Negotiation styles.

Some say negotiation is as much about style as substance. There might be some truth in this. But when it comes to buying high level homes I believe it may be more about substance than style – even if a good story from a smart agent still gets me and a client over the line at times.

As agents we are used to seeing the following styles from inexperienced buyers and sellers:

1. Hit and hope
2. Damage Limiter
3. Begging

Yes the above really are styles – not ones we would recommend on a regular basis but they are all some buyers know. The plus side of them is that they don’t require any preparation work and they don’t require any expertise. The downside is they often cause stress, either during the sale – or post sale, especially when you have missed out or gotten stung. You can read more about them below and why they mostly don’t work.*

Two other common and somewhat more successful styles we see are:

1. Carrot and Stick:  aka the “pleasure and pain” or adversarial style
2. The win-win or diplomatic/compromise style

Carrot and stick is used by many selling agents

When a selling agent gives you an offer to buy a home,  the carrot and stick approach works like this:

• If you pay this price you will get a Carrot (buy the home)
• If you don’t pay this price you will get a Stick (miss out)

The carrot is pleasure (reduced stress) and the stick is pain (fear of loss)

Sometimes agents use this carrot and stick approach a number of times to work buyers up a price ladder. They may also use bait or lowball quoting to get you into the game and then when you have some emotional attachment apply the carrot and stick technique.

The most obvious carrot and stick or pain v pleasure negotiation is the Auction. It is an adversarial situation and for some it can be brutal.

If you’re an experienced buyer you can apply or return fire with a carrot and stick approach by telling the agent: “here is the offer (carrot to remove stress) and here is the deadline” (stick with fear of loss attached). But the offer needs to be correctly structured or else there is no carrot to the seller and if there is no carrot, then there is also no stick.

When one party is in a stronger position than the other a carrot and stick approach can be very effective. I am a big believer in it as long as it is used ethically.

The win-win or diplomatic/compromise style

An alternative negotiation style is the art of compromise or skilled win-win negotiation. It is not our only or even preferred style, but it is the style we most commonly apply outside auctions.

Win-win is about finding common ground by considering the other side’s needs and seeing if they can be accommodated – and in return having your needs considered.

It’s a collaboration between buyer and seller, and at the highest levels when you have a savvy buyer agent and a savvy selling agent it can be the most effective way to get a deal done.

That does not mean that there are no potential ‘pain and pleasure’ outcomes, it’s just that there is a little more decorum and some genuine mutual benefit (for the clients first and foremost) involved.

Unfortunately some inexperienced homebuyers try to negotiate using a win-win attitude while they are in fact being beaten over the head with a stick – with no hope of getting the carrot.

Win-win is hard to play but is not impossible in isolation. Carrot and stick can be played on friendly, respectful and ethical terms if either or both parties so choose. However in my opinion (which has changed over the years), the level of skill each side employs in using the style affects the result more than the style itself.

For me there is no one style or right style to negotiate. In fact while Mr Mandela or Mother Teresa were brilliant negotiators at their peak, they would not have been exclusively win-win dealers either – it’s more likely they would have been very polite users of the carrot and stick style.

Kay and Burton’s Jason Scillio, buyer advocate David Morrell and Jellis Craig’s Nick Elmore are fine players with the Carrot and Stick. Some of the best win-win dealers I can think of are Mike Gibson of Kay and Burton, James Connell of Marshall White and Jenny Dwyer of Hocking Stuart. And the above, I’m sure, are equally as good with a different style. That is not to say that there are not many other first rate negotiators out there, nor that you have to be an agent to negotiate effectively on a home (but in my opinion it’s certainly an advantage).

However for all the talk of technique, showmanship, bravado or charisma I would still place hard work, preparation and experience ahead of style issues when it comes to high level wheeling and dealing.

Tony Abbott is a classic in this sense – he doesn’t come across as a styled negotiator but makes up for it with substance, preparation and doggedness. (I’m a swinging voter by the way not a Lib.)

I have found the most effective “style” negotiators are the ones that have adaptability and therefore are not 100% predictable. I like and use win-win but for me the carrot and stick is just as effective. It’s about horses for courses.

*More On Three Other Commonly Used Buyer Techniques

Damage limiter style or technique: This is where dad or a relative comes in half way through a negotiation. They imply they are only here to help – but the vibe they give off is one of desperation. The simple fact that they are now involved gives the selling agent a very clear message, and an experienced agent can work this buyer technique a treat. Why? –  because if dad doesn’t get the prize the agent knows dad is in big trouble…

Hit and hope: This is a favourite amongst way too many lazy buyers. They can’t be bothered working out the price or a strategy correctly, and they don’t have a negotiation style or technique, so what they do is add 10% for auctions and deduct 10% for private sales off the agent’s quote – and they go in swinging. It’s like a windmill style. Occasionally you get lucky and it can work – especially if the agents just can’t get a read on what you are about. The downside is that this devil-may-care style operates on very poorly researched foundations.

Begging: Any of us blokes who have been married for a few years knows what the begging style is. In fact sometimes it’s the only one I’ve got. But with an agent who is working for the seller it’s a disaster style.