One of the most important qualifications of a real estate broker is his/her ability to negotiate effectively. Buyers and sellers ought to seek out brokers who have high level negotiating skills and use them to buy or sell their property. What makes a broker a skillful negotiator is not only understanding the negotiating process and navigating through the multiple issues that a real estate transactions entails. The broker’s effectiveness as a negotiator rests on a number of other critical areas of expertise, without which the broker cannot effectively negotiate and conclude a deal successfully.
Knowledge of the Market
Comprehensive knowledge of the market is sine qua non to effective negotiations, as the broker is much better equipped to deal with their counterpart to achieve better results for their prospective buyer or seller. The broker must have deep knowledge, especially in the area where a would-be buyer or seller needs to buy or sell a property and must know about every property that was sold and closed in the same category, apartments currently available on the market, current market trends (i.e. whether it is a buyer or a seller’s market), the demands for the property being sold or sought after. In addition, it is critical for the broker to know the price of comparable units in other areas of the market to provide the buyer or seller a wider range for comparison.
Understanding the Buyer’s or Seller’s Needs
Regardless of how critical knowledge of the market is, the broker must have a clear understanding of the buyer sand the seller’s requirements and needs. They must be certain that their understanding exactly reflects that of the prospective buyer/seller. This includes: 1) the motivation behind selling/buying, 2) the readiness, willingness, and ability to transact, 3) buyer’s/seller’s time frame, 4) prior experiences in the market, 5) understanding of the market’s trends, 6) flexibility a buyer/seller may have on pricing, 7) what their ideal deal would be, 8) how sensitive they are about their finances, and 9) how forthcoming they are in their dealings. To be sure, the more the broker knows about their cleints, the better they can negotiate on their behalf.
Appreciating the Buyer or Seller’s Psychological Disposition
Whereas understanding the buyer’s and seller’s requirements and needs is central to negotiation, understanding their mindset, emotions, concerns, anxiety, prior bad experiences, disappointments, need to safeguard sensitive information, and finally, their expectations must all be carefully considered to satisfy the buyer’s and the seller’s needs in these areas. Discerning their feelings and mindset are of paramount importance to the negotiating process because often buyers and sellers do not wish to disclose such sensitive information or feelings, because they may feel it works to their advantage throughout the negotiating process.
Developing a Negotiating Strategy
Before commencing the negotiations, it is critical to ascertain that a buyer is qualified financially to buy should he/she find the desired property consistent with their budget. It is also important to determine that that the broker for the seller and broker for the buyer are committed to working toward a successful sale.
Needless to say, without having all the information above, the broker cannot possibly negotiate effectively. But once the broker is satisfied that he/she has gathered and absorbed all the information they need, they will now be in a position to develop a negotiating strategy. To do so, the broker must first and foremost establish in his/her mind the fair market value of the property in question and how consistent that value may be with the buyer’s or the seller’s expectations.
It is critically important to establish a strategy at the outset in order to achieve the highest possible price for the seller or lowest price for the buyer. To that end, a skilled broker would sketch on paper the whole give and take of the negotiating process from the moment the initial offer is made. This basically provides a road-map that allows the broker to guide whomever they represent on the steps they should take along the way. All this must be generally consistent with what the buyer wants to pay and taking into account the price the seller is willing to accept.
There are dozens of twists and turns in any negotiation. What buyers and sellers need to know is that the broker representing them fully understands the intricacies of negotiations and shares with them the general strategy to give them a clear picture of the negotiating process. In the final analysis, buyers and sellers do not want a broker who simply carries messages from one party to the other. They want a broker who strategizes and has a keen sense on how to bridge the gap between the two sides while ensuring that both buyer and seller emerge mutually gainful. Indeed, this is the key that will help smoothly facilitate the signing of the contract once there is an accepted offer.