As a real estate agent, the ability to negotiate is crucial for your career. Whether you are dealing with landlords or discussing your commission with clients, your negotiation skills need to be on point. On a personal note, knowing how to negotiate can also help when haggling with local shopkeepers, or when discussing a pay raise at work.
During our interactive workshop at Bayut Academy, we took a deep dive into mastering the art of negotiation. In this article, we summarise the highlights from this session.
What is Negotiation?
Before we can talk about how to negotiate effectively, it’s important to understand what negotiation is. According to an expert, here’s an all-encompassing definition of what negotiation includes.
Negotiation is a basic means to get what you want from others. It is the back and forth communication designed to reach agreement, when you have some interests that are shared and opposed.
Roger Fisher and William Ury – Getting to Yes (Houghton Mifflin, Boston, 1981 p.33)
In short, it is the art of talking through an obstacle you have at hand with another person, where you ensure that both parties are satisfied with the final result of the transaction.
The Concerns of Negotiation
There are two concerns that a person has when negotiating:
- Outcome of the agreement
- Present and future relationship with the other party
We can divide negotiation into styles, based on the outcome of each. Let us explore each one.
Competing Negotiation
“I win-you lose,” or the competing approach places more importance on the outcome. It is an approach usually taken by assertive individuals, as this negotiation style involves driving a hard bargain with your opponent.
An example of competing or positional negotiation is bargaining at the local market with a farmer, where you demand a lower price on the produce. Although this negotiation style gets you easy results, you risk the relationship. It also leads to unwise decision-making and mechanical splitting of differences.
Due to the constant back-and-forth, competing negotiation is good for short-term deals and ineffective in the long run.
Avoiding or Walking Away
With the Avoidant approach, both the outcome and the relationship between both parties are of the lowest importance.
This approach is taken by negotiators who don’t take their relationship into consideration, or when they are not assertive. Rather than discussing the issue, they tend to walk away without resolving it. This usually leads to building ill feelings and resentment between parties.
Accommodating
The accommodating approach involves prioritising the relationship over the outcome of the negotiation.
This approach focuses primarily on maintaining relationships and coming to a compromise. It is ideal for temporary solutions, as this negotiation style lacks assertiveness and usually favours one party over the other.
Compromise
Both parties don’t ‘win’, but reach a compromise and split the difference.
As the name suggests, this style of negotiation involves coming to a middle ground. With a focus on problem-solving and mutual gains, this negotiation usually ends with a partnership being formed.
Collaborative
The collaborative or principled approach is the best way to go.
A collaborative or principled approach focuses on achieving an outcome that satisfies both parties, by coming up with creative solutions that empower everyone involved. This approach requires active listening, understanding the needs of both sides and striving for a win-win solution for all.
Choosing to approach negotiations using the Principled or Collaborative style would be the ideal way to go about a typical sales scenario.
The Types of Negotiation Styles
Every person has their own approach when dealing with another person. Understanding your and your opponent’s styles can lead your discussion to a more fruitful conclusion. Broadly, negotiation is categorized into two types: soft and hard negotiation.
Soft vs. Hard Negotiation
According to the book “Getting to Yes” by Roger Fisher, negotiation can be broadly divided into categories, Hard Negotiation and Soft Negotiation.
Soft negotiation is a gentle approach aimed at avoiding conflict and making concessions. In contrast, hard negotiation treats every discussion as a competition, which can exhaust people and resources, ultimately causing harm to relationships.
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Does Being Nice Work?
A common belief associated with negotiation is that ‘being nice’ or compromising helps maintain relationships and is the route you should take. This is when both sides use the soft style of negotiation.
This approach is not practical in real-life scenarios, as it may lead to both parties making unwise decisions and ending up with losses. Although it works if you are looking to avoid spilling the boat with the person you’re negotiating with, it does not yield wise results.
On considering various factors including the outcome, the approach and the personality of the negotiator, negotiation is classified into four styles.
Embarking on Principled Style of Negotiation: The Negotiation Process
Negotiation is a cycle, with each step making its way to the next.
Step 1: Preparation
To begin with effective negotiation, one must understand the needs on both sides. Here are some pointers to keep in mind while preparing for negotiation:
1. Main Objective and Supporting Points: Clearly define what you aim to achieve in the negotiation. The main objective is your primary goal, while supporting points are the reasons and justifications that back up your objective.
This could include data, benefits, and potential outcomes that will strengthen your position during the negotiation process.
2. Best Alternative to Negotiated Agreement (BATNA): Understanding your BATNA is crucial as it highlights your best option if negotiations fail. This alternative should be beneficial and concrete, providing you with leverage during discussions.
For instance, if your negotiation involves a salary increase, your BATNA might be a job offer from another company. Knowing your BATNA helps you negotiate better and avoid accepting unfavourable terms.
3. Worst Alternative to Negotiated Agreement (WATNA): The WATNA represents the most negative scenario that could arise if negotiations do not succeed. By identifying your WATNA, you assess the risks and potential losses associated with walking away from the table.
Knowing your WATNA lets you approach negotiations with a balanced perspective, weighing the consequences of failure against your desired outcomes.
4. Walk Away Price (WAP): The WAP is the threshold you set beyond which you will not continue the negotiation. It serves as your bottom line, ensuring you do not agree to unfavourable terms. Establishing a WAP requires careful analysis of your needs and values, and it may vary based on the situation.
Being clear about your WAP allows you to negotiate confidently and avoid compromising too much.
5. Zone of Possible Agreement (ZOPA): ZOPA is the area in which two negotiating parties can find common ground. It is defined by the overlap between each party’s acceptable terms, including price, conditions, and other essential factors.
Identifying the ZOPA increases the chances of reaching an agreement and guiding your negotiation strategies, thus focusing on where both parties’ interests align.
Figure out your ZOPA to come to a conclusion that satisfies both parties
Step 2: Exchanging Information
After compiling the information you need, exchange this information with the other party.
Step 3: Bargaining
At this stage, you should discuss the best outcome and identify a middle ground between the two sides.
What to do when there is no deal?
If the discussion falls back, here are some things you can do to reach a conclusion that both parties can agree on:
- Create a list of possible actions to take when the negotiation fails
- Strengthen your points (if possible)
- Select your best alternative from this list
Step 4: Closing
Once you have established the final outcome that satisfies the requirements of both parties, it is time to close the negotiation!
Mastering this art may take time and practice, but can definitely help you take your real estate career forward. Join us for our next session on “Introduction to Negotiation” at Bayut Academy to get a more in-depth look at this skill, along with interactive activities to further your understanding.
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