THE REWARD OF NEGOTIATION
10 POINTS TO GIVE YOU CONFIDENCE
by Neil Jenman
When selling your home, you need an agent with the ability to negotiate the highest market price for you.
The difference between a good negotiator and a poor negotiator can easily amount to ten per cent of the value of the property.
You should take as much care to choose an agent to sell your home as you would to choose a builder to build your home.
Incredibly and tragically, most agents are clueless about negotiation. Therefore, most homes are short-sold – and often by many thousands of dollars. Especially if sellers have been persuaded to use public auction as it’s the worst way to sell a home. With most auctions, you are almost guaranteed to be short sold. Of course, few agents will ever admit the truth about auctions which is reprehensible.
Agents are paid by home sellers which means they have a legal duty to act in the best interests of sellers. And no, running backwards and forwards with offers and counteroffers between buyers and sellers does not make agents negotiators. It makes them messengers.
It’s not just agents, most people don’t know much about negotiating.
So: HOW DO YOU SELECT A GOOD NEGOTIATOR?
Given that most sellers – indeed most people – are not skilled in the art of negotiation, how does a person who knows almost nothing about a topic spot someone skilled at that topic?
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IMPORTANT: The right answer is to call me, Neil Jenman. Or to call our office, Jenman Support on 1800 1800 18. Alternatively you could contact my son, Alec Jenman . If he can’t help you, he may arrange a time for you to speak with me. Please understand, however, there are about 10,000 homes sold each week in Australia. I’d love to help all home sellers because I have never met a home seller for whom I could not get a higher price and less expenses – and one day we hope to find a way we can have enough supporters to speak with everyone. Until that happens, I will speak with as many genuine and decent sellers as I can handle. And, please, do not get me wrong. This is not like work to me. I love helping you. All at NO EXTRA CHARGE – because the agents pay us (to protect you 😊). It’s a great system for sellers. So, please, if you are a serious seller who needs to sell for the highest possible price, try and get hold of me. Contact Alec Jenman now, or ring Jenman Support on 1800 1800 18. Thanks
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One way to spot a good negotiator is to learn more about negotiation.
So, here are ten simple and easy-to-learn points about negotiation. They may not get you a job at the United Nations, but they should increase your confidence. They may also encourage you to become more interested in this vital topic.
POINT 1: FAIRNESS
The most important word in negotiation is ‘fairness’. Don’t even consider ripping anyone off.
If you’ve got a good product, but it’s priced higher than a similar product elsewhere, you need a good reason to justify your higher price. Therefore, it’s so hard to get a better price when you place your home on a big real estate web portal. The buyers compare your home with other similar homes and buy the cheapies. This is how advertising forces your price down.
Of course, agents know this, which is one reason they over-advertise. It does not help you get more money, but it helps agents get more commission because they get well paid whether they sell your home for a high price or a low price. And that’s just not fair.
What are you offering that other sellers are not offering?
If nothing, then all you’ve got to offer is price. If you are in a price war – as so often happens today, especially with cars and white goods – there’s only one way you can be sure of winning.
GUARANTEE the best price. Or, if you’re selling a home, make it the best home. Be proud to ask a good price for a good home.
People love honest guarantees in negotiation. Guarantees feel safe. People don’t go away with a nagging feeling that maybe they could have bought cheaper elsewhere.
So, this sort of negotiation is simple. If you’re the seller, offer the best price possible. Or, the best product. If you’re the buyer, research and get to know prices.
There is, however, one wonderful seven-word question to ask the other party, regardless of whether you are buying or selling. That question is: ‘Is that the best you can do?’ You’ll be astounded how many times this soft little question saves you a stack of dollars.
One final tip on this question: Ask it a second time with one word added. Once you’ve got what you are told is ‘the best’, ask an eight-word question: ‘Is that REALLY the best you can do?’
POINT 2: VARIABLES
Second, look for variables – something you can add in as an extra if you’re selling or something you can take out if you’re buying.
For example, a home may have expensive light fittings. If the buyer makes an offer which seems low, the seller can say, ‘We accept the offer, but we exclude the light fittings.’ There are a whole host of other extras you can include or remove when you are selling or buying a house.
During tight times in real estate, some developers offer a ‘free car’ if you buy a property. With such a large ‘gift’, it’s hard not to think the car’s price has been added to the property’s price.
