The Bank of Canada (BoC) slashing the overnight rate three times in a row is certainly a good thing. However, a big impact of these rate cuts on the housing market is less likely to happen overnight. In fact, it will take a much bigger drop in interest rates before we see the housing market pick up again.
So, what does this mean for Realtors and real estate brokerages in Mississauga?
Well, with fewer clients coming into the market, Realtors have to put in their extra best to close each deal. This is where strong negotiation comes into play. Here are the negotiation tactics you should and shouldn’t try in this housing market.
Negotiation Strategies That Work Well for Realtors
“The Unlikely Offer”
An unlikely offer means offering a slightly higher price than what the seller is expecting. But you pair this high price with a request for a longer closing timeline or building a fence around the yard. Here’s how this negotiation strategy will work -
By putting a higher price on the table, you show the seller that your home-buying client is really serious about the deal. Because of this, the seller might be willing to oblige with the request that you have paired with the offer, helping your home-buying client win a great deal. Also, who knows, since the seller is getting a higher price on their offer, they might agree to offer some other concessions to the buyer.
“The Silent Treatment”
After you and your real estate brokerage team make an offer on behalf of a client, resist the urge to follow up with the other party right away. Instead, give the other party some space and time to think over the offer. When the other party has this time to digest your client’s offer, they might start to see its value more clearly.
But don’t get us wrong - we do not mean that you should completely disappear after making the offer. After a reasonable pause, do check in to see with the client on where they stand with the offer.
“The Emotional Appeal”
While sitting at the negotiation table, you can share a story with the client that relates to the situation at hand. For instance, if you’re working with a young couple who is buying their first home, you might share an emotional tale about your first home-buying experience with your other half. Maybe you can recount how excited you were to finally paint the walls or how you felt the first time you walked through the front door.
By sharing such personal anecdotes, the professionals of a real estate brokerage in Mississauga can create a connection that makes their clients feel understood and valued. They’re more likely to be receptive to the Realtor’s suggestions and proposals when they feel a bond with the expert.
“The Scarcity Tactic”
If you know that there are multiple interested parties for a property you’re helping to sell, it’s smart to let the other side know. This negotiation tactic plays on human psychology - people often want what they believe they can't have (in this case, the home).
By letting the buyer know that there are other buyers who are knocking on the doors for this property, you create a sense of urgency and competition. This can push the home-buying client to act faster and with more commitment.
“The Surprise Concession”
Let’s suppose you and your real estate brokerage team are in the middle of a negotiation and things start to get a bit tense. In such a situation, instead of strictly sticking to your initial terms, you must consider making a surprise concession - something the other party wasn’t expecting.
This could be lowering the fee, including certain services in the deal (moving, cleaning), or being flexible on the closing date. By doing this, you not only show that you’re willing to compromise but also create a positive shift in the negotiation atmosphere. When the other party sees you’re going the extra way for them, it can soften their stance and encourage them to reciprocate.
“The Golden Rule”
When you approach your clients and the other party with kindness, it sets a positive tone for the whole negotiation process. This is especially true for the other side - when they feel they are respected, they’ll be open to more creative solutions and compromises. Also, a positive negotiation experience can help you strengthen relationships with clients and other professionals, which is essential in real estate. People remember how you and your real estate brokerage team in Mississauga made them feel and that can lead to referrals or repeat business.
Ineffective Negotiation Tactics That Realtors Shouldn't Use
“The Hardball Tactics”
When you come at a real estate client with a tough stance in your negotiation, they may become defensive and less willing to collaborate. For instance - maybe you tell your home-selling client that if they don’t lower the asking price by X%, you’re out. This way, instead of seeing you as a helpful expert in their home-selling journey, the client might start seeing you as an adversary.
“The Lack of Preparation”
Most often, the professionals of a real estate brokerage walk into a negotiation without doing research on the housing market. However, this lack of information can make you look uninformed and put you at a disadvantage at the negotiation table. After all, your client expects you, their Realtor, to know about the real estate market stuff. Because of this lack of preparation, you might also end up getting your client to agree to an unfavourable deal.
“The Bluffing”
Imagine you’re in the middle of a negotiation and you just start telling tall tales of how another buyer is ready to pay more for the property. In case your client finds out that the latter was a stretch, they might question your honesty and refrain from working with you in the future.
“Ignoring the Silent Cues”
The top professionals of a real estate brokerage know well that in a negotiation, sometimes body language speaks louder than words. For instance, if a client is sitting with arms crossed or avoiding eye contact with you, it means they’re unhappy about where the deal is heading. Hence, in case you focus on only what the client says, you might think they’re all in when they’re actually unsure. This disconnect can lead to a lot of misunderstandings and worse, stall the negotiation process.
“Nitpicking About Little Things”
During a negotiation, Realtors often get in full battle mode and find themselves debating even over small things. This “fixating on small things” attitude can frustrate both the opposite party and your own client and stall the progress of the deal. While you’re getting bogged down on small issues such as minor repairs or a specific closing date, you can lose sight of the bigger picture - helping your client buy or sell a home.
Your Negotiation Skills Can Make or Break Your Client's Chances in a Deal
Your negotiation strategies can truly make or break a deal for your client, impacting everything from sales price to contract terms. Hence, you need to essentially hone your negotiation skills to boost the success of your deals and also build trust with your clients.
There are tons of ways through which the professionals of a real estate brokerage in Mississauga usually sharpen their negotiation skills. They read books or take courses focused on the best negotiation strategies for Realtors. Role-playing different negotiation strategies with colleagues can also be a fun way to sharpen your negotiation skills. Lastly, don’t forget to try out the winning negotiation strategies that we mentioned above in your next real estate deal. We’re sure these strategies will help you and your real estate clients win a great deal!