Real estate negotiation is a hot topic. Every month, according to Google, there are 700 searches for phrases similar to “how to negotiate the house price.” Couple that with 63.3% of businesses with no formal negotiation process having decreased net income… you have a MAJOR opportunity.
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When it comes to negotiations, specific tactics work overtime. So we’ve compiled a list of some common real estate negotiation strategies.
But we all know the price is not set before diving in. And neither is a seller’s immediate inclination to work with or not with you, the real estate agent or investor.
They could call you ready to sell but a few days later lose interest. Or they could call skeptically and leave the call prepared to sign.
How you negotiate with sellers and buyers determines these outcomes: what you say, what questions you ask… even how you talk.
We spoke with some experienced real estate investors and agents and asked them how they negotiate with sellers to close more (and more profitable) deals. We threw in some of our advice from decades of combined experience.
Keep reading to get real estate negotiation tips!
Or you can download our real estate sales negotiation playbook by clicking below — it’s got proven-to-work scripts, six questions to ask on every call, and a fool-proof seller scoring system.
The Pre-Negotiation: Base-Setting For The Verbal Negotiations
The first thing we’d like to mention is the pre-negotiation before diving into the 20 real estate negotiation tips our three experts offered.
Before you get on a call with a seller for the first time, they have some preconceived notions about who you are, what you do, and what your business is like. They’ve unknowingly gathered this information through your offline marketing materials (direct mail, bandit signs, etc.) and online marketing materials (your website and digital advertisements) and perhaps through referrals from a friend or family member.
Maybe, they come in thinking that you’re desperate for deals. Maybe, they come in thinking that you’re trustworthy and level-headed. Maybe they come in having no idea about what you do but are curious about how you might be able to help them.
Whatever they believe, for better or worse, it’s a direct result of the brand you’ve created.
That’s why building a well-respected brand in your community is so important. It makes sellers more likely to trust your opinions, value your input, and answer your questions honestly, making your job as a salesperson much easier.
But how do you set the stage for effective and profitable negotiations?
Here are some quick tips…
Add Credibility To Your Website — When someone visits your website, you want to build as much credibility as possible… as fast as possible.
This means including testimonials from past happy sellers, emphasizing that you’re a local real estate investor, showing your online reviews, being honest about your process, and sharing your company’s vision and mission.
Video testimonials are particularly effective. Here’s an example from a Carrot member (Carrot websites provide a lot of space for adding credibility and, for that reason, are the highest-converting websites in the industry!)…
Set The Tone — With the colors, words, and font you choose for your offline and online marketing materials; you’re creating a tone of voice for your brand. Maybe it’s stoic and professional.
Or maybe it’s casual and fun. Or maybe it’s kind and lighthearted. Or maybe it’s hasty and irreverent. Whatever the case, beware of the tone you create… because callers will expect that same tone when speaking with you on the phone.
Be Honest — One of the best ways to differentiate yourself from the competition is to be upfront and honest. Being dishonest will almost always backfire. It’s better to tell people who you help and how you can help them so that the right people dial your number in the first place.
20 Real Estate Negotiation Tips from 3 Negotiation Experts
1. Don’t Ask For a Price Right Away
This first tip comes from John Martinez, the founder of REI Sales Academy.
To avoid spending too much time talking to tire-kickers, many real estate investors will ask the seller for their lowest price within the first five minutes of the call.
John recommends not doing that. He suggests that investors focus on price only after you’ve sold the seller on yourself and your business (more on that in the next tip).
First, once you’ve spoken to the seller about your process and built some trust, the number they gave you will probably change… so why use it at all?
Second, hearing a seller request a high price will usually make the salesperson (you or someone on your team) feel unmotivated to continue the call. They likely won’t operate at the same level of salesmanship.
So while it might sound counterintuitive, it’s best to leave the price for last.
2. Sell Them Before You Make an Offer
This tip also comes from John Martinez, and it’s similar to the first tip… but about your offer.
You don’t want to hear the seller’s number until a little bit later in the call (as mentioned above) to build trust before discussing the price.
