I recently took a course to become certified to teach continuing education in Hawaii. For the final project, I was given an assignment to make a presentation to the class which was made up of real estate instructors and some of the members of our real estate commission. I selected the title from a short list that was supplied to me. It was "The 3 P's of Negotiation". They gave me the title but did not mention what the 3 P's were. I was left on my own to be creative.
Here is a rough overview of my presentation.
There are three steps to a successful negotiation, known as the 3 P's of Negotiation.
- PREPARATION
- PRESENTATION
- PAUSE
I am sure that many of you have your own idea of what makes for quality preparation and presentation. For this example we will be looking from the eyes of a real estate agent who is representing a buyer for the purchase of a residential property and has already identified a property they wish to make an offer on.
PREPARATION: The agent needs to do research. Check public records, do a comparable market analysis, view the property and interview the seller's agent.
- Identify any potential issues like zoning, building permits.
- Look for red flags on the property that may affect the value to the buyer.
- Try to get a read on the seller's motivation.
- Determine market value of the home.
- Meet with the buyer to determine their motivation.
PRESENTATION: Prepare an offer to the seller that will give the buyer their best chance at getting the best deal at the best terms for them possible. Present that offer to the sellers via their agent. Here are some of the elements to that offer.
- A clean executable purchase contract. A contract with no unusual special requests that a seller may object to. A complete contract that has every signature, correct math and all needed attachments and addendums.
- A price that is reasonable, close to what we believe is the lowest the seller is willing to go, possibly a little below that.
- A strong loan approval letter from the funding letter, not a broker. A letter from Central pacific Bank who approves and funds the loan is much stronger than a letter from Bob's Mortgage and Hair Cutting Emporium.
- A nice cover letter that explains and part of the contract that there may be questions and introduces your clients and yourself to the sellers.
- A reasonable period of time to make a decision. (No game playing).
- Nothing too creative, nothing that will make them nervous.
Your offer needs to be so clean that if they sign it you are in escrow. An offer that has mistakes and missing elements is a big disservice to your client. If you create an environment that they are forced to counter for housekeeping you open the door for price and terms to be back on the table. You eliminate your shot at getting your first offer accepted. You want that offer so attractive that they are afraid to chance losing the buyer, even if the price is a little less than they really wanted to accept.
PAUSE: This is the most important part. Once you have presented your offer, stop talking. He who speaks first usually loses in a negotiation. Give the seller enough time to stew it over. Let them get used to the idea of maybe accepting a little less money to get a stress free sale. If their agent calls and tries to extract information that may help their clients in the negotiation, keep your cards close to your vest. Give them no hint, leave the doubt as to what would happen if they counter. Leave them having to decide whether they want to risk losing such a solid offer or whether they will just sign it. Remember, he who speaks first usually loses.
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Randy L. Prothero, REALTOR®, ABR, AHWD, CRS, e-PRO, GRI, SFR
Century 21 Liberty Homes
Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers. His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.
Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) and the Leeward Regional Chairman of the Honolulu Board of Realtors. To improve overall professionalism in his area Randy also offers classes for real estate agents.
www.HawaiiRandy.com * Oahu (Honolulu County) Property Search * Hawaii Military Relocations
Good info. And I especially agree with the presentation.....I cant stand to get offers that are incomplete or not legible. Got one like that today!!
Randy~
You are a masterful teacher as this post demonstates. I will share it with my broker team THX!
Randy,
You put together a great presentation. You are a a quick thinker.
Dream Team - I always ask where is their broker in all this when I get a sloppy contract.
janeAnne - Thank you, I am creating a 3 hour class from this for both buyer and seller agents.
Dinah - Thank you
This is a great presentation! I hope you did well and will be teaching more "P"'s to the lucky Hawaiian Realtors!
I love the "pause" part. It's always interesting when there is a long pause of silence!
I agree completely that presenting a clean, complete and clear contract is the most important step. Taking the extra time to make sure that all the "i"s are dotted. . . . . just may give you a ratified contract right up front.
This is time consuming but critical to make sure your contract is complete and ready to go to the title company.
Contracts that have to go back and forth to correct mistakes or fill in blanks invite other offers in to compete.
