Questionable Negotiation Strategies in Luxury Real Estate
Negotiation is a crucial aspect of real estate. It is a critical skill, however not all negotiation strategies are created equal. While some are ethical and effective, others are questionable and can damage relationships.
Six Questionable Negotiation Strategies
In this blog post, we will explore six negotiation strategies. By understanding these tactics, you can better navigate negotiation situations and achieve more favorable outcomes for your clients.
1. The Red Herring
The Red Herring tactic is often used to redirect the conversation away from important points or to manipulate the other party’s emotions. In real estate, for example, it’s like when somebody makes a really low offer, then sticks something in the offer to distract you from the really low price.
2. The Trial Balloon
The Trial Balloon negotiation strategy involves making an extreme or unrealistic offer to gauge the other party’s reaction. This tactic is often used to test the waters before making a more reasonable offer.
Politicians use this all the time and call it a leak. If people react negatively to the information given to them, they say, “Oh that was a leak and it wasn’t really true.” If people love it, they can say, “Yeah, we were working on that.”
3. The Low Ball
This is by far, my least favorite negotiation tactic.
People do it because they believe it reframes the person’s thinking. My advice to you on lowballing is to be appreciative of the offer, thank them for their interest, and get them to move forward by telling them about other offers.
4. Bait and Switch
The Bait and Switch negotiation strategy involves luring the other party with an attractive offer and then changing the terms of the deal once they’ve committed. This tactic is often used to get the other party to agree to a deal they wouldn’t have otherwise accepted.
This is becoming more prevalent in real estate, especially with cash offers. If you’re going to make an offer, the ethical thing to do is say, “Listen, I’m gonna make an offer, I am getting a mortgage, but I’m not making my offer contingent on getting a mortgage, because I know I’ll get approved.”
5. Are You Nuts?
Sometimes, people just go nuts! They’ll scream or go into tirades—either in person or on the phone. When this happens I try to take a deep breath and let them vent. Otherwise, I’ll do the silent treatment, which makes them go even more nuts until they run out of energy.
6. The Written Word
This strategy is similar to the Limited Authority tactic where people pre-print things into a contract. Certain agents or companies in your marketplace might have their own forms that aren’t standard Realtor Board forms.
It’s important to carefully read every form you get because this is a great tactic to bury things in boilerplate and you want to make sure you’re not taken advantage of.
Concentrate on the merits of the negotiation rather than the positions. Share on XHere’s the bottom line:
Look for the principles that are underlying positions. Why are they doing what they’re doing? What is it they really want to attain? What is their goal? What is their motivation? Look for solutions rather than getting hung up on the tactics.
Do you want to be prepared to spot other questionable negotiation tactics? I list four more negotiation tactics that you should be aware of in luxury real estate here.