The other side of this coin is that you don’t want to make an offer until you’ve built trust and sold them on yourself and your business.
The real lesson of these two tips is that you don’t want to talk about price until the seller trusts you — a discussion of price is virtually useless, and negotiations even more so if the seller doesn’t trust you.
Additionally, holding back the price discussion will give you more time to gather valuable information on why the seller is selling, what motivates them, and why they’re selling to you. That information, in turn, will give you “ammunition” for the price discussion…
“I know that price is lower than you were hoping for. But do you think getting out of your tough situation is worth it?”
3. Be Open & Honest
The more honest you can make the discussion between yourself and the seller — the more open they are to share pertinent information with you — the easier it’ll be to negotiate.
Have you ever negotiated with someone, for example, where it felt like there was no way you would agree… but you didn’t know why?
Like there was some big unseen brick wall between the two of you?
That’s usually because the seller hasn’t told you something — maybe they’re not the real decision-maker, maybe they need a certain amount of money to pay off additional debt, maybe they’re going through something that they haven’t shared, or maybe they’re too emotionally connected to the home.
Whatever the case, most of those hurdles can be overcome if they’re out in the open… if you can discuss them honestly and with empathy for their situation with the seller.
Here are some of the questions John recommends asking to pull out important (potentially hidden) information…
- Ask the homeowner if they can hold the house for another 5+ years and what that will mean for them.
- Can they make the repairs themselves to resell at a higher price? And what will that look like for them?
- You’ll also want to address any concerns influencers bring up, including the seller’s family, CPA, attorney, etc.
4. Allow The Seller To Squeeze Every Dollar Out Of You
The seller wants to get as much money for their home as possible. And you want to pay as little for their home as possible.
So it might sound counter-intuitive — and again, this is advice from John Martinez — to allow the seller to squeeze every last dollar out of the deal.
But there’s a difference between getting hustled and allowing the seller to get as much money for their home as possible.
After all, the seller wants to feel like they’re getting an excellent deal — like they’ve negotiated as far as possible and gotten the best home offer.
For that reason, starting with your max offer is a bad idea.
Instead, start by offering $20,000 or $30,000 lower than (depending on the value of the home) your max offer. Then if the seller balks, offer ways for them to increase their offer — maybe you give better deals to veterans, or maybe they get a better deal if they move out faster or if they sign papers within 24 hours, or maybe they get a better deal if they clean out the home before moving.
“I can offer you an extra $10,000 if you sign the papers within 24 hours.”
“I can offer you an extra $5,000 if you clean out the home before you leave.”
This will give the seller room to feel like they’re negotiating with you and squeezing every last penny out of the deal when, in reality, you’re in control of negotiations the whole time.
5. Don’t Provide Options; Give Your Expert Recommendation
Maybe I’m alone in this, but I love when I go to a nice restaurant and ask for recommendations, and the waiter or waitress tells me what I should order.
Better yet, when I go to restaurants with tastings menus, I don’t have to decide what to eat.
I get to trust the food experts.
Just like the seller gets to trust you, the real estate expert.
Maybe you have a “menu” of real estate services that you offer — buying for cash, selling on the MLS, listing homes, etc. But just because you offer all of those services doesn’t mean you should offer all of them to everyone.
There is such a thing as having too many choices (think of the last time you and your significant other were trying to decide where to eat for dinner), and you don’t want to put the seller in that position, giving them “analysis paralysis.”
Instead, determine the service that would benefit the seller and only offer it to them (unless it later becomes clear that some other service would be more fitting).
You’re the expert, after all.
And they want your opinion about what they should “order.” Tell them your recommendation and leave your other services on the bench.
6. Extract Information
This next tip comes from Steve Trang, real estate investor, agent, and creator of “The Perfect Seller Appointment Scoring System“ (which you can access inside our free guide!).
In the last tip, we discussed offering the seller something that fits their situation.
But that’s not something you’ll be able to do until you’ve asked questions and extracted pertinent information.