Randy, My sellers and I would be happy to just once get a COMPLETE offer!! It's very rare that we recievd an offer that has all of the paperwork together. I wonder if the buyers have any clue how clueless their agents are?
Clean contracts make a good offer. I need to remember the PAUSE thing!
Nice presentation. I like that last "P" as we often keep running our mouth way too long!
Thank you for this great information. I just signed up for a class on negotiation next month that looked interesting.
Great information Randy. Negotiating correctly and effectively takes practice and preparation. The results are worth it.
Excellent Article Randy. This info is great for both new and experienced agents!
I like the clean executable contract the best. Sometimes what I receive isn't complete or makes no sense in whom they are representing.
Thank you.
He who speaks first loses. I remember it well- Closing 101. Slightly awckward metaphor in our enlightened times, but very apt.
The "Pause" part is perfect. In negotiations, that type of silence can truly be golden.
Good tips. Everything is in the presentation.
Excellent presentation. And easy to remember, I hope I do. Thank you.
Randy, I can see a future in teaching these course. Very well thought out and I can bet the presentation was top notch also.
Randy,
The key to success is often "dead air". Most people like to break the silence. So, there are some openers that will invite them to do just that.
Brian
Terrific post Randy. In an ideal world all agents would be using the 3 P's.
Hi Randy,
Very well covered article. Good one.
Randy, my husband has told me about teh Pause before. His sales training was with IBM, and they taught it there. It's so tempting to pick up the phone - but don't!
Love the use of the word Pause instead of the close.
Randy - you did a great job on this. In this market this makes so much sense. The Pause is key - but often hard to do.
So I assume we will be hearing more from you on your teaching in HI!?
Jeff
Randy, that is great advice. Especially the "Pause".
Randy,
Pause....I love that....that makes total sense and I will remember that one...
Hi Randy, It is rare that an agent presents their own offer here but I agree about how important it is to stop talking !
I think that many people can master the first two but fail miserably at the third. Great post and reminder.
Randy - excellent post and you are right, let them talk first. Pausing is very important part of negotiation.
Randy..hello from Sonoma! What I think is your most important point is that agents need to take pride in their work with mutual respect for all parties..This is not a game...Some of the tricks of the trade are the presentation and knowing when to stop talking...Listening.... an under-utilized asset! Thanks for the post !
Pause I love that one. My broker whom I have known for years before I was in the business always said he who speaks first loses.
Randy, big business and big results are all about presentation. Many people are terrified to present to others or to practice it. The more you practice and the more you present, the more successful you will be for the rest of your career!
PAUSE: This is the most important part. Once you have presented your offer, stop talking. He who speaks first usually loses in a negotiation.
I use this tactic all the time
PAUSE: This is the most important part. Once you have presented your offer, stop talking. He who speaks first usually loses in a negotiation.
I use this tactic all the time
I happen to think you'll be a great teacher Randy! Love the 3 P's. Do I get a discount on classes lol
I think you picked 3 good p's. Now if only they will listen to you!
"certified to teach continuing education", that's where the money is NOT in negotiating sales.
good points; I particularly like the p for pause as it also requires patience.
"Your offer needs to be so clean that if they sign it you are in escrow" AMEN! Some people have a hard time with this one...and I think part of it is because of the abuse of templating. Don't get me wrong, I am a huge proponent of templating...but... it has it's place and in your contract is not necessarily "it's place". When I receive a contract for land that has all of the home contingencies checked it tells me they used a template and yes we counter to do housekeeping and of course while we are at it, we counter for price and terms if need be...Great and relevant post Randy!
"He who speaks first usually loses in a negotiation."
and
He who cares least usually wins!
Great post Mr. Prothero - it's been a while!
Tony
Nice to see you blogging again! I keep busy with my new photo blog and the two condo sites that I have. Business is up so I am busy for a change. See yea. Great Blog!
I enjoyed the post and have bookmarked it for future reference.
Patricia/Seacoast NH
Thanks for sharing Randy. You expanded your audience when you blogged this. I have to Practice the Pause and be Patient. Margaret C.
randy, thanks for a Great Presentation. Sold a Home this week...Contract presented by listing agent...signed as presented....LOVE it! When negotiating, I love the Pause...Thanks for the reminders. Have A Great Weekend!
