You’ve found your perfect property. From the moment you crossed the threshold, you knew it was a home for someone like you. You’ve imagined your children running around the garden, presents under the Christmas tree and all the wonderful memories you and your family are going to create there.
What now stands between you and the full realisation of your dream home is the small matter of agreeing a price with the owner.
If you’re lucky enough to be working with a good agent, it might be less stressful, but it’s unlikely to be straightforward, and the conversation around price is usually only the start of the process.
When emotions are running this high, it’s hard to be rational, and most people have very limited experience of these kinds of negotiations.
It’s one of life’s biggest decisions, both financially and emotionally. The downside of making a mistake is huge. The upside of getting it right is years of happiness. The stakes couldn’t be higher.
With all of this in mind, I thought that for the next in my series of guest blogs it would be fascinating to hear from Suzanne Tager.
Suzanne spent over fourteen years as a commercial litigator at Hogan Lovells, and now works as a commercial mediator - helping people resolve disputes quickly and easily.
Her knowledge of psychology, negotiation, influence and decision-making are fundamental to her offering.
She’s also negotiated the purchase and sale of several properties, and given what she does in her professional life, I was really interested to hear what she had to say about the process.
When my husband and I bought our first house we had a great story to tell about the process, as did the owners.
We had secured a house we really wanted at a competitive price and they had sold a property they were having difficulty renting, which needed investment.
When we came to sell, it was a turn-key property and once again everyone had a great story to tell.
The buyers had purchased a house that they had already imagined themselves living in. We felt jubilant, having sold for over double the price we had paid, and confirmed ourselves as value creators.
Why am I telling you this story? Well, the way we see ourselves, others approval and ultimately our self-worth are at the heart of all negotiations.
Self-esteem
In a negotiation, we need to try and reach a conclusion whilst ensuring that those involved feel they have been respected, heard and treated fairly.
That way, they can not only move on from the transaction with their self-esteem intact, but maybe even enhanced.
They might also have a great story to tell. The question is, how do we do that?
Curiosity and active listening
Find out what the key drivers are for your counterpart, as well as their values and beliefs.
Actively listen to them and reflect back to show that you have heard.
Acknowledge points they make and validate any feelings they might express.
Make sure you show empathy, particularly if they are finding something challenging.
People concede more to people they like, who share their ‘world view’ and are nice to them, so take the time to smile, be respectful and build rapport. Importantly, seek to understand if particular proposals you might make will be seen as a loss or a gain.
We are all loss averse, so focusing on what someone might lose is more likely to create traction than trying to frame something as a gain.
Negotiation tactics
Deploy some negotiating tactics such as perceptual contrast and reciprocal concessions.
Perceptual contrast is where you intentionally deal with big ticket items first, knowing that all other aspects will appear less consequential in contrast; think about how the price of a tie does not seem as important when you have just paid for the suit.
Reciprocal concessions are where you ask for something huge, knowing that your request will not be granted and use this initial concession as an illusory part of a highly effective compliance technique aimed at getting your next request; have you ever said no to an expensive charity dinner and then willingly agreed to buy raffle tickets?
Always provide an explanation for a request. A famous study involving someone asking to cut in line found that just putting the words ‘because’ into a request, increased compliance by 93%.
Emotions and communication
The idea that you can ‘leave emotions at the door’ during negotiations is flawed. Expressing positive emotions actually builds trust.
That said, whilst expressing your emotions and being assertive is fine, it is worth taking the time to communicate in a non-accusatory way.
Emotions and feelings play a bigger part in decision-making than we might like to admit.
Trying to convince your counterpart of the logic of your proposal without first acknowledging their emotions will not work.
Once you have engaged with what are often big feelings, remembering to be empathetic, you can focus on problem-solving and bring in logic.
Pride
Finally, remember to help your counterpart to create a great story that they can tell themselves and others about the transaction.
All types of transactions, including property ones, typically require those involved to make concessions and overcome perceived risks to their self-esteem, status, autonomy or other non-financial needs.
We all want to feel good about ourselves and gain the approval of others, so help others to create an outcome that they feel positive about.
Great negotiators know that by achieving that objective, they create value for themselves and others.
Things I've been inspired by this week
Given Suzanne’s background, I wanted to hand this over to her this week.
Thinking, Fast and Slow, by Daniel Kahneman
Daniel Kahneman is an Israeli psychologist and economist notable for his work on the psychology of judgment and decision-making, as well as behavioural economics, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences.
“My favourite concept from Daniel Kahneman is the need to recognise sunk costs for what they are, and refrain from investing more into a failed endeavour to avoid crystallising a loss, or admitting a project isn’t going to work”
The Dare To Lead Podcast with Brene Brown
“Brene has had some excellent guests, that helped me to crystallise ideas that I wouldn’t have been able to put into words.”