Part of being a real estate agent requires that you negotiate on your client’s behalf to get them the best deal possible. Often, you will be negotiating with other real estate agents or directly with homeowners or buyers.
Your ability to negotiate relies heavily on the local and national real estate market. More often than not though, the purchasing and selling of a home occurs quickly — especially with today's real estate trends. As an agent, you must make decisive financial decisions during the buying, selling, and negotiation process.
The guide below details what you can negotiate for when buying or selling a house and lists useful tactics to implement when negotiating. These tactics will strengthen your negotiating skills and should help generate deals that satisfy your clients.
Real Estate Negotiation Tactics
The below strategies discuss different negotiation tactics when it comes to working in residential real estate. We included detailed information and quotes from longtime agents, brokers, and real estate experts. You can also see our visual on negotiation tips here.
1. Show Your Cards Second
When negotiating a deal, always try to be the person to name your initial offer or price second. Several studies have found that naming your price second gets you a better deal and can cause much less anxiety after negotiations.
According to Harvard Law’s Program on Negotiation study, Masters in Business Administration (MBA) candidates who made the offer first when negotiating a single-price deal felt more anxious about their decisions, and as a result, felt less confident and satisfied with the outcomes.
2. Use Inclusions
Use inclusions towards the end of the negotiation process. Let’s say your client is selling their home and have decided to include their washer and dryer in the deal. Now, if the purchasing party is requesting that your client pays for a repair similar in price to the washer and dryer, or wants your client to pay for a portion of the repair, then argue that since you’re including the washer and dryer, a value nearly equal to the repair cost, it’s only fair to not have to also pay for this minor repair.Making use of inclusions is a great way to help get your client get closer to their target home value. Just be careful though — inclusions work both ways, so don’t be caught off guard if they are brought up.
3. Connect Personally Through Letter Writing
Sometimes, it pays off to be friendly and to make connections with the opposing side. Making those personal touches and connections can go a long way during negotiations.Marisa Rohrer, a longtime real estate broker and Co-author of Home to Home, encourages her buyers to,
“Write a personal letter to the sellers of the home… A letter helps the buyer’s offer become a person with a story and not just paper.”
For proof, read Jen Cameron's story, on how she and her buyer’s small acts of connection helped secure a competitive listing. During a pre-inspection visit, the buyer realized that her husband had graduated from the same law school as the seller. The buyer then requested Jen, her luxury real estate agent, to deliver in person a hand-written letter expressing her love for the home. In that letter, the seller used a quote from a song that was on a displayed album in the seller’s home.
Delivering the letter allowed Jen to speak with the selling agent and “ask further questions and reconfirm our [Jen and her client’s] commitment to close.” From the 100+ people who viewed the house the first two days, they accepted Jen and her client’s offer. Jen’s clients now “live in the home with their two children and absolutely love the neighborhood.”
4. Use Affirming Language
Affirming language makes someone feel heard and welcomed. In many instances, using affirming language can make it seem that your ideas originated from them. Here are some examples of affirming language:
- “Well, you’ve done a lot for us already, and I feel awkward requesting this one thing, but would you be willing to [request]."
- “I think we’re on the right track, your idea to split the costs was great, what if we also split appliances."
Being friendly and using affirming language can also give you a positive reputation in the real estate community, which can be quite advantageous according to Kat Timpson, a New Jersey Realtor for Coldwell Banker.
Kat argues that one of the agent’s goals is to get to “the closing table as easily and with the least challenges as possible.” If you have a good reputation as an agent, then other agents are “already more willing to work together — for the good of their clients.” While on the flip side, if someone is known for being a challenge to work with, other agents will simply pass on their listings or won’t contact them if they’re on the interested sellers’ list.
5. Facial Expressions and Body Language Will Set the Tone
Depending on who you negotiate with, be mindful of your voice, facial expressions, and body language. Many of our facial expressions occur subconsciously and we oftentimes don’t even consider them. However, our facial expressions almost always evoke a response in someone else’s mind.Our body language also evokes emotion.
For example, crossed arms typically conveys a defensive position, and the shaking of one’s head from side to side can suggest disagreement or irritation. While pacing can be perceived as either an intimidation tactic or nervousness.On the other hand, smiling changes our vocal cords to sound more friendly and endearing. You should always be aware of your own, your client’s, and the opposing parties’ facial expressions and body language.
