I enjoy playing real life poker (not the online games). I now only play an occasional home game for fun, but my poker skills have translated beautifully to the negotiation table.
The ability to intelligently and effectively negotiate is arguably the most important skill for a real estate agent to develop. Unfortunately, very few people give it any thought until they're in the middle of a transaction when the stakes are at their highest.
Oh yeah, I am absolutely going to litter this article with poker metaphors. Sorry... not sorry.
Let's talk about some negotiation tactics that might just help you successfully buy or sell a home and maximize your likelihood of a "good deal".
The Importance of Playing More Than Your Own Hand
This probably won't surprise you: most Realtors absolutely LOVE to talk.
Like nearly all salespeople, real estate agents tend to be extroverted; they find it easy to strike up a conversation with just about anyone. But that same trait gets them in serious trouble when it comes to negotiation.
It's much more important to find a Realtor that has solid listening skills and knows how to steer a conversation. Just like in poker, if you're not paying attention to the other players, then all you're doing is playing your own hand instead of playing everyone else's.
It never ceases to amaze me how much information I can obtain just by calling the other Realtor and asking a few questions. Then all I have to do is get out of their way as they give me more and more detail about their client's motivations, financial situation, and personality. They'll often tell me exactly what their client is willing to concede and nearly exactly their bottom or top price. Listing agents give away details about other offers and potential offers. Buyer agents give away their client's willingness to be flexible, worries that could become big ticket items on repair addenda down the road, and more.
(The phone is the key. Many real estate agents are, for some reason, deathly afraid of using the telephone and it keeps them from giving their clients the best service possible.)
Realtors aren't purposefully trying to undermine their client. It's just very difficult for many agents to keep from being chatty. It's who they are.
Related poker tip: The next time you're at a poker table, before you even look at your own cards, pay attention to the reaction of everyone else as they look at theirs (they will almost never notice you doing this). Many players will put their hands on their cards if they are bad and intend to fold. Also, make sure that you don't ever do that. You don't want to miss an opportunity to win an easy pot, regardless of what's in your hand!
THAT is playing other people's hands instead of just your own.
I'm not a fan of bluffing without first having some insight because it's all too likely to backfire. An example of this is when a listing agent tells a potential buyer they met at an open house that 2 offers are likely coming in, when, in fact, they've only had a couple of people express interest.
The listing agent assumed that this would motivate the buyer to get their own offer together. Instead, the buyer decides to move on because they don't want to be part of a bidding war.
This would be like bluffing at a poker table on the first hand in first position. Yeah, it might work, but you don't have enough insight to make the risk worth it yet. (More aggressive, risk tolerant players would argue with me on this one.)
When employed judiciously and properly, bluffing can be a powerful tool. Even more powerful is the ability to call someone else's bluff. Which just so happens to be my favorite thing to do in poker, too!
For instance, the bluff I see frequently is when a buyer's agent says that their offered price is the highest the buyer can go. Some listing agents would take the buyer at their word and work hard to convince their seller to accept the offered price, or counter-offer lower than they would have otherwise.
But, the listing agent and seller could call the bluff (and hope that it really is a bluff) by counter-offering as though the buyer didn't mention anything about affordability. There is a risk that this could make the buyer walk, but if the seller is on board with the strategy, it's usually worth it to find out how high the buyer really is willing to go.
A good conversation with the buyer's agent beforehand will often yield some insight on whether or not this is a good stategy.
The Bad Beat
It happens all the time. You lured your opponent into going all in with a pair when you've got pocket aces. And then they river out on you. There is no worse feeling in poker than a bad beat.
In real estate, the bad beat can come in many different forms. One of the most obvious is when you feel that you've got all the right information and put together a great offer. You hear back from the listing agent that the seller intends to accept it. Then at the last minute some other buyer swoops in with an all cash offer (or other favorable terms) and your offer is suddenly not looking like a winner.
On the other side of that equation, you may be the seller and decide to go with the cleanest offer, where the buyer's agent promises a smooth transaction and easy close. Then, somehow, their buyer morphs into a Martin Scorsese villain, demanding 3 pages worth of minor repairs, delaying closing, and then deciding to cancel the whole thing on a technicality.
While there's not much you can do to protect yourself from a bad beat in poker, there are a few options in real estate. This is where, again, gleaning the most amount of information from the other Realtor becomes imperative.
If your offer looks like it's going to get beat out by a cash offer, see if you can find out more details about it. That cash offer might not be as perfect as it sounds. You might be able to increase your offer, change the terms to be more favorable to the seller, or make an appeal to emotion.
For instance, sometimes a cash buyer may be an investor intending to demolish the home or turn it into a rental. The seller may have strong feelings for their home. As a buyer, you can use this information to your advantage.
Is the fact that your offer includes a financing contingency the major road block? While you probably can't suddenly come up with 400K in cash, you can provide additional proof of your financial stability, assuage their concerns about the financing going through, and let them know how much you are going to love and cherish their home.
But if, in the end, you get dealt a bad beat and there was no way out of it, that's part of playing the game. Find a good way to vent your frustration, pick up the pieces, and re-buy for another round. Because we're in it to win it, my friend!
Be Nice, Until It's time to not be nice
I'm breaking away from the poker analogies for a minute to mention one of my favorite movie quotes to use in business.
I'm a straightforward person and I've been called "intimidating" more than a few times. But, I am ALWAYS nice. Especially to clients, fellow Realtors, contractors, and other industry professionals.
Until it's time to not be nice.
I truly don't understand Realtors that act unconscionably rude all the time to try to get their way. It's not a smart way to do business, it's not good for your reputation, and it serves no real benefit to the client.
But it is incredibly beneficial to crank up the volume and stand firm when the occasion calls for it.
For example, during a transaction, the HOA (home owner's association) and management company of the condo complex refused to take a negative report by a general inspector and another report by a structural engineer seriously. This was going to torpedo the whole transaction (when both the buyer and seller were fully onboard getting it done).
I tried contacting everyone I could think of and tried every tactic I knew but the HOA seemed to have become an immovable road block. And, of course, no one would want to buy a place with a potential major structural issue. This was a huge problem for both the buyer AND seller!
I decided that the time had come to not be nice.
Simply through persistence and switching tone, I was able to get through to them. Without going into detail, in the end, everything worked out and everyone was happy.
Imagine if I had been pushy and a pain to work with from the beginning? If that's how you start out, there's nowhere to go from there when you need to get things done.
This tactic works very well in any type of negotiation. Being polite, respectful, sincere, and definitive is amazingly effective most of the time. So, when it comes time to not be nice, the change in tone bears A LOT of weight.
Are you ready to get in the game?
Contact me or fill out the form below. Let's play a winning hand! (Okay, maybe the analogies have gone a little too far...)