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.
Your Challenges
One of the biggest challenges with negotiation is maintaining the relationship with the other person, without losing out on the deal you’re making. A good negotiation means both parties walk away happy.
The Concerns of Negotiation
There are two concerns that a person has:
- Outcome of the agreement
- Concern for the present and future relationship with the other party
The concern for the agreement refers to the final result of the mediation. Walking away from the agreement with a wrecked relationship is not very desirable to many.
The Types of Negotiation Styles
Every person has their own approach when dealing with another person. By understanding your style and that of your opponent’s, you can lead your discussion to a more fruitful conclusion. Broadly, negotiation is categorised 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 used to avoid conflict and make concessions. Meanwhile, hard negotiation involves seeing every negotiation as a competition, ending up exhausting people, resources and harming relationships.
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 ending up with losses. Although it works if you are looking to not spill the boat with the person you’re negotiating, it does not yield wise results.
On taking various factors into consideration including the outcome, the approach and the personality of the negotiator, negotiation is classified into four styles:
Competing Negotiation
Usually executed by assertive individuals, this approach 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.
Here’s an example of competing negotiation in your day to day life:
Customer: How much do you want for this brass dish?
Shopkeeper: That’s a beautiful antique, isn’t it? I guess I could let it go for AED 75.
Customer: Oh come on, it’s dented. I’ll give you AED 15.
Shopkeeper: Really?! I might consider a serious offer, but AED 15 certainly isn’t serious.
Customer: Well, I could go to AED 20, but I would never pay anything like AED 75. Quote a realistic price.
Shopkeeper: You drive a hard bargain. AED 60 in cash, right now
Customer: AED 20
Shopkeeper: It cost me a great deal more than that. Make me a serious offer.
Customer: 37.50. That’s the highest I’ll go.
Shopkeeper: Have you noticed the engraving? Next year pieces like that will be twice what you pay today.
Although this style of negotiation is associated with reaping results easily, you also end up risking the relationship. It leads to unwise decision making and mechanical splitting of differences. This is good for short term deals and ineffective in the long run, due to the constant back-and-forth.
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Avoiding or Walking Away
When the relationship between the negotiators is not taken into consideration, or when the individuals involved lack assertiveness, this is an approach that is taken. Instead of talking through the issue at hand, they prefer to walk away without resolving the conflict.
This usually leads to building ill feelings and resentment between parties.
Accommodating
This style primarily focuses on maintaining relationships and coming to a compromise. Ideal for temporary solutions, this approach lacks assertiveness and usually works in favour of one party.
Compromise
As the name suggests, this style of negotiation involves coming to a middle ground where both parties are satisfied with the outcome. With a focus on problem-solving and mutual gains, this negotiation usually ends with a partnership being formed.
Collaborative
A stark contrast to the competitive style, the collaborative or principled focuses on coming up with an outcome that satisfies both parties. Zeroing in on creative solutions that empower both parties, this approach involves listening, understanding the needs of either side and coming up with a win-win solution for everyone.
Choosing to approach negotiations using the Principled or Collaborative style would be the ideal way to go about such a scenario.
Embarking on Principled Style of Negotiation
To negotiate with the principled approach, here are a few tips one must keep in mind.
- People: Take a closer look at the problem you have at hand, instead of your opponent.
- Interests: Pay attention to the interests of both parties, instead of the positions taken.
- Options: Having multiple options at hand can be useful if the negotiation does not go as planned.
- Criteria: Ensure that the criteria you have listed is objective and favours both parties.
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 research the needs of both sides. Here are some pointers while preparing for negotiation:
- Determine your main objective and supporting points
- Identify your Best Alternative to Negotiated Agreement (BATNA)
– Your BATNA is the most advantageous alternative while negotiating, if it is unsuccesful and an agreement cannot be made - Identify your Worst Alternative to Negotiated Agreement (WATNA)
– Your WATNA is the worst outcome that can come from an unsuccesful negotiation - Identify your Walk Away Price (WAP)
– Your WAP is a point that you set, where you walk away from the negotiation - Find out your Zone of Possible Agreement (ZOPA)
– This refers to a series of options available that both parties can agree on.
Step 2: Exchanging Information
After compiling the information you need, you must 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 for 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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