Newsletter July – 2010: Top 10 Negotiating Rules for REALTORS

Thursday, 29 July, 2010

By Rich Levin

Most Agents have little or no specific training in negotiating yet it is a major component to an Agent’s success. Negotiating is a skill like any other that is awkward at first and improves with practice.  Some of these rules will take some time to implement effectively.  Others you will be able to apply immediately.
(Some of these rules refer to the situation where you are presenting and negotiation directly versus through the other Agent.)
Rule #1: Do not go back and forth between the Buyer and Seller more than twice or you make them crazy.  At and after the third round your chance of making the sale drops dramatically.

  • In the first round the buyer and seller are thinking about buying and selling the home.
  • In the second round the buyer and seller stop thinking about buying and selling the home and start thinking about the money.
  • At and after the third round they begin to resent each other. Both Buyer and Seller lose site of the home and money. They begin to make it personal and focus on the other party.

Your buyers and sellers are not experienced negotiators.  In fact most have only experienced the often negative negotiations when buying cars.  So, they are predisposed to fear and discomfort in a negotiation. Others get caught up in the fight and just want to win no matter the cost or loss.  Either way these predispositions make it a lot harder for you. And you can avoid it if you shorten the negotiation.
Rule #2: Don’t let the buyers and sellers come to dislike each other.
You take responsibility for what you convey to all parties. The most frequent reason buyers and sellers come to dislike each other is because the Agent talks about one party to the other.  So if you hear your client or yourself beginning to disparage the other client intercede and suggest that whatever the reasons for the Client’s behavior might be, let’s focus on putting together the sale and getting the move complete.
Rule #3: Stay focused on the goal of completing the sale.
Never let interruptions, the other party’s emotions, emotional outburst, personality, position or anything else distract you from the issues and the concessions that lead to completing the sale.
Stay calm. Listen. Empathize. Do not get involved in conversations about the party’s personalities. Do not get emotionally hooked by the emotions of the client.  Be a professional. Whether your clients know it or not, they want and need that kind of focused objectivity from you.
Rule #4: People believe what is in writing.
So, support your position in writing.  If a comparative market analysis supports your position, prepare it.  If certain comparables support your position, provide them.  If a report supports your position, copy that portion and use it.
And most of all put your offer in writing.  Don’t negotiate verbally.  I realize that it can work many times. I realize that some Agents will insist on it and there is little you can do at those times.  Please for your sake and for your Client’s sake make those times rare. Verbal negotiations are fraught with potential problems, misunderstandings, misinterpretations, omissions, as well as simple changing of minds. Put every step of the negotiation in writing.
Rule #5: When you give a concession, ask for something in return.
You may not get anything in return but asking dampens the motivation to ask for more. The seller wants another three thousand dollars in price and the buyer says if I accept that I want the kitchen appliances. The seller says ok and so the buyer says we have been thinking about it and we want the washer and dryer too.  The seller says ok.  So the buyer then asks for….  You get the idea.  If the seller says no the first time, even if they ultimately end up giving up the kitchen appliances to make the deal, asking for something in return dampens the buyer’s motivation to ask for more.
Then at the structural inspection or at the pre-closing inspection the earlier dampening of the buyer’s motivation carries forward and dampens the buyer’s motivation to ask for too much later.
Rule #6: Never take the first offer too quickly or easily.
It sends a message that may make your job more difficult later. When you have an offer accepted quickly wait a few hours to call the Buyer. Then don’t emphasize that it was easy.
On this same topic, don’t tell the buyer they have bought the house or the seller they have sold the house just because they have an accepted offer…. because they haven’t. The house isn’t sold until there are attorney’s approvals, approved inspections, a mortgage commitment and all other contingencies are removed.  Instead of saying congratulations you got it. Say, “Congratulations you are on your way. We want to get the attorney’s blessing, get through the structural inspection and get through the bank process. I don’t expect any problems so I think you have a great home.”
Rule #7: Never gloat.
I remember earlier in my career walking into a seller’s house with a full price offer, all cash, and only attorney’s approval as a contingency. It had the closing date the seller wanted, no personal property.  I was proud and pleased. This one was going to be easy.
So I strutted in with swagger and a smile. I said, “You guys are gonna love this offer.”
Well, as you might expect.  They questioned me and challenged me about everything from the legitimacy of my buyer to where their cash was coming from, all because I didn’t have the good sense and sensitivity to realize these people are moving their lives.  I treated it like a game and they quickly reminded me of its importance to them.
The next time I had the situation. I talked about how hard I worked to get them as much of what they wanted as I could. I couldn’t get it all but I hoped we were close enough to come to an agreement. They looked at the great offer and said, “Rich, you did great. We can accept this as it is.”  Lesson learned.
Rule #8: When you hit an impasse settle everything else first and return to it.
As you present the offer to the seller and you reach an item they don’t accept, make a note to come back to it and get agreement on everything else first. Then, once you are through the offer completely, you will have isolated all the items, if there is more than one that requires negotiation.  You will find that at that point the negotiation goes easier. There is nothing else on their mind and they know that this item or these items will complete the transaction. By doing this you create a momentum that carries you to success more easily.
Rule #9: Get the other party to negotiate with themselves.  Never negotiate with yourself.
This is a more aggressive rule. Above, in Rule # 4 I said to always get your negotiations in writing.  This is the exception that proves the rule.
Watch.  I am sitting with the seller reviewing a Buyer’s Agent’s offer.  The seller is willing to accept it and doesn’t want to lose the buyer or the sale.  I say to them, “Let’s see what I can do without risking the sale.”
I call the other Agent (Agent is another one we capitalize) and ask if the Agent can reach their buyer. They say yes.  I tell them that the sellers are in the room and they are really close to accepting the offer.  If we could get another $1,500 it’s a done deal.  Could they check with the buyers and see if they would move at all?  And if they will, I want to get it wrapped up tonight while everyone is in agreement.
Ten minutes later the Agent calls to tell me they’ll do it or they’ll do $500 or $1,000 or nothing.  A vast majority of the time I’ll get more and make the seller very happy with me.  If the Buyers won’t move I call the Buyer’s Agent back in five minutes and to tell them that their offer was accepted as is and compliment them on their smart negotiation.
You may or may not approve of this methodology.  I am not condoning or condemning it.  I am just using it as an example of, “Get the other party to negotiate with themselves.  Never negotiate with yourself.
Rule #10: Do not use these rules and approaches carelessly.
When these rules are applied or are done awkwardly or carelessly they cause your clients to distrust you.  Be careful.
Done with care and confidence (and practice) you are going to have a lot more fun, be a lot more productive, preserve more time, and get the admiration and referrals from your clients because you will make them more comfortable in addition to getting them more money with your negotiating skills.

