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Real Estate Negotiation: 8 Effective Strategies From A Kw Mega Broker
Negotiation is not just a skill — it’s an art. In real estate, knowing the keys to a successful negotiation is essential. Skillful negotiations can not only help you build a more sustainable career — they can also help you earn higher compensation, get more listings, and achieve more satisfying outcomes for your clients.
After 29 years and thousands of listing presentations, I have found that sellers, more than ever, want an agent who has solid negotiation chops and who is willing to use them on their behalf. If you want a long and successful career in real estate, you’ll need to sharpen your negotiation teeth.
1. Know your client’s desired outcome
Sometimes, you may need to lose a battle to win the war. Let me explain.
Before entering any negotiation, it’s crucial to define your client’s overall desired outcome. A well-defined outcome ensures that you won’t be swayed by pressure. It helps you clearly define where to compromise and when to stand firm. Ultimately, knowing precisely what you want streamlines the negotiation and allows you to effectively advocate for your client.
To define their overall desired outcome, you and your client should reflect on their reasoning for entering the negotiation and the motivating factors behind it. I guarantee their goal goes beyond simply owning or selling a property. Less important negotiations can complicate or even prevent clients from achieving their most important objectives. Your job is to prevent that from happening.
For example, if a client is upsizing because they are having a new baby, this overall objective outweighs all other factors. If the water heater in the home they want is 12 years old and the seller refuses to replace it, you need to keep your eye on the prize: a bigger home for them.
Once your clients have shared their overall desired outcome with you, you can reflect on the following questions prior to negotiating:
- How is their desired outcome guiding their decisions and emotions?
- What boundaries need to be set so you can help them achieve their desired outcome?
- How can you communicate with them that conflicting objectives may prevent them from achieving their overall desired outcome?
After clarifying your clients’ overall desired outcome and sharing how you will help them achieve it, you will need to learn to help manage emotions throughout the negotiations.
2. Manage emotions
High-stakes negotiations can be stressful, but your ability to remain impartial and composed during talks is crucial to achieving the best outcome for your clients. High emotions can cloud judgment and escalate conflicts, potentially derailing a deal.
If you want a positive outcome, it’s your responsibility to manage not only your emotions but the emotions of the other agent and your client. Good negotiations are based on logic, not feelings. Here are some key steps to keeping your emotions in check.
Restate the journey without judgement
Set the tone of the negotiation by calmly restating how everyone came together to this point. Keep in mind that everyone is trying to do the best they can. Stick to the facts without judgment, blame, or assumptions. In doing so, you help everyone involved stay grounded and start on an equal playing field.
Agree on the common outcome
What brought everyone together in the first place? In most cases, a buyer wants to get a fair deal on a house that the seller wants to sell at a fair price. So you would state it something like this: “Your seller wants to sell… and my buyer wants to buy, right?” Don’t move forward until you have agreement from the other party on this point.
Give permission to negotiate
Negotiations are scary for most people, so I like to start by giving them permission to negotiate. When a seller sternly says, “I’m not going to pay x% to anyone to sell my house!” I calmly reply, “I understand. I’m not going to let the compensation or fees get in the way of working together.” When it is between a buyer and a seller, I might say, “I’m confident we will find a solution that is agreeable to both parties.”
These techniques will only take you so far. To become a master negotiator you will need to become an outstanding listener.
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3. Develop your listening skills
Negotiation is about understanding the other party’s needs, pain points, and overall desired outcome. We accomplish this through listening. When you take the time to hear what the other side wants, you can craft a solution that addresses their concerns.
Sure, you think you’re a good listener, but use these techniques and see how your negotiation results improve.
Ask open-ended questions:
Open-ended questions deepen conversations by allowing the other party to share more about their goals and fears. You’ll gain new information that can help you restructure the negotiation as needed.
For example: “What do you hope to achieve in the sale of your home?”
Repeat the sentiments by sharing back to them:
This shows the other party that they’re being heard and strengthens the relationship. It also helps include them in solution-building, setting the stage for a negotiation that everyone leaves satisfied with. It’s about showing empathy and understanding while working towards a common goal.
For example: “If I understand correctly, you’re looking to get into your new home by September 15th because that is when your son starts school… Is that right?”
