5 Tactics to Avoid When Negotiating Real Estate

When negotiating real estate deals, agents have their work cut out for them in any market. It’s a delicate process with many moving parts. Emotions are high, there’s a lot of money at stake, and buyers and sellers have competing objectives.

With all this in mind, agents have little room for error.

Keep reading to learn about five common mistakes agents make when negotiating real estate to avoid making unforced errors that derail deals.

1. Failing to Establish Proof of Life™

Many agents are eager to provide value before establishing a formal relationship with their clients. Unfortunately, the moment they start providing that value is the moment they become less valuable.

In every real estate game, there’s a favorite and a fool—meaning someone a client wants to work with and someone they are using to extract information they can use to get a better deal from a different agent. If you’re unsure which role you’re playing, you’re probably the fool.

To figure out whether you’re the favorite or the fool, ask a Proof of Life™ question: There are plenty of other real estate agents out there; why did you pick me? This question will help you figure out whether there’s a deal to be had—and whether that deal will be made with you.

You’re looking for a robust answer: Why did we pick you? Well, Dan and Susan down the street used you to sell their home and said you were easy to work with, communicated well, were a straight shooter, and didn’t hide anything from them. So, it seemed like a no-brainer for us to reach out to see if you could duplicate that success with us.

When they make a case on your behalf, you’ll know you’re the favorite, and you can formalize your relationship and start providing value from that point forward.

2. Failing to Provide Predictability

The more predictable a real estate agent can make things, the more a client will trust them.

Personally, I grow weary when I see agents celebrate when an offer has been accepted—which is when the trouble is just beginning. This is the start of a journey replete with problems, many of which are predictable. Most agents just hope problems won’t materialize after an offer is accepted, but hope is not a strategy.

Because you don’t have much control over many aspects of the process, it’s critical to control what you can. And predictable problems—like issues that come up after an inspection—fall under that category.

Uncertainty is the mother of fear. So let your clients know that the process won’t be unicorns and smooth sailing. Get in front of the negatives and provide predictability so that clients don’t get caught off guard when negatives appear.

An easy way to do this is to call clients regularly, even when there’s no update. And when there’s bad news to deliver—for example, an inspection report comes back, and you have to tell your client that the buyer wants them to address all these issues before moving forward—kick things off with an Accusation Audit®: I’ve got bad news. You’re not going to like it. I told you there would be challenges in this process, and here’s one of them.

Lay out the news, provide your recommendations, and ask for their opinion. Because you’ve already told them there will be issues along the way, they won’t be blindsided by the information.

3. Failing to Demonstrate Tactical Empathy™

Real estate deals are built on a foundation of trust, and using Tactical Empathy™ is a key way to build that trust.

When you can truly demonstrate that you understand the other person’s perspective — whether that’s your client, an agent, a lender, or a contractor — you connect with them on a deeper level, which leads to trust-based influence.

Remember that attempting to generate understanding is far more important than demonstrating accuracy. If you miss the mark, your counterpart will tell you because the desire to correct is too hard to pass up. We feel good when we’re told we have knowledge someone else doesn’t, and we’re eager to share it.

4. Failing to Use Asking Labels™

To most people, these two statements are pretty much the same:

Does a 21-day close work for you?
So it sounds like you’re okay with a 21-day close?

But there’s a major difference: Many people find direct questions abrasive. Instead of asking a direct question, use an Asking Label™. Otherwise, you risk shutting the other side down by peppering them with direct questions they don’t want to answer.

With Asking Labels, you create more space for your counterpart to share candid information. Instead of asking, What did you see that you liked? after touring a property with a client, use an Asking Label instead: Seems like you saw some things you’re thinking about? Suddenly, your client will vomit up a bunch of information they otherwise would never reveal.

5. Failing to Address Counterproductive Behavior

Real estate is one of the most highly regulated industries. At the same time, it’s replete with people who engage in some of the rudest, most unethical, and most counterproductive behavior in any industry I’ve ever seen.

Failure to address this behavior is a mistake. When you don’t address persistent counterproductive behavior, you can’t influence people. It’s that simple.

Let’s back up: When I see counterproductive behavior once, I chalk it up to happenstance. Twice? That’s a coincidence. A third time? It’s deliberate enemy action.

When you run into counterproductive behavior, use an “I” message—a negotiation technique that has three parts:

When you [do this behavior]
I feel [like this]
Because [reason the behavior is a problem]

One “I” message might look like this: When you continue to ask for things outside the scope of the inspection report, I feel frustrated because I’m not sure how we can continue this transaction in a healthy way.

It’s an easy way to draw a line in the sand without seeming confrontational.

To learn more mistakes to avoid when negotiating real estate, check out our free e-book, Real Estate Negotiation: The 6 Biggest Mistakes Real Estate Agents Make.