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When negotiating, it’s important to understand the person across the table. They may have ironclad constraints that no amount of negotiation can loosen.
1. Your budget
It’s important for you to know a client’s budget before offering your services. This will help you determine if they are a good fit for your business and will allow you to set realistic expectations. It’s also helpful to weed out prospects who are not a good match for your services.
Asking about a potential client’s budget doesn’t have to be awkward or uncomfortable. Try using open-ended sales questions that will encourage them to open up and share more information about their project. You can also share about your past projects and the price range for similar services to give them a better idea of what you’re looking at.
Start by compiling a list of their fixed expenses, such as rent or mortgage payments, utilities and transportation costs. Next, include a list of variable expenses that may change from month to month, such as food and clothing purchases. Finally, make sure to include a line for savings in their budget.
2. The home’s condition
Many homeowners are reluctant to reveal information about their home’s condition. They don’t want buyers to go through the inspection stage and be surprised by a major problem that would stop the sale. Your agent should be able to provide you with some of this information.
If a seller lists their home as “as-is,” you’ll want to know what that means. It may only apply to certain elements, such as the swimming pool, a shed or broken appliances. It may also exclude things like drapes, chandeliers and furniture.
A sellers’ willingness to disclose information about a home’s condition can have a significant impact on its price. When homes are selling quickly, buyers are far more willing to overlook minor issues. If the seller is unwilling to make any repairs, expect to see lower offers. This is especially true in a buyer’s market. Buyers will assume that the home is in serious disrepair and will low-ball you.
3. The seller’s motivation
Knowing the seller’s motivation can make or break your chances of buying a property. Some sellers will only be willing to take a low offer, while others are chomping at the bit to sell. The key to understanding their motivation is asking the right questions and balancing professionalism with proper bedside manner.
Some red flags of low motivation include a refusal to negotiate, or a desire to play cat-and-mouse with you. Other signs of a motivated seller are a willingness to make selling concessions, or an open mind when it comes to price.
Some sellers might have a strong reason to sell, such as a job transfer, health issue or divorce. While these are all valid reasons to sell, you’ll have a better chance of making a sound offer if you understand what their true motivation is. This can be as simple as requesting more information about their situation. For example, you could ask what year they bought the home and how much they have invested in it.
4. Your negotiating skills
The ability to negotiate is one of the most important skills for success in work and life. It involves understanding how to frame issues, listen to the other party and be prepared to compromise. It also means being able to read the other person and anticipate their responses.
Skilled negotiators know what their own interests are and are able to make concessions without losing their principles. They are able to avoid common mistakes such as demanding too much or acting petty. They know how to make the other party like them and thereby increase their chances of getting what they want.
Negotiation is a complex process that requires repeated practice and preparation, including reading negotiation books and taking structured learning opportunities. While luck and magic play a role, practical experience and street smarts are the primary keys to successful negotiations. Emotions can also be used to your advantage, but they mustn’t dominate the negotiations or lead you astray.