Newsletter August – 2010: The 7 Steps to Highly Effective, Low-Cost Marketing, – No Matter the Market Conditions!

Tuesday, 27 July, 2010

What’s the #1 Secret Successful Agents and Brokers
Are Using to THRIVE in This Complex Market?

The Answer May Surprise You…
It’s Potato Chip Marketing!

(a.k.a. The 7 Steps to Highly Effective, Low-Cost Marketing – No Matter the Market Conditions!)

By Jennifer Cummings

What is Potato Chip Marketing?  And why does it matter to YOU?

Today, more than ever before, it is absolutely necessary that you understand the difference between advertising and marketing.  You may THINK you know and understand that difference.  But after working with hundreds of agents and brokers from around the world, I’ve realized that most people don’t understand the REAL difference – the millionaire-making difference.

Here’s what I’m talking about…

Most real estate agents and brokers have advertising campaigns, but very few have effective marketing campaigns. Advertising and marketing are VERY different.

Advertising creates attention and promotes an image or brand. Marketing, however, compels someone (i.e. your prospective client) to buy or sell with you!

TRUE marketing is THE #1 way to build your business – especially in this market.

However, there is a crucial part to marketing effectively that almost ALL agents and brokers have been leaving out of their marketing campaignsAn effective and successful marketing campaign – meaning one that will truly appeal to your prospects – is all about THEM – not YOU. It’s all about GIVING – not TAKING. It’s all about practicing what I call…

Potato Chip Marketing!

And this isn’t just some random concept I created out of thin air.  This Potato Chip Marketing has been VERY successfully used by REALTORS® from around the world – and it’s tried and true…guaranteed.  Especially in these market conditions…

So, let’s break it down a little.  An effective and proven Potato Chip Marketing campaign has seven crucial steps:

1. Understand, Practice, Instill and Reinstill the Potato Chip Marketing Mindset in YOURSELF!

Potato Chip Marketing is what I call “give-to-get” marketing.  What exactly does this mean?  How does this work?

