How do the most successful agents negotiate with impossible sellers? Do you know when to fold or when to hold your ground? And do nice guys really finish last?

In the real estate industry the services that we have to offer our buyers and sellers are, as a whole, rather subjective. We sell convenience, time management, market and transaction knowledge, and among the most important of these services are negotiating skills. Often undervalued until that maddening moment when the deal is about to fall through, negotiating skills are highly prized once you get to the closing table.

Negotiating is like a game, you want to prevail, and your opponent wants to prevail - who's going to win? Negotiating is meeting somewhere in the middle so that both of you win.

Your demonstration of your negotiating skills actually begins at the listing presentation, when you are ready to select a listing price for the home.

All of a sudden, your sellers lay their cards on the table - they want a unreasonably high price for their home. They've heard some other homes in the neighborhood went for "that much." Clearly they want to hear that you can "get that much, too."

Do you set the property's price high, so the seller will be impressed? Your job is to get the listing, right? Once you get the listing and the home doesn't sell, you will be able to go back to your seller and price the home more realistically.

Wrong! Overpricing is for amateurs, and amateurs hurt their own and the industry's reputation. The real pros determine the market value based on comparables and in-person visits to the competition so they can see for themselves why homes are selling for certain prices in the neighborhood. A true market evaluation and pricing will attract a buyer as quickly as possible at the highest price possible. But pricing out of the market? That only wastes marketing time and money and frustrates your client.

In a competitive environment, especially one in which the seller is laboring under a number of misconceptions about how the industry works and how buyers will react to their homes, the course of least resistance may, at first, appear to agree with whatever your seller wants.

But, your job is to get the home to close. Capitulating to your seller before you list the home may only cause problems down the road and prevent you from marketing the home effectively, negotiating with buyers and bringing the home to closing.

And if you can't negotiate with your seller on the front end, what kind of a chance will you have with a buyer and his/her agent?

A new study in negotiating skills may provide some insights. Bruce Barry, Ph.D. and Ray Friedman, Ph.D, both Vanderbilt University professors, study personality and bargaining, have concluded that nice guys do finish last.

According to their findings, published in an article in Psychology Today, August 1998, negotiations come in two varieties - integrative negotiations (those situations in which both sides work towards a mutually satisfying result.) and distributive bargaining situations (those negotiations in which there is a clear winner or loser.) Knowing which type of bargaining situation you are in will help you choose the right approach for a satisfying result.

For REALTORS® who spend a good part of their personal marketing efforts to showcase themselves as reputable, caring professionals, it may be a surprise to learn that nice guys do finish last in negotiations. If choosing a price for the home is an integrative negotiation, then according to the professors, the skills that will help you meet your goals will be intellect and the ability to assess your opponent's needs. The professors found no positive relationship between geniality or extrovertism and getting what you want.

In fact, nice-guy personality traits are disasterous in distributive bargaining, where street smarts and nerve beat a high IQ every time. The closing table is a perfect example of distributive bargaining, where you are much better served by skepticism and aggression.

Pricing negotiations are most likely to move ahead to a positive conclusion, the professors found, if you can assess your opponent's needs, and work toward a goal that meets those needs.

In other words, a better strategy for dealing with an unreasonable seller is to find out why they want such a high price, and explain to them what they will have to do to get it. Do they want to move to a larger, more expensive home? Are they trying to pay off debt? Are they upside-down in their current note? (find out how much they owe on the home and how long they have lived there.) Are they attempting to boost their retirement fund and scale down at the same time? To get a high price, are they willing to wait for months for the right buyer? Are they willing to update the home to neighborhood standards and can they afford to? Can they afford two house payments while they move to the home of their dreams?

Answering questions such as these will help the sellers modify their position and make them more likely to follow your suggestions and expertise, especially when you can come up with a creative solution to help them meet their goals.

Your best preemptive move is to preview the competition before you arrive for the listing appointment. You will not only demonstrate your knowledge of the neighborhood, you will be able to adequately field comparisons to other homes. When your seller mentions "that house that just sold," you can respond with particulars about the home that made it command such a price and ask your sellers if they would be willing to put in the same investment? Knowing that a home has a completely remodeled kitchen, or that the roof, electrical, and A/C have been replaced makes a tremendous difference. Seeing with your own eyes gives you access to information that isn't always available in the comparable analysis.

You can also wait to suggest a listing price until you have more information. Some agents encourage their sellers to have their homes inspected or obvious repairs made before they list the home.

The one personality trait that the professors found to help in all negotiating situations is having high expectations.

If you believe you can, you will prevail.

Published: September 16, 1998

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