When representing a buyer in a real estate transaction, many real estate agents are so focused on developing an offer based on market data alone that they often leave concessions on the table. One of the most common concessions requested is closing costs. When this happens, they fail to fully represent their clients financial interests.
With that in mind, let’s take a look at four tips agents can use when negotiating closing costs to ensure they get the best outcomes for their clients.
1. Start with a conversation.
Whatever you do, don’t be the agent who starts the negotiation after the offer is written. Of course, this isn’t something unusual for agents to do. They might look at comps, tour the property, consider how long the property’s been on the market, and then give the listing agent a call after they’ve sent the offer.
In such a scenario, agents go into the conversation with the intent to justify their offer. They fail to obtain valuable negotiating information. They’re not listening to the other agent. Instead, they’re placing their own desire to succeed ahead of truly listening to and understanding their counterpart.
Rather than taking this approach, you’re much better off kicking things off with a conversation, and heading into that conversation looking to learn. Ultimately, you need to remember that you are not the decision maker—your clients are. To serve them as best as you can, you need to learn as many details as possible. Overlooking the need to do so will result in loss of opportunity.
Always remember, the other agent is not your opponent; this should be a collaborative process. You should listen to the other agent and try to pick up on hidden Black Swans. If the agent tells you they will lose the listing within a month if the property doesn’t sell, it might present the opportunity to identify the pressure that he or she is under. Then listen for more and continue to apply tactical empathy. You will gain valuable information. When you lead with an offer instead of a conversation, you deny yourself and your client the opportunity to develop a more informed strategy before writing.
2. Use Labels™ and Mislabels.
When negotiating closing costs, Labels™ are particularly helpful. For example, you might pick up the phone, call the other agent, and say something like this: It seems as though you are anticipating selling this house close to list price without any concessions or subsidies.
Listen to how they respond, and use the other Black Swan tools to continue applying Tactical Empathy®. Here, Mirrors™ and Paraphrasing can help you uncover more information.
And don’t forget about Mislabels. Because the desire to correct is so overwhelming, Mislabels can be quite effective: It seems like your client is probably nowhere near ready to review or accept an offer with any type of seller concession. Once you use a Mislabel, follow up with Dynamic Silence™. In most cases, the other side will give you a wealth of information.
3. Use an Accusation Audit® and ask No-Oriented Questions™.
The Black Swan skills are designed to work together in harmony. At this point, it’s time to launch into an Accusation Audit®: You’re probably going to think that I’m trying to take advantage of you. You might think that I’m just here to lowball you with an offer. You’re probably going to decide that this conversation was a big waste of your time. . You may even wonder about how serious my client is about purchasing this property.
Once you’ve primed your counterpart to hear what they suspect will be absolutely awful news, it’s time to ask a No-Oriented Question™: Would it be totally offensive if I were to submit an offer with a seller subsidy?
Throughout the conversation, you’ll also want to use a Summary™ that sums up the world as they see it. When you summarize their point of view as thoroughly as possible, they have no choice but to respond with the two magic words: “That’s Right”™.
4. Practice with your colleagues.
As The Black Swan Group says, none of us rise to the occasion. We all fall to our highest level of preparedness.
That being the case, you definitely want to make sure to practice negotiating closing costs with your colleagues, getting the low-stake reps needed to shine in high-stakes situations.
To do this, let them know that many agents follow Chris Voss and The Black Swan Group’s real estate teachings—Chris even wrote a book on the subject—and you’re trying to do the same. Would you be against roleplaying with me and taking the selling agent’s perspective?
That way, you’ll get your reps in and be ready to really listen when the time comes.