This is your first goal on any call — to learn about the seller, why they called you, why they want to sell their home, what problems they’re facing, and how they think you can help.
The more you know about the situation, the easier it’ll be to work with them.
So ask a lot of questions.
Top-performing salespeople ask questions more than they try to pitch or convince…
Here are some top questions you should ask sellers (you can get a complete list in our free sales playbook!)…
- How are you hoping I can help you?
- This is a great home. Why would you consider selling to an investor like me?
- Who else has input on the sale of your home?
- Who will be impacted by the sale of your home?
7. Set Rules
So far, we’ve talked a lot about building trust with the seller, being honest and transparent, and asking questions to understand where the seller is coming from.
But before any of that happens, Steve Trang recommends setting some “ground rules” for the discussion before the discussion begins — this will allow you to maintain control of the conversation and keep it progressing in a productive direction.
What does he mean by “ground rules”?
First, Steve will let the person know how the conversation will go and what they can expect. He’ll ask for their consent to continue the conversation and that they’re transparent.
Here are a few of his rules…
- If I make you an offer, I ask that you’re comfortable with telling me “no” if the price doesn’t make sense.
- If you like my offer, you agree that you’ll put it in writing.
- Saying you need “time to think about it” is against the rules. Instead, you can tell me “no”.
Additionally, if the client gets off-topic during the conversation, Steve will ask them to pause and to write down everything they were going to say. Then he’ll ask a new question to progress the conversation.
This might seem intense.
But it’s an effective way to progress the conversation and build respect. And if done right — with empathy and kindness — it can be highly effective for closing deals.
8. Look For “No”
It probably sounds a little odd to try and get the seller to say “No” to you, but according to Jim Camp, the author of Start With No, that’s precisely what you should do.
Here’s how he explains it…
“‘no’ gets you past emotional and trivial issues to essential issues. We want decision-based negotiation, not the emotion-based waste of time known as win-win.”
“Embrace ‘no’ at every opportunity in a negotiation. Don’t fear the word; invite it. You do not take it as a personal rejection because you are not needy. You understand that every ‘no’ is reversible.”
When you allow the person to tell you “no”… when you try and get them to say “no,” you create opportunities to address their largest objections, to discuss the real worries and concerns that are stopping them from working with you.
You allow for progress to be made in the negotiations.
Price anchoring is just one example of this.
That’s when you intentionally make the seller a massively low-ball offer to find their bottom price — for a home you’re willing to pay $100,000 for, you might start by offering $40,000 or $50,000 to see how they react…
“Oh, heck no. I wouldn’t take a penny less than $80,000.”
Works like a charm.
9. Nail Your Branding
Branding is an essential part of any marketing strategy.
Just check out some of these stats from Oberlo…
- 86% of consumers say authenticity is crucial when deciding what brands they like and support.
- 81% of consumers said they need to be able to trust the brand to buy from them.
- Using a signature color can increase brand recognition by 80%
- It takes about .05 seconds for people to form an opinion about your website.
- The consistent brand presentation has been seen to increase revenue by 33%.
Now those stats are mainly referring to the e-commerce industry.
But if people care so much about working with authentic and trustworthy brands when buying a pair of sneakers online, how much more do they care about it when buying or selling a home?
Real estate amplifies the need for branding.
That doesn’t mean you have to build a super professional and formal website so that people will think you’re the bee’s knees — remember that authenticity is one of the key things people care about.
One of our favorite examples of authentic (and practical) branding comes from a Carrot member, Brian Rockwell — he’s an investor in Dallas and Fort Worth…
His homepage is clean, to the point, and semi-casual…
And his “Our Company” page takes authenticity and personability to a whole new level, with a picture of him and his family and the company’s core values…
This might not be a direct negotiation tip, per se — but your online branding sets the tone for negotiations. It helps determine how much people trust you and see you as the expert before you speak with them. That’s super important.
10. Use Scripts
If you’re an expert salesperson who knows your target market extremely well and you’ve been doing this for a long time, then maybe you don’t feel the need to use scripts.
