A real estate agent’s ability to negotiate can have a significant impact on a transaction. An effective negotiator can bring in a higher offer and better terms for a seller or get a buyer into a home at a lower price and under more favorable terms. By contrast, an ineffective negotiator can prompt buyers and sellers to settle for a less-than-favorable offer just to close the deal. Homeowners, therefore, need to focus on selecting an effective negotiator to represent them. But how can they do this? What should they look for?
After more than a decade in the real estate industry and working as a broker in central California, I have fine-tuned my answer to these questions and would like to share my insights into how real estate agents can use “tactical empathy” to negotiate on behalf of their clients.
The Art of Negotiation
It is important to remember that real estate agents only get paid when a deal closes. As a result, many agents view closing as the primary goal and often overlook the needs of the buyer or seller. This can leave their clients in a less-than-favorable position during the negotiation process. Only agents with solid negotiation skills – developed through training and experience – have the ability to truly put their clients’ needs first. This may mean directing a seller to forfeit an offer or advising a buyer that a better opportunity may exist in the market. Effective real estate agents can weed out questionable situations and gauge where the greatest opportunity is. But what skills must an agent have to do this?
The Foundation: Understanding the Client
The first step for any client is finding the best agent. Agents should be a resource for clients throughout the negotiation process, and those who understand and align with their client’s needs will be the most successful. Not all buyers and sellers have the same agenda. For example, some sellers want to sell quickly, even to a buyer who is offering a lower price. In this situation, an agent should recognize the importance of identifying buyers with minimal contingencies and a quick closing date. An agent who focuses only on pricing may be wrong for the seller.
Clients also need to find an agent who will be fearless during the negotiation process and focus on results. It’s important to realize that negotiations don’t always end with a deal. In some cases, real estate agents must direct their clients to walk away from a transaction, even if they think a deal will never be made. Agents with proper training and experience have the confidence to make these difficult decisions and, in the end, bring the best results to their clients. Fearless agents also focus on creating results. They direct their negotiations based on their clients’ needs.
Tactical Empathy Closes Deals
In addition to understanding and aligning with the needs of their clients, agents must strive to understand the counterparty. Here’s where I’d like to introduce “tactical empathy.”
Tactical empathy is the core element that drives winning negotiation and is an attribute of today’s most successful real estate professionals. It refers to an agent’s ability to recognize the perspective of the counterparty (e.g., the buyer and their agent when the agent is representing the seller) and then vocalize that recognition. It is a combination of intuition and vocalization.
You may be wondering why tactical empathy is so imperative in negotiations. Let me explain.
Buying or selling a home can prompt an emotional response in clients. Although seasoned investors understand that every transaction should be looked at from a financial perspective, the reality is that homeowners and homebuyers often build an attachment to a property and set internal expectations based on this response. For example, homeowners who have lived in a home over two decades tend to see more value in the property due to their psychological connection to the home.
Agents who recognize this and practice tactical empathy in their negotiations are more likely to close deals. Tactical empathy leads agents to build rapport with the counterparty, which then leads to reciprocated empathy. This strategy involves active listening, mirroring what is heard in conversation, and asking calibrated questions. Such an interaction results in the agent using trust-based influence to increase the likelihood of making a deal.
In real estate transactions, tactical empathy does not mean the agent agrees with the other party or even feels compassion toward them. Instead, it simply means the agent recognizes and understands the counterparty’s position. The result is the ability to influence the other party’s actions in a proactive and strategic manner.
Agents who focus on the counterparty’s perspective instead of their own agenda are better able to represent their client and close the deal.
Negotiation Is a Learned Behavior
It is important to remember that negotiation is not the product of blind effort or dumb luck, solely based on hope. Instead, it is a science that must be learned. Accredited, data-backed research supports the use of tactical empathy as a negotiation strategy in real estate transactions. Brokers who choose to study – and more importantly practice – tactical empathy benefit not only themselves but also their clients.
Therefore, when vetting prospective real estate agents, it is helpful to research the strategies they use to assist clients in buying or selling a home – this provides insight into how well the agent can represent a client during the transaction process.
In the end, clients should follow their gut. They should take into consideration the importance of tactical empathy and take the initiative to hire an agent who can bring this unique skill to the table.
Are you interested in learning more? Contact us. Let’s engage in a negotiation session, and you can experience our skills, which can help to land you the absolute best deal for your real estate transaction.