Negotiation is one of the most important facets, if not the most important, for every successful business transaction. At the very foundation of this concept, is the understanding that it is essentially a game of tug-of-war between the buyer and the seller. The buyer doesn’t want to overpay, while sellers want to make sure they receive a substantial profit. However, for every negotiation in a real estate investment, there are a set of rules to follow. Once you have these down pat, you’ll be ready to sell your home in no time, or make an informed home purchase.
Credibility
The first rule of a successful negotiation is to build the trust of whomever you’re appealing to, whether it’s the buyer or the seller. Be as honest as you possibly can without giving away too much information. In order to build credibility, it is usually a good idea to provide facts, figures, statistics, testimonials—whatever you have in your arsenal—so long as the numbers add up. Additionally, by appearing professional, calm, and providing reliable information, you establish yourself as someone who knows what they’re talking about and can be trusted.
Aim High
Typically, successful negotiators are optimistic. They have the utmost confidence in their abilities and fully expect to walk away from the table after a business transaction and derive a favorable deal. After all, it’s sheer human nature: if you expect more, you’ll work harder to achieve more. However, make sure not to go overboard with confidence—on the flip side, you don’t want to read as overly arrogant and deter people. Rather, exude a conservative level of confidence and empathy and be amazed by how many people respect you for it.
Uncover Your Opponent’s Motivations
Another advantage to have when trying for a successful negotiation is to understand the motivations of the opposite party, whether they’re the buyer or seller. The more desperate, or motivated they are, the more likely they are to contend with your terms. For example, the seller might be desperate to sell their home as soon as possible because he or she needs the funds to finalize the purchase of another house. Exploit this! You can uncover this information through calculated small talk.
Give Yourself Room To Compromise
Ultimately, compromise is paramount to conducting a successful business transaction. Being a good negotiator doesn’t mean only pushing for your terms and ignoring your opponent’s; rather, it’s a healthy balance of making sure your needs are handled while satisfying the opposite party as well. However, a key mistake negotiators make that prevents this from happening is having their opening position be too close to their expectation level. You can avoid this by establishing an opening position that allows you to compromise and still reach your objective. Overall, compromise takes planning.
The Bottom Line
Sometimes it is best to simply walk away from the deal when it is not the right one for you. However, before one is able to do that, they must identify what characteristics within a deal aren’t desirable for them. After all, walking away from a deal with all your chips in order instead of taking on a bad opportunity is always ideal. Because remember, the key to a successful negotiation isn’t simply taking on a deal for the sake of finding agreement. Rather, successful negotiation is the culmination of collecting favorable deals.
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