Ask for clarity when you need it:
While I disagree that there are no stupid questions, I do believe that they’re rare. If you’re listening and repeating back statements and still remain unclear on a detail, be brave and ask for clarity. This shows you care and sets the stage for the other party to do the same.
For example: “I’m sorry if I missed something. Can you tell me again how you are planning on using the proceeds of the sale?”
Read non-verbal cues:
Body language, tone, and the rate of their breathing can give you clues on your next steps in the negotiation. Specifically, whether you need to slow down, take a break, or just clarify a point. Ultimately, you want them to stay calm and relaxed so they can remain open and honest in their communication.
Avoid interrupting:
Do your best to avoid talking or correcting the other party while they’re sharing. This can interfere with their thinking, cause distractions, or worse, frustrate them to the point where they no longer wish to wish with you. Simply take a beat after they are finished speaking before you reply.
Speaking of “taking a beat,” it’s important we dig into the importance of what you may find extremely uncomfortable — silence.
4. Silence is powerful
Sometimes the best thing you can do in a negotiation is… nothing. Silence can be a powerful tool. When used correctly, it will give the other party time to gather their thoughts, prompting them to share more or rethink their position.
Don’t rush to fill the silence. A long pause after making an offer or countering can also often make the other party feel uncomfortable. No matter how awkward the silence, wait until the other party chimes in before responding.
Here are some great examples of times to remain silent:
- “What happens if you don’t sell the house?” (Silence)
- “How will not moving by September 15th impact you?” (Silence)
- “Who else will be affected by this?” (Silence)
- “My compensation rate is __%” (Silence)
Pro Tip
When using silence as a negotiation technique face-to-face with your client, don’t engage in intense eye contact, as this can make people feel challenged, and they may react defensively.
I have trained myself to keep a pen in my hand and stare at the page as if I am waiting to write down their answer. Sometimes, a few minutes feels like an eternity, but it is almost always worth the wait.
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5. Negotiate the deal before presenting to your client
After interviewing for literally thousands of listings, I have learned that sellers HATE IT when an agent hands them an offer and asks the client how they want to respond. I believe that my #1 value proposition for my clients is my ability and willingness to negotiate on their behalf. I do this by negotiating any offer before presenting it to my client. Here’s why:
- Point #1: The client doesn’t want to be the “bad guy”
- Point #2: It’s your job to negotiate for them… That’s why they hired you!
I negotiate EVERY TIME the other party requests ANYTHING. Yes, even when I believe my client will agree. They hired me to be the front-line soldier and defend them from taking any arrows from the opposing party. My job is to be the “bad guy” so they don’t have to.
“Bad guy” trope aside, it is important that you do this in a polite and respectful manner.
Here are some examples of what I like to call pre-negotiating:
“Thank you for your (offer, reply, request). Unfortunately, I don’t think this will work for my client’s situation. Is this the best your client can do?”
As the agent for my client, even if they are agreeable, I don’t think I can advise my client to accept your (offer, request). Can you go back to your client and improve this (offer, request) before I present it to my client?
It will shock you how quickly the other agent will agree to improve their offer or request. I’ve had agents verbally raise their price $30,000 just by me pushing back and negotiating their initial offer!
Pro Tip
Don’t forget to tell your client about your early negotiation efforts when you present the offer. They love to hear about how you are “doing your job” and “fighting for them.”
Take this to the next level by learning how to create win-win solutions using the Backboard Technique.
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6. Create win-win outcomes using the backboard technique
The key to positive negotiations is ensuring that both sides feel they’ve gained something (even if/when they haven’t). A common mistake agents make is being too agreeable. Being agreeable is a good trait when you are at dinner with friends. However, in negotiations, you and your client’s pleasantries will limit the opportunity for a healthy compromise and, ultimately, a satisfied client.
Example
A buyer makes an offer on a property and the seller quickly accepts the offer. The buyer may feel that they could have negotiated for more. Later, during the inspection period, the buyer hits the seller harder with a long list of repairs. Now, the seller is upset and tells the listing agent that the buyer can shove it, and the seller puts the house back on the market.
Both clients are now crying “foul” and your deal explodes over something as insignificant as a $20 bathroom fan and a garbage disposal.
