Edgewood, WA Real Estate Blog

Have you ever considered your negotiating style?

If not, you might want to think about it. It’s important to recognize the implications of your style versus the style of the party with whom you’re negotiating.

There’s 5 basic renegotiating styles:

• The avoider. This person doesn’t like conflict and prefers to avoid confrontation (15% of the population – Saturn buyers).
• The cooperative. Let’s see how we can work this out.
• The accommodator. Let me solve your problem so you can help me solve mine.
• The competitor. Winner take all. This type has a high need to win, possibly by any trick in the book.
• The innovator or problem solver. How can we invent a solution that makes the pie bigger so we both win?

Real estate negotiations tend to be transactional. That is, they are one time events although not entirely so as we’ll explore in a moment. We all negotiate every day, but not all negotiations are purely transactional in nature. For instance, we negotiate differently with our spouse or family than we do in a business environment. Furthermore, not all business negotiations are transactional because they often involve ongoing relationships.

If you’re an avoider, you probably aren’t in the real estate business. Better you have someone else negotiate for you.

Accomodators don’t tend to do very well in real estate negotiations because they get taken advantage of by parties with other styles. Unless they are negotiating with someone with a similar style, they’ll fix the other guy’s problem and get nothing in return.

Problem solving works best in non-transactional situations. There are few opportunities in real estate transactions to be a real innovator or problem solver although it is not impossible.

That leaves us with the most common bargaining styles: the cooperative and the competitor. When each type negotiates with a similar counterpart, negotiations proceed rather smoothly (with all bargaining styles).

It’s when a cooperative and a competitor engage things tend to go awry (and/or with accomodators if they’re still in the game). Each tends to think the other party is just like them and negotiating from a similar stance. It generally won’t take long for suspicions to arise – the cooperative will offer concessions in exchange for concessions. The competitor will see that as a sign of weakness and dig their heels in. The cooperative then no longer trusts the competitor and suspects they are not bargaining in good faith… etc, etc.

So which is the best style?

There is no best. It’s just your style.

But cooperatives tend to successfully complete more transactions. Competitors have a lot their ego at stake and may opt for an “I win or there’s no deal” scenario. Contrary to popular belief, overly competitive types don’t generally fare better.

Earlier I mentioned that real estate negotiations tend to be one time events – but not entirely. Most of the time a home inspection contingency is involved with a sale. This is “round two”. When an overly competitive type has “crushed” the other side, the other side is often out for revenge in round two. If emotions fester enough, they may even intentionally kill the transaction (”no deal rather than you win”). Oh, you need an extension? Round Three.

There’s a couple of additional dynamics in real estate negotiations. Maybe you’ve already considered them.

Most real estate agents adopt a cooperative negotiating style. In contrast to buyers and sellers for whom a purchase/sale is a one time event, agents expect negotiating further transactions with the same agent or same community of agents. At the very least, their reputation proceeds them in the next negotiation. Trust plays a big part in negotiations. If word gets around an agent can’t be trusted, they may find other agents reluctant to work with them, let along negotiate.

Is it just me or have you noticed for some reason FSBO & do-it-yourself type home sellers more often than not have an overly competitive bargaining style?

What results would you expect when they (try to) negotiate (unless first understanding the implications of a difference in style)?

Ever wonder about the reason for those bellicose blog comments from FSBO’s; how their now-previous agent just wasn’t tough-enough (competitive) and seemed afraid to negotiate?

How would you as an agent with a cooperative bargaining style work effectively with a competitor type client, and vice versa? What about a listing agent dealing with an unrepresented competitive buyer where no relationship/trust has been established?

What happens when you have differing styles among a four parties: the buyer, seller, listing agent, and selling agent?

Understanding that there are different bargaining styles, and then knowing your style and that of your counterpart are the first steps to completing more successful negotiations.

I’ll offer some suggestions for negotiating effectively when your opposite number has a different bargaining style in a future post.

If you want additional information on bargaining styles in general, you might check out G. Richard Shell’s Bargaining for Advantage, 1999, Viking (I think there’s also a number of paperback editions available). Of the eight plus negotiating books on my bookshelves, his is one of my favorites. He also offers a workshop.