It’s safe to say we are living in interesting times and bearing witness to adversity and its related irrational behaviour.
I’ve never seen anyone fight over toilet paper before.
It can be hard to negotiate deals in such a climate.
We need to question if this behaviour is really irrational?
Many would answer a resounding “yes”, but I propose that the behaviour we see and even display ourselves, while it may seem irrational, is based on very rational and predictive thinking.
Why?
Let’s take the example of people fighting over toilet rolls and food.
These are basic needs and the perception of scarcity will stimulate our self-preservation needs.
Maslow’s hierarchy of human needs is a great model to visually see how people require their physiological needs met before they can move to higher levels.
For example, if you can’t pay the rent, then you’re probably not going to be thinking about buying Netflix, are you?
Psychologically, we are programmed to keep ourselves and our families safe. This is our limbic system simply kicking in.
But how does this relate to real estate?
Dealing with ultimatums
The buyer tells you the price the vendor is asking is crazy in this market and there is no way they are prepared to pay that.
Their offer is embarrassing for you to take to your vendor.
You feel yourself getting angry with the buyer and think that they are playing you.
Unfortunately, you do not have other buyers, so what do you do?
What happened?
As the agent, you are obliged to bring all offers to your vendor and you know the client is not going to be happy.
This also becomes a problem for you because the vendor may feel you are a poor negotiator, or you don’t care.
It questions your ability to market their property.
How do you negotiate with unreasonable people in today’s market?
The challenge is, as a salesperson, you can overreact, which will have an impact on how the buyer relates to you.
This attitude can result in many lost deals because the salesperson thinks that the buyer:
- Cannot be trusted, so there is no point in dealing with them
- It is too risky
- They are playing me, and they will continue to try it on
The result is, we can make hasty judgements about people without knowing their situation, and as a result, we view trying to negotiate as a futile exercise.
As I have written in my previous articles on negotiation, it is especially important to understand the other person’s possible interests, needs, constraints, and perspective.
We need to develop the ability to get into the other person’s shoes and see it from their perspective as well.
This will stop us from seeing the other person as hostile or irrational, and it allows us to build trust.
The following are mistakes salespeople make in negotiating with irrational buyers.
If you are aware of them, it can change the way you respond and work to everyone’s advantage.
Mistake 1: Their low-ball offer represents a hidden limitation
Find out their constraints.
So many people do not provide all the information upfront, they sometimes hide it from us.
One of the keys is to become comfortable in asking questions, especially challenging ones.
Ask questions to find out if:
- Are they the only decision-maker?
- Do they have financial constraints?
- What is their timeline?
You may discover the real reason why they are offering a lowball figure is that they have put an offer on another property, or they are not under any time pressure and are playing a waiting game.
Understanding there is no such thing as a free lunch can help people to understand that there are consequences.
The consequence for the buyer is a lost opportunity, and sometimes it is important to let the buyer know that.
Mistake 2: Salespeople think buyers are well aware of the real value of the property
Buyers often believe what well-meaning friends and family tell them and often don’t have access to up-to-date information, leaving them uninformed.
This is the time for the salesperson to educate the buyer on the real-life scenario and why making a reasonable offer is in their best interests.
Mistake 3: Buyers’ interests have not been identified
Difficult buyers may have interests you don’t know about.
They may act quite illogically in the way they communicate with you, and you need to understand the motivation for the client to behave this way.
The key is to be open enough to question the buyer, so you understand them and can base your judgement on real information.
Without information, you’re guessing.
Dealing with angry buyers
When confronted by an angry buyer who insists that their offer is fair and that they expect you to like it, it can be challenging.
There is also the chance that their anger may trigger an angry response from you.
Learning how to reduce the buyer’s anger at that moment can help them to think about the real reason they are bidding for the property.
The following strategies can be utilised in dealing with anger:
Step 1: Try to understand why they are angry
As a negotiator, you need to find the real reason the buyer is angry.
It could be that they are not privy to all the facts, so you need to provide them with all the details.
Many salespeople assume that the buyer has no rational reason for being upset, so you need to question the buyer.
When you do question people on why they are upset, they often realise that there was no need for their reaction.
The questioning process is sometimes similar to a psychologist who diagnoses before prescribing a solution.
Step 2: Let them vent their anger at you
Letting unhappy or angry buyers vent their anger at you allows you to understand their frustrations and importantly, reduces the anger they feel.
An angry outburst is often a symptom of an assumption of facts that is affecting what they believe.
The right reaction to anger is not to provide a fight when clients expect one.
They want a tug of war, but when they find they are the only ones holding the rope, it provides a chance for the salesperson to calm the situation by answering with neutral comments which give both parties time to diffuse the situation.
Step 3: Change the emotion of the buyer
Do not take it personally.
When people are angry, it is primarily because they feel their beliefs have been challenged.
Think for a moment, would the buyer behave this way if they could see that their offer was too low when considered in line with up-to-date data?
Staying calm and not engaging in conflicting interaction is likely to change the emotion of the buyer from confrontational to reasonable.
Step 4: Ignore their angry outburst
“Take it or leave it”.
This is a statement of finality a buyer makes to you. What should you do?
Responding without referencing the threat will help you to deliver a rebuttal that provides a solution.
Just ignore the threat and ask a neutral question to find the underlying reason.
Step 5: Call their bluff
The buyer has made a low offer.
To challenge their bluff, you do need to have done the previous steps, which are to identify their interests, limitations and understand why they are low-balling you.
You need to be comfortable in calling their bluff in an amicable and respectful manner.
You must provide an opportunity for the client to change their mind graciously for them to feel comfortable in providing you with a revised offer.
As Lou Holtz, a former American footballer, put it very succinctly, “You’ll never get ahead of anyone as long as you try to get even with him”.
The key thing to understand is to be careful about taking things personally and reacting to ultimatums, as your response will have a greater determination on the success of extracting a higher offer than anything else.
The ability to do this under pressure is a low-risk strategy and a high chance of closing the deal when you focus on the buyer’s underlying interests.
