Negotiation - Real Estate

How To Pre-Qualify Clients §

It is not a winning formula for agents to try to impress clients during an initial conversation. Before offering free advice, ask Proof of Life™ questions to make sure you’re not wasting valuable time that you’ll never get back. At the end of the day, you can always make more money. But you can never make more time.

Before someone calls you to buy or sell, they have already spent a lot of time researching the topic and researching homes on their own. They have for the most part, already decided who they want to use as a Realtor, decided their budget, and decided the house they want. In other words, you need to make sure you are not wasting time on people who are most likely not going to work with you and are just trying to get free information out of you. They will take something you said or do and ask the Realtor they do go with to do that for them. Don’t take it personal, we all do this.

Asking Proof of Life questions answers two essential questions:

• is there a deal at all, and is it with you?

It enables you to determine whether you’re the favorite or the fool. Regardless of whether you’re the favorite or the fool, there is no reason to cut your commission.

Ask soon as you are asked to help someone determine the value of their home or help someone sell their home, you need to ask.

• Would you be opposed to having a 15 minute phone conversation first? Is now a bad time?

As a real estate agent, your Proof of Life questions might look something like this:

• Why are you considering me as your realtor?

The more robust the response is here, the better. If they tell you that they’re in your office because they saw your flier in the mail, that should raise an alarm. If they tell you that they extensively researched your online presence, found favorable reviews on Zillow and Trulia, and loved the content you’re promoting on social media, you might very well have a fish on the proverbial hook.

• You are probably interviewing other agents. I know you have a good reason for that, what is the reason for talking to other agents?

• How did you choose your agent the last time you had to sell or buy?

  • What is you process on picking an agent?
  • If you had to choose an agent right now with what you know, who would you pick?

This is an important question to ask because the client is most likely going to choose their agent the same way they did the last time they needed a realtor. If this is their first time, someone (a trusted advisor) is going to recommend someone or tell them how to find a good realtor. This is one of the top 5 most important decisions in their life, they are not just simply buying a slice of pizza of a menu. Your job is to find out if you are the Realtor that was recommended or if you fit their criteria of a “good” realtor.

• Make sure you are making an emotional connection
• Is the conversation collaborative (not only you talking)
• Are they willing to make some kind of commitment up front?
  • Commit to doing the last listing presentation with you
  • Meet you in your office
  • Commit to doing business with you before you do your listing presentation

When a potential client views you as being the same as everyone else, you’re in an uphill battle. If that is the case, turn the conversation back to them with a no-oriented question:

• Are you against me walking you through some of the things that I bring to the table?

At this point, you can lay out your battle plan. But remember, you don’t want to give up too many of your secrets. Keep it generic with statements like this:

• I want you to know I’m not the type of agent who’s going to give you false hope. I’m going to be candid with what we’re up against and what the lay of the land looks like from your perspective.

• Follow this up with an Accusation Audit™ and defuse potential negatives harbored by your soon-to-be client:

• This is probably going to catch you off-guard. Pause… because you want their brain to go to the far end of the fear spectrum before bringing them back home.

• Continuing the conversation, you might say:

• I’m a full-service, full-commission agent. I’m going to do everything humanly possible to make this the best experience for you. If you want someone to raise your expectations only to disappoint them later, I might not be the person you want to go with.

You know what happens when you talk like that? You drive home the point that you’re a straight shooter who can be trusted—and someone the client should do business with. In other words, you’re establishing that trust-based influence we talked about earlier, and you’re proving that you’re in the business of trust. Once they know that they can talk to you and rely on you, they’ll want to do business with you. Ninety percent of real estate agents will recoil in horror reading about this kind of approach. That is because they’re so deathly afraid of driving business away. But never forget, losing a deal isn’t the biggest sin you can make as a realtor: Taking a long time, giving up a lot of information, and still losing is.

What are we trying to avoid?

• Getting a call from someone you have never met telling you they want you to sell their home

• You preparing a market analysis on the area, analysis on their home, a beautiful powerpoint presentation, printing listing agreements, printing color copies of information you want them to know about the process.

• Driving to their home to see it and present all the information you gathered and prepared

• Having the client go with their relative that has no experience and now has all of the information you provided the sellers in your 2 hour meeting.

• You need to screen your potential clients up front to make sure you are dealing with people who you want to work with, who are ready to buy/sell, and who truly want to work with you.

Tips §

• People respond favorably to requests made in a reasonable tone of voice and followed by a because reason (even if the reason isn’t great)
• Offer bonuses to get a yes
• Set your price higher/lower that what you really want to get/buy
  • Buyer (start low and negotiate up): 65%​ → 85% → 95% → 100%
  • Seller (start high and negotiate down): 135%​ → 115% → 105% → 100%.
• Use an Accusations Audit​ to pre-empt the first offer to take the edge off
  • You’re going to think I haven’t done my homework
  • You’re going to feel insulted by my offer
  • I’m embarrassed to tell you my offer
• Use lots of empathy and ways of saying No in between to get other to counter before I increase my offer
• Use precise, non-round, odd numbers
• How to say No politely:
  • How am I supposed to do that?
  • Your offer is very generous. I’m sorry that just doesn’t work for me
  • I’m sorry but I’m afraid I just can’t do that
  • I’m sorry, no
• Predictability builds trust. Call your active clients every Friday to give them an update. Also inform them if you are not going to be available a certain day or time. If you are predictable on when you will call them (even if there is no update), your clients will begin to trust you. Remember, this is a stressful environment. They don’t know when it’s going to end or how it will end. You need to help the situation but being predictable and letting them know they will hear from you every week @5pm.

How to ask for 6% commission on a listing? §

Right up front before you get to the listing presentation. Talk about the elephant in the room, commissions.

Tell the seller:

• In a calm but firm voice
• I am a full-fee full service Real Estate agent
• I charge 6% commission (I get 3.5% and the buying agent gets 2.5%)
• Silence​, at least 4 seconds to let your words sink in
  • Note: If you are explaining why you charge 6%, you are already loosing

It is better to find out very early in the process if you are going to work with this seller or not. It would be a waste of your time to go over the listing presentation and not get the listing.

The listing presentation is not really that valuable as all you are telling them is how the market is doing, how much their home is worth, and what is your strategy to get their home sold. This makes you look just like every other agent out there and this means the seller will just pick the agent with the lowest commission. This is not a good situation for you.

What makes you valuable?

The agent that is able to navigate through the entire selling process and walk the seller though it is what makes them valuable. The journey can be rocky, this is the top 5 most stressful events in peoples lives. Regardless of their experience, buying/selling is a high stress environment. Your marketing plan is not what navigates the stress environment for your client. Your process and your emotional intelligence are what navigates them through this stressful time. What is on the line for your client? Their hopes, dreams, and future is on the line.

You can also deliver this in a top 4 things on why you should not pick me as your Realtor:

Tell the seller:

• Late night DJ voice
• Before we continue, I want to share with you a few things that might be a deal breaker. Here are the top 6 reasons why you should not pick me as your Realtor.
  • I am a full-fee full service Real Estate agent
  • I charge 6% commission (I get 3.5% and the buying agent gets 2.5%)
  • I like to price properties in a price that would make the property sell and sell quickly and this might be a price that is lower than what you would like to sell it at
  • I am going to encourage you to invest in preparing the property for sale and you are going to need to stage the home
  • The last thing, is that I do not work 24/7 but when need me you are not going to get me. But you are not going to need me at 10 o’clock in the night. My phone goes off at 6 and I don’t work saturdays.
  • Silence​, at least 4 seconds to let your words sink in