6. Start Close to the Market Value
When making your first offer on behalf of a client, don’t throw out a lowball offer, this might not only offend the opposing party, but they’ll simply pass on your offer — especially in a selling market.For your purchasing client, your initial offer should be slightly above the market value, but below the asking price. This way, you’ll have more room to negotiate and hopefully stay below your client’s asking price. Omer Reiner, President of FL Cash Home Buyers, says,
“I will assess a property and do my best to determine its fair market value and then use this for negotiations (instead of the asking price). In this way, you reframe the price from what the buyer is asking for to a fair market price."
7. Research Everything
If you’re working with another real estate agency, research them to get insight into their negotiation tactics and what they typically compromise on. One way to get key information is through networking. Try to see if your real estate network has any insights into another agent’s behavior or negotiation tactics.Ryne Lambert, Co-Founder of Sell my House in Wisconsin, suggests that during the negotiation process, real estate agents should attempt to “understand the other party’s personality profile (i.e. DiSC profile) so that we [agents] can communicate effectively.” For example, if the other party has a dominant personality, they will likely be direct with you. In return, you should also be direct and to the point. If someone is conscientious, they will likely want numbers and facts, so come prepared with all figures clearly laid out.Use your high emotional intelligence to read other’s demeanor and behavior, and to send the correct message and information to help appease them, while also getting closer to a finalized deal.
You also want to gather as much information as possible about the property when selling or buying. Hire a well-trusted house inspector to review the house for any unknown additional costs. Also, research the neighborhood and market to make the best offer on behalf of your client. Another research tactic is to keep track of an agent’s previous deals to see the difference in selling price versus the initial listing price.“If you have data of any kind, it's hard to dispute. Give specific examples or data that the other party may not have to gain a competitive advantage,” argues Ryan Waller, of BethandRyan.ca.
8. Control Emotions and Stay Positive
You won’t always know how someone else will act when going into negotiations. They might have outbursts or can be patronizing. It is important that you control your emotions. Don’t let someone else’s behavior throw you off of your game. If you trust your instincts and stay positive and friendly, more often than not, your client will be happy with how you handled the situation and their finances. Lukasz Kukwa, a Real Estate Advisor and Investor for Coldwell Banker, often tells other real estate professionals to remember this:
"Residential real estate is an emotional process for both sides. They are experiencing different emotions. So, do your best to accommodate those emotions. Always make sure that you deliver on what you offer or promise.”
9. Meet in Person or Talk on the Phone
It’s best to meet in person or at the least talk over the phone when discussing details. Meeting in person, or talking over the phone, allows you to better read someone else’s emotions. Also, it doesn’t give the opposing side as much time to think or rework their offerings — they have to do it on the fly.If you are meeting in person, virtually, or over the phone, make sure that you have thoroughly done your research. You want to be absolutely sure that you know the details of the house, the local market, and what your client values most. If you’ve done your homework, you should be prepared for any questions or tactics the opposing party might bring up.Prepare as if the opposing party wants to meet in person for the same reasons you do: to catch you off guard and work to quickly get a deal done.
10. Have a Backup Plan
Any negotiator worth his or her salt knows that you most likely won’t get the exact deal you or your client wants unless the market is heavily in your favor. So, always make sure that you have a backup plan — it helps you determine when to walk away and when to sign the dotted line.
To have a solid plan B, know what your client is and is not willing to compromise on. Also, try to figure out what the other party values most and what they will not budge on. Discovering this information early on will speed up the negotiation process by reducing the amount of the back-and-forth.
Lou Gimbutis, a Chief Homebuyer for Property Solutions LLC recommends that agents have a “thorough knowledge of the motivations and factors of importance to the other party. This knowledge will help you immeasurably, as you can ensure that any concessions you make are framed in reference to what is most important to the opposing side.
”A good rule of thumb when considering your backup plan is that if your plan B is better than what is on the table, you shouldn’t take the deal. However, if the offer on the table is better than your plan B and original offer you should strongly consider it.
11. Know When to Say “No”
One of the hardest tactics to learn when negotiating is learning to say no and knowing when to walk away. First, saying no doesn’t always mean you’re walking away. You can say no to a deal or a proposal anytime and can continue the negotiation process by making a fair counteroffer. Say no to make a point, but be aware that saying no can cause the opposing party to walk away.