Imagine this…

You are on a reality show. To win $100,000, you must persuade 20 squirrels to eat out of your hand. Your only tool is a bag of potato chips. You are taken to a park where there are plenty of squirrels. Your instructions are that you cannot go more than 100 feet from a park bench.

How would you get the squirrels to come to you? You certainly wouldn’t run out and say, “Hey squirrels, come get these potato chips!”  Obviously, that would scare them off.

What WOULD work would be to lay out a trail of potato chips to attract them to where you are sitting. They would come to you only when they felt it was safe and when they felt they could trust you.

And this very same concept applies to your potential clients…
They will come to you when they feel it is safe and when they feel they can trust you.

Some people say that real estate is a numbers game. But, if you are “in it to win it,” that’s just not true.  No client wants to be treated as if they’re a number. They want relationships…they want trust…they want to “try before they buy.”

Potato Chip Marketing is simply about uncovering THEIR needs, building trusting relationships with THEM…and giving-to-get.

2. Target Your Market

When you ask most agents or brokers who their clients are, their response is, “Anyone who wants to buy or sell a home.”

The problem with that answer is that an effective marketing campaign is always carefully targeted to a specific group. Your message must match the audience. You must have that “message-to-market-match.”  You absolutely CANNOT be EVERYTHING to EVERYONE!  If you try that, you’ll be NOTHING to NO ONE.

For example, your marketing message to a luxury vacation penthouse target market would be drastically different than the marketing message you’d send out to first-time homebuyers.

The next step is to decide how you’re going to send this message out to your target market(s). Will it be a postcard, print ad, or a web marketing piece?

You must also decide the purpose of your piece as well as the message you want to send. Will you offer a special report or a checklist of pitfalls to avoid in today’s market? Will they call and leave a message on your 800 number or can they receive the item by going to your website and downloading it there?

How do you figure all that out?  Read on…

3. Research Your Target Market’s Wants and Needs

To generate REAL leads, you must know and UNDERSTAND what makes your target market tick.

How do you do that?

  • Look for commonalities.
  • Make it about THEM.
  • You MUST do your research BEFORE you begin your marketing campaign.

For example, are members of your target market concerned about schools, down payments, or neighborhood safety?

As you go through this process,
a key point to keep in mind is that
you’re NOT in the real estate business;
YOU are in the problem solving business
.

The better you are at solving problems and providing value, the better your business will be.

4.    “Hook” Them!

A “hook” is simply a headline or a hot button that your target market members have…and it’s NOT a headline or a hot button ABOUT YOU.

Because we are SO bombarded with advertising today,
it’s an absolute necessity that you cut through your prospects’ clutter.

Did you know that you only have one or two seconds to grab your prospects’ attention? The Reticular Activating System (RAS) is the brain’s screening mechanism for what receives our attention. While our subconscious can process up to a million bits of information per minute, we can only consciously pay attention to about 15 bits.

Bottom line…a great hook cuts through your target market’s clutter AND captures their attention.

5.    Keep ‘Em Reading!

Here’s the brutal truth:

If the piece is all about you – they will toss it.
But…if the piece is all about THEM – you have a chance!

You need to use what I call “coffee talk.” This simply means that you write the way you speak – as if you’re chatting over coffee with a friend.

Here are a few tips to remember about “coffee talk” copy:

  • “Coffee talk” copy is salesmanship in print…it’s about THEM and speaks to THEM in an easy, conversational tone.
  • Think about the conversation your target market members are having in their heads. What are they thinking as they’re reading this?  What objections or doubts are they having?  What worries keep them up at night?
  • Aim for the seventh grade reading level.

6.    Make It…Layout to Stand Out!

This one is simple.  Legibility refers to the “quality of print that can be easily read.”

Readability refers to the “quality of language that makes it easy to understand.”

With your marketing pieces…
use short paragraphs, bullet points, headlines, and sub-headlines to keep the eye engaged.

7.    You MUST, MUST, MUST Have a Call-to-Action

What truly differentiates advertising from marketing is a call-to-action.

Here’s the thing…prospects are begging to be lead – and they want free information (yes, even in the internet-age…prospects still want free information from YOU)! And remember, they want to try before they buy. On the other hand, they don’t want to talk to you right away.

