Pure Negotiation with Lee Woodward and Matt Steinwede

There is an art to negotiation which is often misunderstood when real estate agents consider what needs to be done or said, and even how a situation makes people feel.

Negotiation techniques used in Australia and New Zealand are different to the American methods. Mat Steinwede, from McGrath Central Coast, developed the Mat Steinwede Real Estate System on the selling process because there was nowhere in Australia to study negotiation. CDs outlining negotiation could be bought from America, but Mr Steinwede said these weren’t always right for this market, so he created his own system. Here he explains how effective communication can make the difference when winning the sale, and even the sale price.

Negotiation begins immediately

Real estate negotiation is not about closing the sale; it’s about confirming the information and understanding the situation, ensuring everyone is comfortable. Mr Steinwede explains that effective negotiation starts when an agent meets someone. “It starts by listening to what they are saying, understanding the message that they’re getting across to you. Not so much the words that they are saying, but the feelings around what they have experienced before, what they want and where they are going. It’s about really listening and grabbing on to that information,” he said.

In real estate, the fee, price, terms, concessions, marketing, listing, expiry of the listing and the final fee are all part of the negotiation process. When discussing these topics, Mr Steinwede said the key to successful negotiation was to feed back to the client information that they had already given you. “When I meet a buyer I think to myself, this is where I start negotiating; this is where I start gathering all my information about how much they have to spend, what they really like, where they live, what are they looking for.”

Using reference points

Instead of getting frustrated when showing buyers properties and they say they have found others they like better, it is important to look at the scenario from another angle. “Reference points and framing: this is what negotiation is about. What they are saying to you is that there are important characteristics which they would like to transfer to this area that they want to move to,” Mr Steinwede explained. “I always ask people to tell me about the house they live in because this is a reference point for them.”

After recently moving, Mr Steinwede was able to throw some more light on this negotiation technique and explained how important it was for agents to find out a buyer’s property goals because it was not always about price.

“I dealt with the agents but none of them really got to the bottom of why I wanted to buy a house. The number one thing for me is that I want to watch my kids ride to school and from school. The agent told me about a house that was coming on the market. I drove past it and liked the look of it – it was in exactly the right spot that I wanted. I hardly looked at the house, and said I’ll buy it and just paid whatever the owner wanted,” he said, explaining that even though the house is impractical, the fact he could see his children riding to and from school was the most compelling factor.

Finding out this important information means spending time asking prospective buyers questions about what is really important to them about their new home. “You have got to get into their world; it’s not about just racing out and helping them find a house in their budget. It’s really asking those questions about their kids, about their dog. Is a dog-friendly beach important to them?” he said.

“Spend a little bit more time with people. It’s not about as many buyers as you can work with; it’s about working with quality buyers over a period of time. The questions that you’re asking people early on are creating an agenda to your negotiation down the track,” Mr Steinwede said.

More information means better negotiation

Information controls the negotiation process. The more information an agent has about why someone is buying or selling gives them a better position as a professional negotiator. Mr Steinwede said he would only work with a maximum of 15-20 buyers at once because he spent a long time looking for the right property for each one. “Every time I take them out to show a house, it’s like I’m gathering a bit more info, a bit more info, a bit more info. I work with people for quite a long time looking for what fits them.”

Mr Steinwede outlined an example to illustrate his point: he worked with a woman for two years to find her the right property at Avoca Beach. After he had spent all that time finding out her criteria, he knew when he had found the perfect property. “She paid $1.8 million and it was worth $1.3 million, but to her, it didn’t matter. This is what I mean about the power of information. She knew it was more than what it was probably worth, but her number one criteria were for her kids to walk across the road to the beach – and it was 20 steps to the beach.”

Spending the time finding out exactly what the buyer wants and needs means an agent can be very targeted when selling a property. The collective intelligence they have from the time spent asking the right questions means they will know when they find the right property for their buyer – and it makes the negotiation process that much more effective.

Sourced directly from the Real Estate Hot Topics Magazine Archive.