Learning to walk away is a difficult skill, but knowing when to do so comes back to knowing your client and what he or she is or is not willing to give up on. Know your client’s maximum purchasing price or lowest selling price. If you and the opposing party aren’t in the same ballpark early on, then it’s best to walk away and work with someone else.
Additionally, if you have worked for a lengthy amount of time to make a deal happen with another party, give the process more time before walking away. That being said, if a deal isn’t in sight, know that you have to walk away and other suitors will be coming along.
Sean O’Dowd, from Close Concierge, says it best: “Rather than beating a dead horse, you need to walk away. There are millions of other homes out there, and there will be one that's a better fit.”As a residential real estate agent, your main priority is to help your client get the best deal possible when purchasing or selling a home. Remember that real estate negotiations are an emotional process for both the buyer and seller.
What is Negotiable When Buying or Selling a House?
As a real estate agent, you should be keenly aware of what is negotiable in general and what can be negotiated for each property your clients are interested in. The six items below are generally negotiable in residential real estate.
Negotiating the price might seem obvious, but the price is what realtors negotiate first. The seller hopes for the highest price while the buyer wants to pay the least amount for the property. Therefore, it is typical that both parties offer higher or lower prices at first depending on their positioning, then negotiate to a price somewhere in the middle.
2. Closing Costs
If your client is buying, they must pay a prepaid closing cost for their mortgage. The mortgage company typically holds this closing cost in an escrow account. However, the buyer can request that a seller pay a flat dollar amount or small percentage contribution (1–3%) towards closing costs.
3. Closing Date
When selling, your client wants to sell as fast as possible to stop paying for the property listing. Sellers are also eager to get a large financial return once sold.For buyers, once they own the home, it will affect their monthly cash flow. After closing, the buyer typically skips the next month’s mortgage payment. In this case, the buyer might want to close at the beginning of the month to skip the next month’s mortgage payment.
4. Home Repairs
Homebuyers usually have the upper hand when it comes to negotiating repairs. Since the buyer is purchasing and likely living in the home, you should urge your client to hire an inspector and to do a pre-inspection walkthrough. The inspector will discover issues that your client will have to pay to repair in the future. Therefore, buyers should add these repairs when negotiating costs.
If your client is selling, you can always specify that the house is being sold “as is” which notifies prospective buyers that repairs will not be included and should not be negotiated for.
When selling a property, the seller will sometimes include built-in or staple appliances such as the refrigerator, washer, dryer, microwave, and stove. If your client is selling, consider including some of these appliances while using the other ones for negotiation purposes.
As a buyer, research the quality of the appliances by looking up the serial numbers. The first four digits on the serial number are the month and year the appliance was built. Doing a bit of research on the appliances via the serial number will help when negotiating their monetary value.
Furniture that fits well with the house can be up for grabs if the seller is willing to depart with it. This can be outdoor furniture, cabinets, chandeliers, or mounted televisions. If your client is selling and plans to use their personal furniture when staging a house, then try to advertise the furniture in the listing. Just make sure that it’s clearly stated which furniture belongs to who when finalizing the contract.For more tips on negotiating, see our visual below:
As the agent, you need to be keenly aware of everyone’s emotions and feelings. At the end of the day, you want all parties to come away from the deal feeling positive about their decisions. If you also work with renters, consider using RentSpree’s tenant screening services and renters insurance to help keep your emotions level.
- Gretchen N. Foley, “Nonverbal Communication in Psychotherapy,” Psychiatry MMC, June 2010: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2898840/
- PON Staff, “Negotiation Techniques: The First Offer Dilemma in Negotiations,” Harvard Law School Program on Negotiation, Jan 25, 2021: https://www.pon.harvard.edu/daily/dealmaking-daily/resolving-the-first-offer-dilemma-in-business-negotiations/
- PON Staff, “5 Tips for Improving Your Negotiation Skills,” Harvard Law School Program on Negotiation, Nov 23, 2020: https://www.pon.harvard.edu/daily/negotiation-skills-daily/5-tips-for-improving-your-negotiation-skills/
- Richard Laycock and Catherine Choi, “Buyer’s Remorse,” Finder, Nov 02, 2020: https://www.finder.com/buyers-remorse