But maybe you’re not a total expert yet… or you’re leading a team of salespeople who still have some stuff to learn.
Either way, scripts can help.
We’re not saying that you should stick to scripts even when the conversation takes some unexpected turns — as a salesperson, you need to be adaptable — but it’s good to have a script in front of you. That will help keep the conversation moving in the right direction if it gets off the rails.
And you can click below to get your free negotiation playbook & scripts — stolen straight from the desks of expert investors and agents ;-)
11. Avoid Negative Statements
When negotiating with a seller whose home is in distress, you might think that pointing out the problems you’ll have to fix — smoke stains, broken windows, trashed lawn, etc. — will help the seller understand why your offer is what it is.
And to some degree, that’s true.
You want to be honest with the seller about your costs so that they have more realistic expectations for what you can offer them.
However, it’s essential to be careful about bringing those things up.
The homeowner is likely attached to their property — maybe they inherited it from now-deceased parents, or they used to live there themselves.
Either way, there are emotions involved.
So instead of saying, “Look — your home is in terrible condition” or something similar, stick to the facts and avoid emotion: “We estimate that we’re going to spend about $XX,XXX to fix up the home. That’s why our offer is what it is.”
12. Trust The Follow-Up
As a salesperson, people are going to tell you “no.”
It’s bound to happen, so it’s best to become comfortable with that word.
The good news is that most deals happen during the follow-up process, especially when you’re making lowball offers.
People will say “no” initially because they’re surprised and upset. But then they’ll think about it. Maybe you send them a text message and an email or give them a phone call.
After a few months, they still haven’t sold their house on the MLS.
Now they’re ready to sell to you.
And if you’ve followed up consistently (say, a couple of times a month), they know how to reach you.
Ryan Dossey once told us that he closes 90% of his deals during the follow-up process, not during the first phone call.
So follow up consistently and trust in the process — most of your deals are yet to come.
13. Learn to Blank Slate
This tip comes from Jim Camp’s great sales book: Start With No
In that book, Camp suggests that every salesperson should have a “blank slate before entering into a negotiation.”
Take a deep breath and let go of all opinions, biases, emotions, and preconceived notions about how the negotiations should go.
“Your ability to blank slate is directly related to your ability to rid yourself of expectations and assumptions, two very bad words in my negotiation system.”
Because expectations and emotions add an unnecessary wild card to the negotiation table — if you’re too emotional, you might make a bad deal… if you’re frustrated from something that happened earlier, you might lose your patience… if you’re too opinionated and outspoken, you might miss out on getting vital information from the buyer or seller.
So before you negotiate, take a deep breath and remind yourself that you don’t need this deal and will just see how things go.
There’ll be many more deals in the future.
14. Understand The Numbers
Of course, “blank slating” doesn’t equate to being unprepared.
Before you negotiate with a buyer or seller, you should know the details of the deal as well as possible — how long the person has owned the home, how much equity they have, why they want to sell, your max offer, how much it’ll cost to fix up, etc.
Those numbers are critical for real estate negotiation because they’ll help you negotiate.
If, for example, the seller asks for an explanation of why your offer is so low, you can explain the math to them.
Knowing why they want to sell and/or how much equity they have can give you insight into their behavior if they shy away from your initial offer.
So yes, you want to blank slate.
But you also want to be as prepared as possible.
15. Include an Escalation Clause
As a buyer’s agent, it’s important to be as efficient and effective as possible. Your clients don’t want to spend the next 6 months looking for a home…
They want to find one that fits their desires, put an offer down, and close the deal.
To keep your clients happy, it’s in your interest to help give every offer they make a good chance of being accepted.
And that’s why you might consider including an escalation clause when the market is competitive — this says that if someone else offers more than your client’s offer, they’ll make a new offer that’s $5,000 or $10,000 more than the counter-offer.
Of course, you’ll want to clear this with your client first.
But it can be an effective way to help your clients secure a home.
16. Try To Meet in Person
Technology has made it super easy to “meet” with sellers.