I got an offer accepted not too long ago because, according to the listing agent, my buyers' was the only contract that didn't require a full page for the counter offer.
Pause and listen are critical. Coming from car sales this was a tool that worked almost everytime while closing a car deal.
Randy, I totally agree with your pause, He who speaks first losses. Listening is critical. Thanks.
Stephanie - Thank you
Melinda - I heard a very experienced mediator talk about the pause one day and have used it ever since.
Lenn - It is amazing how many agents send in incomplete and sloppy contracts.
B.B. - I too rarely get them, but take pride in sending complete one myself.
Gary W. - It is easy to forget.
Wendy M. - That is a good class very every agent to take.
Gabe S. - Thank you
Jennifer - Thank you
Scott B. - I still receive hand written contracts on outdated forms.
J. Phillip - Not many folks practice the pause.
Richard S. - Golden for sure.
Aaron S. - To be a good presentation, you need to have prepped properly.
Glenn R. - Thank you
William F. - Thank you
Brian M. - Usually a mistake.
James W. - Thank you
Sham P. - Mahalo (Thank you in Hawaiian)
Sharon A. - It sounds like IBM had good training.
Joe P. - I do mediations and one the more experienced mediators discussed the pause. It resonated with me.
Jeff D. - You will be hearing more. I sat at a dinner with Frank Serio last week. We talked about Active Rain and he mentioned you.
Ted T. - Thank you
Lori C. - The pause has helped me in many negotiations.
Bill G. - Even if you do not present the offer, you can still practice the idea when communicating with their agent.
Damon G. - I do have to remind myself at times.
Sharon P. - It can make the difference.
Kathleen B. - Great to hear from you. It is all about being professional.
John W. - Speaking is just giving information to the other side that can be used against you and your client.
Justin M. - All of these skills are trained. You make a great point the more you do it the better you get.
Keith L. - I have had many folks on the other side of a negotiation sell out their clients, by speaking when they shouldn't. That is definitely an amateur mistake.
Sally - Thank you, I will practice the pause about the discount. LOL
Allen T. - I am glad they did not tell me what 3P's. I knew mine would be different than they expected.
Gregory B. - I am sure that I will make more money selling homes than teaching. I love teaching and feel it will make me better at what I do.
Teral M. - Patience could also substitute for the third "P".
Trevella W. - Once they force you to counter they leave themselves open to anything.
Tony M. - Thank you, it has been awhile. I hope business is good for your team.
Eric B. - I am trying to spend more time on my blogs the rest of the year.
Patricia A. - That is one of the best compliments. I earned you bookmark. Thank you!
Margaret C. - Thank you
John H. - It is a good reminder. I am sure many top agents know this, but sometimes forget.
Christine D. - I have gotten several offers accepted in multiple offer situations, where the listing agent said that my offer was the cleanest, not necessarily the highest.
Chud W. - I have not met many car salesman who practice that principle. That puts you in an elite group.
Michael S. - That is one of the skills I have learned to develop with age and experience. When I was younger I know I made that mistake more than once.
I would like to add one more P
POLITE-do not be rude in your presentation, do not attack the house, the seller, or the other agent. You can get a lot more bees with honey than you can with vinegar.
I took a negotiation class once and one of his tactics was a little "gasp & flinch" when asked for somewhat more than you are willing to give.
Jenna - Great suggestion!
Great Advice! Thank you very much!
Jose - Thank you
Randy, Great post. Makes me realize again what trust people put in us as professionals.
Fabulous presentation and a great lesson.
Charles - I take that trust very serious.
Linda - Thank you
Great post. It only takes a little extra time to make sure the contract and addendums are in order, and to educate the buyer on the best way to formulate an offer. Unfortuantely, many dont't do it.
Bill - That is the difference between a professional and an amateur.
Randy,
My motto is that more deals are lost to face and not figures. Leave emotion and the door
John - Emotion can cost you.
Another great post - indeed, presentation is so important!
Barbara-Jo - Thank you