POINT 3: RESEARCH
The person who’s best informed gets the best deal in a negotiation. Become a superb researcher.
With negotiation, knowledge is power. Here’s an example. There was a home for sale in my street. It was a gorgeous home but located on a bend down a hill. It was easy to imagine a car ploughing into this house.
This was a valid concern which buyers may have used to negotiate a lower price. But the sellers did their research and discovered the council was going to close the street at the top of the hill. Cars could only go up the hill. Such knowledge saved the sellers from having to give a discount of many thousands of dollars.
POINT 4: TIME
The longer you spend in a negotiation, the more likely you’ll capitulate and the worse off you’ll be.
A car salesman once told me that some buyers will point to a car in the middle of many cars and ask for a test drive. The frazzled salesperson may spend 20 minutes shifting cars. He expects to make a sale. He has invested time and whoever invests the most time is the one most likely to surrender conditions.
Some buyers get salespeople to bring cars to the buyers’ homes. The buyers sit at home and wait. The car salesperson spends a heap of time, especially if they go back and forth to the buyers’ home with several cars.
Be careful. The longer the negotiation, the less chance one side will have of getting the best deal. Make sure it’s not your side investing huge chunks of time.
POINT 5: TERMS
Consider terms. It’s a great way to turn lost sales into sure sales.
Often, negotiation involves a financial focal point. For example, the price asked for a home may be one million dollars. Buyers are only offering $900,000. The sellers reduce their price to $980,000. The buyers increase to $920,000.
Stalemate. Sixty thousand dollars short.
The buyers have run out of money. With their savings, they have reached the maximum the bank will lend them. The sale is about to fall over.
Suddenly, the seller says, ‘Okay, we are $60,000 short, but we’ll let you pay us $12,000 a year for six years.’ If the buyers agree, which they often do, the sale is saved. There are many combinations of financial terms. And they are not all financial. Sometimes you can let the sellers live in the home for a few months rent-free while they attend to their next move. In return for these generous terms, they will give you a generous discount from the price of the home. The magic of terms and yet so many agents overlook it. But that’s because so many agents are such poor negotiators.
POINT 6: STEADY
Be careful how soon you say ‘yes’.
Let’s say you like something with a price of one thousand dollars. You may offer eight hundred dollars. The seller smiles and says, ‘Yes, I accept,’ and out comes their hand to shake (or elbow to bump – not quite the same, is it?). What’s your first thought? It was too easy; maybe you should have offered less.
If you are the seller and someone makes you an offer you want to accept, don’t look delighted. Take it steady.
Ask for a few minutes alone with your partner or colleague. Or even a day or two. There’s a lot of merit in “think it over”. The only people who won’t agree are the salespeople because the longer you think the longer it takes them to get their commission. Think, please.
If you decide to accept the offer, always try to get one more, final, concession. Here’s what you could go back and say: ‘Look, it’s not what we are hoping for, but we have decided to accept if you will pay for postage and packing [or whatever concession you seek].’
Recently one of our sellers agreed to accept $700,000 from a buyer who originally offered $650,000 and said they’d “never pay more”.
Even at $700,000, I felt we could still get more, but the agent was spooked. He warned us that we’d lose the buyers if we placed any more pressure on them.
I said, “Just tell them to increase their offer and we will accept.”
The agent asked how much we wanted the offer increased.
We replied, “That’s up to the buyer. If they increase their offer, whatever it is, it will almost certainly be accepted.”
Now, remember, the sellers would have accepted $700,000; but why is it that most sales are made when sellers agree to a price? It’s because, once sellers agree, agents stop trying. They are too scared of losing the buyers.
The next day the agent rang. The buyers offered $7,000 more.
Seven thousand dollars is seven thousand dollars.
POINT 7: CONTRA
If you give something, make sure you get something in return. Every time you agree to a condition in the negotiation, the other side, in return, should agree to compensate you.
For example, you might increase your offer by $10,000 if they agree to leave their ride-on lawnmower and all the gardening implements. Give something, get something. Contra.
POINT 8: QUESTIONS
Ask questions, it’s easier than making statements. Most people feel uncomfortable looking another person in the face and saying, ‘I want to give you $10,000 less.’
Try and remember what Rudyard Kipling once said: ‘I keep six honest servants; they’ve taught me all I know. Their names are what, why and who. And when and where and how.’