You can text them, email them, or call them.
Heck — virtual wholesaling is now possible as well!
But still, nothing is quite as meaningful or powerful for negotiations as meeting in person — that is (and will always be) the quickest way to build rapport and show buyers or sellers that you value their time and respect them.
If you invest in a state where you don’t live, it might even be worth hiring a salesperson in that area to meet with sellers or buyers for you.
There’s a lot of power in face-to-face interactions.
So whenever possible, do negotiations in person.
17. Leverage Closing Costs
For real estate investors and agents, closing costs can be a helpful asset during negotiations.
Since closing costs are immediate and relatively expensive, many buyers and sellers would like to avoid them.
As an investor, reminding people that you will pay all closing costs can help push them over the edge. For example…
“I know that the offer is a little bit lower than you want, but keep in mind that I’m going to pay all closing costs for you — that would usually be somewhere around $10,000 — also keep in mind that I’m going to buy your house as-is and close in just a couple of weeks. Real estate agents aren’t able to do that.”
As a real estate agent, closing costs can be used during the negotiation phase between buyers and sellers to increase or decrease the home’s total price.
Buyers might offer to pay closing costs for a slight discount on the price of the home, and sellers might offer to pay closing costs for a slight increase in the price of the home.
It’s a vital real estate negotiation tactic to keep in mind.
18. Use an Expiration Date
Expiration dates are an effective negotiation strategy for agents and investors to keep in their back pocket.
Agents can add expiration dates to offers or counter-offers to increase the buyer or seller’s response speed. And investors can use expiration dates to increase urgency around their cash offers…
“If you sign the papers within a week, I will offer you $10,000 more. But you have to sign by Friday.”
For humans, urgency is a powerful motivator.
And offers without urgency result in people procrastinating on making a decision — or being wishy-washy with what they say.
That’s why expiration dates are so helpful.
19. Use Affirmative Language
Salespeople with a positive outlook and attitude often achieve better results — so stick to the bright side as much as possible.
InPower Coaching offers the following examples of “affirming language”…
“I appreciate everything you have offered, especially [example concession they’ve made], and I’m glad you like [example concession I’ve made]. Would you be willing to include [request]?”
“I understand you’re wanting X, Y, Z, correct? If this is true, I’m happy we can give you X and Y, but unfortunately, we cannot do Z for [reason].”
Notice how those statements keep things optimistic?
That’s because when you stay optimistic — and treat problems, concerns, or objections as though they’re overshadowed by more important benefits (in attitude, not in words) — the person listening to you will often follow suit.
They’ll be more optimistic and start seeing the value of what you’re offering.
So practice staying positive.
20. Use Storytelling
When someone has an objection, what do you say?
Imagine, for instance, someone saying, “Well, how do I know that you’ll be able to close in two weeks?”
You could look them in the eye and say, “Trust me. I will.”
Maybe that’s persuasive enough.
Maybe it isn’t.
Another option is to get in the habit of telling stories to overcome objections.
Here’s an example.
If the seller says, “Well, how do I know you’ll be able to close in two weeks?” I could respond to that by telling a story…
“Funny you say that. I was working with a homeowner last week who was in a real bind to sell. If he didn’t sell within two weeks, he risked getting his home repossessed by the bank. It was a huge mess. And reasonably, he asked me the same question. He said, ‘How do I know you’ll close in time so I don’t lose my home?’ — I’ll tell you what I told him.
I’ve worked in this market for a long time- I’ve helped buy and sell hundreds of homes — and never once have I missed a deadline. The service I offer sellers like yourself IS selling fast… and if I can’t do that… well, I don’t have much of a business, do I?“
That’s a lot more convincing than just asking someone to trust you.
So get in the habit of telling stories, and your negotiations will be far more effective and lucrative.
At least part of your success as a real estate agent or investor depends on your ability to negotiate, which means communicating clearly, listening well, building trust, and even knowing when to walk away.
You can use the 20 real estate negotiation tips above to become a better negotiator.