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2. Mastering The Art of Real Estate Negotiating

Once you know you'll be making a listing presentation to an owner, do you also give your best to make sure you'll be the last agent to deliver your listing presentation, too? If not, you could be missing an important ingredient that will have you listing a greater amount of properties than you currently are.

Why is this so? Well, to explain this clearly, we first need to take a look at how the owners of properties often see things from their perspective during listing presentations...

First of all, if one agent or team of agents clearly outperforms the competition and delivers a much more effective presentation to the owners, they'll probably be the ones who will obtain the listing. But in this day and age of intense competition among agents, one agent completely blowing away the competition is very rare. Oftentimes the owners are simply left with choosing instead between two or more presentations that may be fairly close to each other in terms of how impressively they were perceived. The only real exception here would be if a highly successful agent was competing against other unsuccessful agents for a listing. In this situation the listing presentations are likely to be perceived as being dramatically different from each other by the owners.

Keeping this in mind, an owner who will be listing their property has already decided that they want to get it on the market soon. They want to make sure they choose the right brokerage company and agent to list it with, but they also know that the sooner they make the right decision in this arena, the closer they will be to eventually consummating a transaction.

As the owners sit through each listing presentation, depending on how many listing presentations there are, there is often a feeling building inside of them to want to be finished with evaluating the agents, and simply get their property on the market. Because of this, if you're the last agent making your listing presentation, you could be in the best position to walk out of your presentation with a signed listing.

As long as the owners are honorable and don't sign a listing agreement with anyone before they've sat through all the listing presentations, there is no way that agents making their presentations before the final one can possibly walk out of their meeting with a signed listing. The only agent who can do this is the one making their listing presentation after all the other agents are done.

So if your listing presentation is the last one, you can benefit from the owners' growing desire to get their property on the market by accommodating them right then and there when you complete your listing presentation. As long as your presentation is perceived by the owners as at least being comparable to your competitors' presentations, you may be able to persuade them to sign your listing agreement right at that moment. But if you have to wait for the owners to sit through more listing presentations after yours, they may have already selected their agent before you speak with them again. And keep in mind that the greater the number of agents they will still be meeting with after your presentation, the more your presentation may tend to fade from their memory.

With all of this in mind, there are some exceptions to bring to your attention where delivering your listing presentation last may not be as impactful as you'd like it to be:

For example, if the owners are a full-time real estate investment company, a large company with multiple divisions or locations, or a property management company, delivering your listing presentation last may not be as important under these circumstances. In these situations, oftentimes the listing agent has been selected before the listing presentations even begin, unbeknownst to the brokerage companies themselves. Internal agendas, past relationships with brokerage companies, and simply trying to protect one's own rear end in the corporate world all contribute to this. Any commercial agent with ten or more years of experience in the business will definitely know that this is true.

But in situations where the owners are a husband and wife, an individual, or a small group of entrepreneurial investors with one primary decision maker, you will be extremely well served in scheduling yourself as the last potential listing agent they will meet with. In these situations, you have a great opportunity to walk out the door with a signed listing agreement when utilizing your highly-effective power of persuasion.

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2. Mastering The Art of Real Estate Negotiating

About 20 years ago I attended a seminar hosted by the organization I eventually became President of, the AIR Commercial Real Estate Association (oftentimes known internationally as "AIR"). I don't remember the name of the speaker that day, but he definitely was an expert at teaching people how to negotiate.

There was one simple phrase he communicated to us that has stayed with me ever since. In fact, the moment he mentioned the phrase I recognized how important it was for anyone negotiating in a business situation to understand:

"When negotiating, don't give a concession unless you get a concession in return."

When you look at and read this phrase, you may realize that it in fact forms the basis for the entire negotiation process. Because negotiation is about giving and taking, while continually moving towards reaching a successful agreement for everyone.

As a real estate agent, there are times when you'll want to implement this approach for yourself, and in doing so you will be handsomely rewarded, too.

With this in mind, one of the greatest mistakes I see real estate agents making is simply caving in when it comes to negotiating their commission. In fact, in situations like these, the conversation between an owner and agent might go something like this:

Owner:

"I only want to pay you a 4% commission instead of the 6% commission you're asking me to pay you."

Agent:

"OK."

And then, looking at it after the fact, going from a 4% commission to a 6% commission is a 50% difference in an agent's income for doing the exact same amount of work that they're going to be doing anyway on the transaction. With this in mind, the minutes you spend negotiating your commission often translate into the hourly rate of thousands of dollars per hour---quite possibly the most valuable time you'll ever spend as a real estate agent.

In continuing on with this line of thinking, recognize that people love to engage in the game of negotiating. Especially oftentimes when they feel they're in the position of power. These people also want to feel that they've worked towards achieving a result that is even more beneficial for them, too. And the person who stands toe-to-toe with them in negotiating, wins their respect at a much higher level also. So know this and utilize it to your advantage with the people you deal with in your real estate business. If an owner tells you they want to list their property with you at a 4% commission instead of a 6% commission, consider asking them a question like the following:

"Mr. Jones, let me ask you for a moment to pretend that you're a real estate agent working in my marketplace. There are ten properties that you can present to your clients where the owners are paying a 6% commission, and then there's one where the owner is only willing to pay a 4% commission. Now knowing that you'll make 50% more money on a transaction where the 6% commission is being offered, in what order would you then submit those properties to your clients?"

And now that you've got his attention, here are a few follow-up questions you may want to ask after waiting for his response each time:

"Knowing that your property will receive far less showings at the commission you're offering, how much money do you think this will cost you in terms of the lower purchase price you'll definitely receive when you finally locate your buyer?"

(Wait for his response.)

"And with that in mind, paying the fair market commission rate of 6% may actually now sound like a bargain to you, doesn't it?"

Now of course this won't work successfully for you every single time you utilize it, but it will definitely work enough times for you to make it very much worth your while. And at the minimum, it will probably help you to negotiate a commission rate that's a better one than what the owner initially offered you.

But in getting back to the original phrase I mentioned earlier from the seminar, always look to get something in return for what you're giving up when negotiating your commission. If you sense that the owner has finally reached the maximum amount of commission he's willing to pay you, it may be time to segue into negotiating for a longer listing period on the property, in exchange for you now accepting the commission rate he's agreed to pay you.

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