Thursday, March 5, 2015

"Winning" and "Losing" in a Real Estate negotiation.
Can all parties really win in a Real Estate negotiation? Or does someone have to lose?

Over the years I've made many observations about the Real Estate business, and business in general, regarding the subject of negotiations, and there is ONE prevailing datum that seems to be in operation: In order for someone to win, someone else has to lose. But is this really true?

Let me elaborate. Let's say I represent a seller. They have a property for sale. A qualified buyer makes an offer. It's a good offer, well within market value, with a strong bank letter and credit profile. In fact it’s the best offer on the table. And yet the seller, thinking they have to "win" the negotiations, end up losing the buyer over "pennies" or some minor terms point. Conversely, Let's say I represent a buyer. They find the perfect property, make an offer slightly under market and comparable data trying to get "a deal" (win), start negotiating with the seller, but lose the deal over "pennies" or some minor terms point.

In both scenarios the deal was lost because neither party wanted to "lose" the negotiation.

I'm sure anyone in the Real Estate industry (or any business for that matter) has 100 stories of how a buyer or seller couldn't get out of their own way to make a deal.

So does a good negotiation have to have a "winner" and a "loser"? Or can both parties "win". Is a WIN-WIN scenario in a negotiation even possible in a Real Estate transaction? Is business just like a sport where there has to be a winner and a loser?

I've been giving this a lot of thought lately and I think although there is an inherent competitive nature to all negotiations, often times they can spin out of control wherein both parties lose site of the goal of the negotiation, and simply having to "win" takes over.

The key to negotiation success is for the ability of all parties involved to be able to take on the other parties' viewpoint.

The buyer should see the deal through the seller's eyes, through their needs and wants. Conversely the seller needs to be able to see the deal through the buyer's viewpoint and their needs and wants.  It is through this mutual understanding, and most importantly WILLINGNESS of each party to see the deal through the eyes of the other, that a true "meeting of the minds" can take place.

I'll admit this is not an easy task. There are mechanisms in the mind, cultural differences, and the false data of "having to win" that all contribute to preventing this ideal scene. But I have found that with practice anyone can cultivate the ability to take the other guys viewpoint.

So the next time you are locked in a negotiation that more resembles two Longhorns butting heads, take a step back, and look at the deal (situation) through the eyes of the other guy.

Just "BE" the other guy, and then look. It works.