So, try asking a few soft questions.
For example, you can look puzzled before you ask, ‘Why are you asking this price?’
Amazingly, rather than try to justify a price, many people immediately reduce it. To them, it’s easier to reduce than defend their price. But much more expensive.
Let’s say you are checking in to a hotel. All hotels are flexible on their rates, no matter what they tell you. They can’t sell the previous night’s empty room at any price.
The worst rate at hotels is what’s called their ‘rack’ rate. If you know what you are doing you will never pay the rack rate. Hotels almost always have “other deals” going.
So, ask the desk clerk, ‘What special deals do you have now?’
Most hotels have a corporate rate, which is up to 30 per cent cheaper than the rack rate.
Or an upgrade. It costs a hotel nothing to give you a better room. Just politely say, ‘Could you please give us a nice room?’ You’ll be surprised how often hotels will upgrade you at no extra cost. And what about breakfast? Ask the question in a positive manner and you’re more likely to get a positive result. For example, ‘This includes breakfast, doesn’t it?’
Now, a point about those on-line booking agencies – which make it easy to compare prices. They are nearly all based in America. Here’s what you probably don’t know: They are charging hotels and motels commission of around 30 per cent, sometimes more. It’s outrageous. Just for little more than your name.
Many country motels are being crippled by the charges from overseas booking agencies. So, check availability and prices with the slick sites. But always call the hotel or motel direct and tell them you are choosing to by-pass the bookings site because you know about their huge commissions. They will appreciate your loyalty and your intelligence because it frustrates them how so many tourists do not realise what’s going on.
You’ll almost always get a better rate when you book direct. A country motel would rather give regular customer a 20 per cent discount than pay 40 percent to a website in America. And, remember, the discount the hotels give you when you call direct will always be lower than the best price shown to you by the on-line booking websites.
Let’s all band together and boycott these booking sites. You will be better off and so will the struggling country motel owners.
POINT 9: ODD
Have you noticed that when people tell you their highest or lowest price, it always ends in a round number? Such as $10,000 or $12,000. But seldom $10,277. If people really were stretched, they would offer an odd amount.
You’ll be surprised how many times people will accept a price with an odd number, even if they may have refused a higher price with an even number!
POINT 10: EXPERTS
I rarely feel comfortable negotiating for myself. I can help negotiate wonderful prices and terms for sellers or buyers of real estate but when it comes to myself, I often end up feeling sorry for the other side.
Many years ago, I sold a family home below its value. The buyer was a mother with a disabled daughter. I agreed to meet the mother. She was lovely and my heart melted when I heard her story of suffering – it was genuine and touching. I massively undersold the home. If I told you how much, you may consider me stupid.
Sure, I did someone a good turn, but most families cannot afford to do such a thing. If I were selling today, I would use the expert support service at Jenman Support. I would stay in the background. One of my colleagues could do all the negotiating.
It has been a different story, though, whenever I have been buying real estate. On the last three occasions that I or a close family member have bought property, we have always used the services of an expert – a good Buyers’ Agent.
In every case, we saved more money than we paid the expert. In one instance, we paid $200,000 less than we were willing to pay (although that is common when buying at a public auction).
So, if you do not feel 100 per cent comfortable doing the negotiating yourself (on big items only, such as houses or cars), hire a skilled negotiator.
As a buyer, if you call us at Jenman Support, we will often help you for no charge, especially if you have used our services to help you sell. As we are paid by the agent when you sell, we don’t mind helping you at no charge when you buy. Reasonable people only please.
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I hope these few points lift your confidence on the topic of negotiation. There is a lot more you could discover on how to become a good negotiator. There are good books on negotiation in most bookshops.
If you are selling your home soon and you are considering enlisting our help , you are welcome to receive a FREE copy of ‘THE 42 RULES OF MODERN REAL ESTATE NEGOTIATION’ a comprehensive booklet, originally written for agents, but sellers are finding it to be invaluable. Click here to download your copy now.
THIS ARTICLE IS AN EDITED EXTRACT FROM ‘SUCCESS TAKES CHARACTER’ by Neil Jenman. A fully revised and updated second edition of ‘Success Takes Character’ has been written and is scheduled to be available from November 2020. You can order an advance copy by clicking here.
If you are using the services of Jenman Support – or have done so in the past – we’d be pleased to send you a copy with our compliments. Please click here.
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