Make it safe for them to contact you by creating a free hotline where they can order a special report or a checklist that will HELP THEM with their sale or purchase. You can also make the same offer online.

Ultimately, service and giving are at the heart of attraction – no matter what business you’re in – no matter the market conditions. We are paid according to the value we give. Get excited about creating value for your clients and being the resource to solve their problems.

When you approach your business with the Potato Chip Marketing, give-to-get mindset…
you’ll never want for business.


“We make a living by what we get, we make a LIFE by what we GIVE.”

~Sir Winston Churchill


Newsletter August – 2010: Value vs. Price

Tuesday, 27 July, 2010

By Verl Workman

As professional sales people, we are often faced with serious competition and in a challenging market it seems more and more agents are willing to discount their price in order to secure a listing or buyer.
While each agent and brokerage is entitled to set their own pricing, I have found that in most cases where discounting of price occurs, it is not because of a discount price strategy;  rather it’s an inability to show enough value to the client to get the price the agent would like.
I spent many years working state fairs and shows selling hot tubs and satellite dishes (yep, I was that guy!)  I love that hard core sales environment where the best sales people make great money, and the poor sales people watch and wonder how they can be at the same event and suffer with dismal sales.  The answer is very simple-  the super stars of sales know how to sell value.   I remember one year at the Utah State Fair, my Hot Tub booth was set up right next to the outdoor tents where all of the pitch people were.   These pitch people sold everything from Salsa Makers, Ginsu Knives to the Swiffer.   I loved to watch the pros work the crowds and see the hundreds of people walk away with their products.  I know for a fact that all of those customers came to the fair and personally committed not to buy anything!  But after seeing the pitch they could not resist.
Let’s look at how these sales people were able to sell so many products to mostly reluctant buyers:
Let’s take the Super Chamois; I learned several lessons from this great salesman.  He always began his presentation by taking a nice piece of carpet that was light colored and set it in a tub; he then took a Dr. Pepper and dumped it all over the carpet.  This first lesson was “pain” and all the audience members related to this painful experience of spilling something on their light colored carpet.  Next he took out the Super Chamois, and blotted it on the carpet—and you could actually see the Dr. Pepper being absorbed up into the Chamois!
As he made this demonstration he talked about all of the uses for this amazing cloth in your car, boat, , kitchen, bath tub spills, etc. and he showed the different sizes of Chamois.  With great enthusiasm he then created a package that included 2 of the large sizes and one of every other size and rolled them up into a nice bundle.  This is where it got really interesting.  He held up the bundle and gave the price of $19.99 (and I thought this was a great deal) but then with masterful precision he looked at the crowd and  said “I have 25 bundles ready to go right now, and for everyone who gives me their credit card right now, I’ll throw in a 2nd bundle absolutely free!”  It was like a feeding frenzy as people pushed to the front to give their cards to this great salesperson.
The lessons I learned that day were:

  • Pain is a great motivator (spilled Dr. Pepper)
  • Demonstrate the real product-  show dramatically how it works (the solution to your problem)
  • Close with enthusiasm and build a valuable package
  • Create urgency by increasing the value of the package

This simple concept of adding value instead of decreasing price can be effectively applied to real estate.  As an agent you have the ability to build a valuable marketing plan that increases your value.  Some of the things we do is hire a professional photographer to shoot the home, we post the listing on dozens of sites where consumers are looking for homes, track all the traffic using Obeo’s back office, we stage every home with a professional designer to ensure buyers can see themselves living in the home and much, much more. When we demonstrate all of these things to our sellers, they are embarrassed to ask for a discount because there is so much value.   In fact, at a listing appointment the other day I told the seller that I recommended that they pay an additional 1% above my standard commission rate so I could offer an incentive to any buyer’s agents who have buyers in the price range.  After seeing the value I provided they agreed to the increased commission.   Sales is not rocket science, it is the combination of understanding the pain or real problem of your client, then step by step creating a plan to solve this for their family.  This is done by increasing your value, not by decreasing your price.
Bottom line:  People make decisions based on what agent they feel can solve their problem. An agent who does not know how (or can’t sell themselves or their services) can only compete by discounting their price.  This is never necessary.  I personally choose to be a full service, full price agent, and this philosophy allows me to provide a higher level of service to my clients.

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