Share This Post
Negotiate Deals like the FBI
Whether you like it or not – negotiating is at the core of everything we do day in and day out. Negotiating is a skill that real estate professionals must practice, infuse with their own style, and master in order to manage client expectations, close deals, and build an empire.
I recently listened to a podcast with former FBI negotiator, Christopher Voss, who spent 24 years working in the FBI Crisis Negotiation Unit and was the FBI’s chief international hostage and kidnapping negotiator from 2003 to 2007. In this podcast, Mr. Voss discussed his six step negotiation process which I felt realtors and other real estate professionals may consider valuable for getting the most out of every potential deal they encounter here in South Florida. Below are the first three steps of that six step negotiating process.
STEP 1 (GET YOUR MIND RIGHT!): The goal of the negotiator is to have the other side open up and provide information. Negotiation is a discovery process in a consciously created collaborative atmosphere which allows you to get to the real reasons why the other side is resisting so you can address those directly and problem solve.
“Ok, that sounds nice but how do we get to the problem solving part?”
You must first disengage from what your ego is telling you to feel and say. The other side is holding information back so you must get them to start talking. View yourself as a therapist, and as a therapist, your main goals are to actively listen and evoke trust, validation, and rapport. This will allow you to obtain information which will uncover the clincher, EMOTION (but more on this in STEP 6).
Takeaway: Less Rambo, more Dr. Phil. Start slow. Avoid “cutting to the chase” because it could be interpreted as an attack. Use a friendly or calm voice. Avoid making the other side feel as though they are NOT in control. When people are not in control, they lose it.
STEP 2 (PLEASE,…AFTER YOU): Let the other side go first, especially when negotiating price, to get a rough blueprint of their perspective. You can then analyze their perspective and plan your strategy. Mr. Voss advises that conversations can be long-winded but 90 seconds of the conversation is where you find that key piece of information, or the gold nugget.
In real estate, here are two important reasons NOT to go first: 1) you might come in too low and leave money on the table, and 2) you might come in too high. If you come in too high, then you might lose the opportunity to make a deal. Additionally, consider that price is not the only term. The other side could make concessions on other terms and conditions that make price much less important. For example, the inspection period, home sale contingency, seller credit(s) based on appraisal results, specific closing provisions, etc.
Takeaway: Be a gentleman or gentlewoman. Let the other side go first. Actively listen. You are looking for openings into a longer conversation with them which will provide you with more information as to what its really going to take to get the deal done.
STEP 3 (GETTING TO NO):Stop trying to get the other side to yes. Since the other side woke up this morning, people have been trying to get him or her to yes: advertisements, social media, their spouse, kids, and maybe even an irritated Starbucks barrista. If you get them to no, they won’t feel like they are getting cornered into a yes. People have a good radar for ingenuity. Ingenuity shatters respect and adds layers of defense. Getting to no is a tool to earn their respect. Remember that people feel the need to be in control. Their emotions also need to be stable. When you get to no, you preserve their autonomy, make them feel protected, and promote the feeling that they can be blunt with you. Therefore, their emotions calm. When their emotions calm, the effectiveness of their decision goes up. They can take a closer look at what you are offering.
Takeaway: Consider using the “no” approach with ranges when negotiating the sales price on the contract. Unless you are a hypnotist, you can only push the other side to a certain number. Ranges are good way to figure out whether you should continue to invest in this negotiation but also to introduce the concept of being flexible into the negotiation atmosphere. Consider asking, “Would it be a ridiculous waste of our clients’ time to consider the following range (example, $300k to $330k)?” or “Based on (range and/or other facts like comparables), is negotiating and getting this property under contract today a bad idea? Another strategy is using specific numbers instead of rounded numbers. Using specific numbers communicates the idea that you have done your homework and don’t have much room.
STEP 4 (THAT’S RIGHT, THAT’S RIGHT, THAT’S RIGHT): During the conversation, literally look out for the words “that’s right”. Getting to “that’s right” lets you know whether you are on the way to Commission County. You get there by mirroring and labeling. These are tools for building trust and rapport and keeping the information flowing to you.
“Mirroring and labeling? – I think you lost me…”
Mirroring bridges the gap between two opposing views, which confirms you are actively listening by showing attention and empathy. Mirroring involves using the last 1 to 3 words that the other side spoke to you.
Use labeling when you specifically observe aggressive or hesitant behavior. Aggression or hesitation can be interpreted as a subconscious cry for help to you in order to reach a deal that works. You label that behavior with words like “sounds like”, “looks like”, and “it seems like”. By labeling, you convey interest in and validation to other side, and they then lower their defenses in appreciation. Labeling, therefore, promotes trust. Here are a few examples: “it seemed like you were hesitating when you couldn’t provide me with a range”and “it sounds like you have put a significant amount of work into selling this property…I understand why there would be strong opinions as to why this property must sell for $350,000”.
Takeaway: So far in the process, you are the therapist, actively listening, constantly outsourcing the talking to the other side, and looking for opportunities to mirror and label to continue the flow of information until you hear “that’s right”.
STEP 5 (CALIBRATE TO REGULATE): Time to ask “calibrated” questions based on the information you’ve received so far but step and repeat in Step 4 to build rapport and trust or trigger conversation as needed.
This step is based on people’s love of being asked open-ended questions that start with “what” or “how”. These questions make the other side feel in control and like they are educating you. Therefore, your role when asking and formulating these questions is to play the role of the innocently ignorant individual.
When done right, “how” questions reverse the script. They put pressure on the other side to come up with the answers and to consider your problems when making their offers or counter-offers. Examples include: “how am I supposed to do _____”, “what is your biggest challenge for your client consider ______?”, “how do we make this work considering your client is asking ________?”, “how am I supposed to meet you there if my buyer is only approved for _______”.
Takeaway: Ask these questions over and over to keep the collaboration going until there is nowhere to go (i.e. you’ve got them to their bottom line).
STEP 6 (BEND REALITY LIKE BECKHAM):This is real FBI stuff right here. This step involves influencing the other side emotionally by using emotional drivers you picked up from your time as the therapist, labeling, mirroring, and asking “how” questions.
Emotional drivers are revealed when people disclose their problems and unmet objectives. A common driver is fear of loss. Getting to the specific emotional driver is primarily the reason why you have kept the information flowing to you. When you get to what people need, you can offer a vision of their problem which uses your proposal as the best option. For example, “I know this property has been listed for ___ days,…(pause) what is going to happen if you don’t sell this house? My client is willing to put an offer today but they can only offer $350,000.00.” Side note: whenever you want to imply “take it or leave it” without antagonizing the other side, Chris Voss advises that you use what’s called the late night radio DJ voice. Think Freddie Cruz from HOT 105…slow, soothing, and low tone.
Takeaway: Actively listening, building trust/rapport, triggering conversation, obtaining information, keeping the information flowing, and asking the “how” or “what” questions should ultimately uncover and set the table for the emotional driver that will allow you to seal the deal.
BEFORE NEGOTIATING, it might be help to prepare a worksheet where you outline 3-5 possible “how” or “what” questions and 3-5″ possible labels to trigger conversation or keep the information flowing to you.