How To Negotiate More Effectively In High Stakes Real Estate Transactions

We’ve all had a deal where things didn’t go as planned. Maybe you were dependent on a particular deal to make your numbers for the quarter, or something went sideways between the parties involved. Or maybe the buyer absolutely needed the property and the owner wasn’t willing to budge.

These high stakes transactions are where negotiating skills come into play. Unfortunately, many real estate professionals don’t have this critical skill, so when the other party doesn’t simply say “yes,” they conclude that the deal can’t be done.

This is something that I’ve done a lot throughout my career because I specialize in buying properties from distressed buyers. Literally every transaction I do is high stakes because the homeowners are personally attached to their property—their home— and they’re no longer able to afford it. That often makes them angry, scared, combative, and negative, which unsurprisingly makes it a lot harder to negotiate with them. 

But you can overcome all of that, in many cases, with a proven blueprint for negotiating in this kind of situation. By mastering these techniques, you can increase your chances of success in carrying a deal across the finish line in a way that gives everyone a win.

Take Emotion Out Of The Equation

When approaching high stakes negotiations, it’s important to maintain an objective mindset and not to take things personally. 

Instead stay focused on the desired outcome and avoid letting emotions cloud your judgment. Let any hostility or insults be like water rolling off a duck's back. This is easier when you remember that their behavior towards you is typically more about them than it is about you because their emotions are a result of their situation. 

Focus on the numbers and other objective facts tied to the deal, and completely ignore any subjective details.

Communicate Effectively

Clear, effective, and frequent communication is crucial in any negotiation, and it’s even more important when the stakes are high. 

Ensuring both parties understand the goals, concerns, and expectations will help establish trust and reduce misunderstandings. That often requires some uncomfortable conversations, but doing so will help both to get all parties on the same page, but also to build trust through transparency. Conversely, a lack of communication leads people to make assumptions about the other party’s motivations and character, which can spiral out of control pretty quickly.

To communicate effectively, listen actively, use clear language, and be open to feedback. And most of all, concentrate on the best interests of your client and stay selfless in your approach.

Ask Better Questions

The quality of your questions determines the information you receive. 

Asking better questions will enable you to uncover the other party's motivations, constraints, and objectives. This information is invaluable when crafting proposals and negotiating agreements. 

It’s not enough to ask how much they’re willing to wiggle on price. You need to ask questions that give you insight into their business and personal lives—not to find more leverage, but instead to better understand their situation so you can better craft a win/win. 

Remember, negotiating isn’t a one way activity, and when you can give and take, especially on factors beyond just the price, your likelihood of successfully coming to an agreement increases exponentially.

Practice active listening and be genuinely curious to understand the other party's perspective.

Set Appropriate Expectations

Setting realistic expectations helps manage the negotiation process and ensures that all parties have a clear understanding of what is achievable. By doing this early, you can avoid disappointment and maintain a positive atmosphere during negotiations. 

This is important because some things simply can’t be negotiated, and knowing that upfront is critical. For example, if the buyer absolutely needs to get the price down to $200,000, but the seller absolutely needs to get $300,000 from the transaction to pay off their mortgage, no amount of sweet talking or hardballing is going to change either party’s position.

Be transparent about your own constraints and objectives, and encourage the other party to do the same, and you’ll create a more effective and less hostile environment, and avoid wasting time, energy, and frustration.

Be Transparent

Transparency is key to building trust and credibility in negotiations because it encourages a collaborative approach and increases the chances of a successful outcome.

In any negotiation, all parties involved will have opinions, positions, and needs that others involved may not like, but by being open and honest about it, you’re demonstrating that you’re not hiding anything.

This nurtures an environment of trust that makes the other parties involved safe to reciprocate by being open and honest as well. And that’s exactly the environment you need for effective negotiations.

I’ll also point out that this is easier said than done. It’s going to feel uncomfortable and awkward at first, but over time, you’ll get used to it and become a much more effective negotiator.

Conclusion

By taking emotion out of the equation, communicating effectively, asking better questions, setting appropriate expectations, and being transparent, you can significantly improve your negotiation skills in high stakes transactions. 

These strategies will not only help you achieve better results but also foster strong relationships with clients and partners, which also leads to more referrals too! 

Remember that successful negotiations are based on collaboration, understanding, and trust—master these techniques, and you will be well on your way to becoming a skilled negotiator.