The solution is to allow both parties to feel like they have gotten the most out of their negotiation. To do this, both must feel they pushed the other party right up to their limit… or the “backboard.”
Before your client agrees to the other party’s demands, advise your client to create a perceived “backboard” by pushing back on the negotiation. The truth is, it doesn’t matter how small or petty the item is. In fact, I recommend simple things that the other party can easily accommodate or are already planning on doing.
Examples of the backboard technique:
“My client will agree to your (full-price) offer. However, in order for this to work for my client, we must have all the inspections completed by the 12th instead of the 14th.”
“My buyer will agree to the seller’s inspection reply if the seller is willing to ensure the property is professionally cleaned prior to possession.”
This may feel insignificant, but it is a powerful negotiation technique. This is because both parties now feel they both got the maximum out of the negotiation. These seemingly small adjustments can lead to significant results.
All these extra negotiation efforts will not only help you close more deals, they’ll also help you earn more money using the next technique.
7. Juxtapose your offering & fees
A common negotiation mistake is setting a compensation rate that you believe is “fair” or “reasonable.” Oftentimes, this backfires and causes others to undervalue your services. When a client pushes back on your “fair” compensation rate, it not only feels terrible, but it leaves you with your back against the wall since you have little room left to negotiate.
I am going to assume that you offer more value than the standard agent, such as paying for high-quality marketing, staging, or using these negotiation techniques to help your clients keep more money. So don’t undercut yourself by having low fees that don’t reflect your commitment or services. Instead, juxtapose your unique value proposition (and fees) with what your competitors offer.
Begin by proposing a higher compensation. Your goal is for it to be greater than your competitors. This not only sets the stage that you are worth more, but it also gives you room to negotiate.
Examples:
“Our competitor’s rates are lower. My premium package starts at X%… but let’s discuss what features matter most to you.”
“I understand that our competitor’s rates are lower. My premium package starts at X%… but since you are going to sell and buy from me, you qualify for the lower rate of Y% if you commit to work with me today.”
Try this before knocking it! In the worst-case scenario, you may actually have clients agree to pay you what you’re worth! Then, you will have the pleasure of a successful outcome with the closing statement I outline next.
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8. Make a closing statement
The closing statement is a critical part of the negotiation. Prior to closing, either party may feel that they gave a little more than they initially wanted. To ensure that everyone is in alignment with the common goal and pushes through the final closing, I use a closing statement to seal the deal.
It’s a final declaration that acknowledges the work both parties have done to reach an agreement and sets the tone for a positive conclusion. The objective is to honor the efforts, compromises, and perseverance that all parties put forth to achieve a successful outcome.
Example closing statement:
“I’d like to acknowledge the efforts, sacrifices, and collaboration that got us here. This closing marks a new beginning for all involved. Great job to all!”
The closing statement helps create a memorable and positive experience for everyone, making them more likely to sign the final docs without disruption and ideally with smiles on their faces.
Continue to master the art of negotiation
Remember, negotiation isn’t just about getting what you want. It’s about crafting solutions where everyone feels they benefit. Mastering these eight strategies will not only help you become a better negotiator but also build lasting relationships that will continue to pay off in the long run, fueling your success as a Realtor.
Practice makes perfect when it comes to negotiations, and in time you’ll find a few tricks of your own. If so, please share them with us!
About Sean Moudry
A distinguished figure in the real estate industry, Sean Moudry is celebrated for his exceptional achievements and leadership. As one of Realtor Magazine’s 30 Under 30, Sean quickly established himself as a rising star in real estate. His expertise and dedication earned him a place in the prestigious RE/MAX Hall of Fame, a testament to his sustained excellence and impact on the field.
Further demonstrating his leadership capabilities, Sean became a Black Belt Team Leader at Keller Williams, where he played a pivotal role in guiding and developing top-performing teams. His influence extends beyond direct sales and leadership — he was named a top real estate coach by The Close and Inman News, two of the industry’s most respected publications.
Sean’s knowledge and experience are also captured in his best-selling book, The Ultimate Guide to Building a Real Estate Brokerage, which has become an essential resource for professionals looking to elevate their careers in real estate. His combination of hands-on experience, leadership acumen and coaching expertise makes Sean Moudry a highly respected authority in the real estate community.
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