On today’s episode of the Marketing Genius Podcast, I had the opportunity to catch up with Seth White, an old friend and local attorney. I wanted to take the opportunity to learn the art of negotiations and how attorneys use different types of tactics to make deals happen. I’ve had on many different people within the real estate industry, but learning an outside perspective has always been very beneficial for me. Hopefully it will be for you too.
Seth played baseball through college, following his passion for competition and his desire to be challenged. He says that was when he developed his best skillset, interacting and relating with people, and felt the calling to practice law. He initially started working in Little Rock, Arkansas for defending insurance companies, but moved back to Northwest Arkansas working with individual clients.
Usually, Seth is handling personal injury claims, consistently negotiating for a better dollar amount for his clients in the civil arena. This is how we got on to the importance of negotiations in the world of real estate and the legal world. Seth, is always trying to get to a specific number, and make people think that is the right number for them. That is the same thing that agents are doing. You are trying to negotiate to a specific number for your clients, and the other side is trying to get the best number for their client.
There are many different ways in which to get to the right number. Bluffs, focus groups, professional flinches, and hyperbole are often techniques that help a negotiator get to where they want. Seth often likes to use focus groups. These don’t have to be professionally done, but they have to provide you information that can either add value to your deal or show your breaking point.
For the insurance industry there are standard costs for certain things, set by previous court rulings. The real estate industry however is not as cut and dry on pricing because there are many more factors that go into a home’s value. Location, school zone, local shopping, and traffic are just a few of the factors that can go into the price of a home. That is why it is important to learn from the people in your area. Seth says, “ask what something is worth and what would make it worth more”. This allows you to understand when you are making the correct offers and when you have gone too far.
This is very similar to CMA or comparative market analysis for real estate agents. You find a house and check the properties around it for an average sales price, then take that number to effectively negotiate a lower or higher price for your property. This, in a way, is exactly like asking people in your area what they are willing to pay for something. Also, this technique gives you a better understanding of your clients as well as the value of the properties you are negotiating on.
Oddly enough, Seth was hesitant to implement focus groups initially. It wasn’t until after his boss recommended Seth use them, that he actually inserted focus groups into his negotiations. There is a mountain of psychology books that explain how you can use information gathered during focus groups to bring more value to your negotiations. One book Seth recommends is by David Ball, and it goes into deep detail on how to run focus groups for trial attorneys. If you’re looking for an in depth analysis of the psychology that goes into focus groups, you’ll definitely want to check out How to do Your Own Focus Groups: A Guide for Trail Attorneys.
Another great tactic that Seth likes to use is the sales bluff. The bluff can manifest itself in many different ways. You can threaten to walk away from the deal, you can make an offer way under your breaking point, or you can pretend a deal that you like is terrible. No matter the tactic you use, you want to take control of the negotiations and become the authority figure. This allows you to dictate to the other side what the true value of the deal is.
Seth likes to create an artificial breaking point, with his client, lower than the price they will actually pay. He uses this number to negotiate with,. allowing for more breathing room. This is an example of a bluff. Seth convinces the other side from the onset of the negotiations that his breaking point is much lower than it actually is, and puts them into a position that if they want to make a deal, they have to come down to his price.
There are many other ways in which a bluff can work. If you are negotiating and the other side makes an offer that you like, you can pretend that it is the worst deal you’ve ever heard. You might think, “if I like the deal why wouldn’t I just take it?” If you like a deal and let the other side know too soon they could stop where they are at, but if you bluff you could get them to an even better deal.
This podcast has a ton of great insight into the world of negotiations and how to create better deals for yourself. If you want to learn tried-and-true negotiation techniques, when to use them, and how they can help your business make sure to check out the full interview.