The art of real estate negotiation

The importance of negotiation in real estate

Around 70% of real estate transactions in France are concluded at a lower price than initially requested. This ability to negotiate effectively can translate into significant savings. For example, for an apartment listed at €500,000, a reduction of just 5% represents a saving of €25,000 - a far from negligible sum. On the other hand, for sellers, a well thought-out negotiation strategy can enable them to maximize the sale price despite fierce competition.

The stakes of negotiation are not limited to price. It also encompasses aspects such as the conditions of sale, any work required and property diagnostics. All these elements can be evaluated to create a win-win agreement.

In this article, we'll explore the different facets of real estate negotiation. We'll look at how to analyze the market and prepare a strategy, what techniques to use to get the most out of each discussion, and how to handle deadlock situations. Whether you're a novice or an experienced buyer or seller, these tips will help you approach every transaction with confidence and skill.

Understanding the real estate market before negotiating

Local market analysis

Before embarking on a real estate negotiation, it's essential to understand the local market context. The real estate market is influenced by a multitude of factors, such as the economic situation, interest rates and local housing policies. However, global trends do not always reflect the reality of each neighborhood or commune. That's why a detailed analysis of the local market is essential.

Understanding current trends: price per m², supply and demand

The first indicator to watch is the average price per square meter in the area where the property is located. This price varies considerably from one neighborhood to another, and can even differ from one street to another, depending on quality of life, infrastructure and demand.

For example, in a sought-after area with few available properties and high demand, the price per m² will naturally be higher, and negotiation margins will be low. Conversely, in an area where many properties have been for sale for a long time, it may be easier to negotiate downwards.

In the Paris region, the most reliable indicator is provided by the Chambre des Notaires de Paris. For the whole of France, you can use the Meilleurs Agents property price map.

IMPORTANT: the average selling price of a property per sqm is a value that must be interpreted with care. Within the same property, price variations can be as much as 50%.

Supply and demand play a central role. A “sellers' market” is one in which demand far exceeds supply: buyers are in competition with each other, giving sellers greater bargaining power. On the other hand, a “buyers' market” is characterized by a surplus of available goods in relation to the number of buyers. In this case, buyers have a greater margin of negotiation, as sellers are more inclined to reduce their price to conclude a sale.

How to identify a seller's market and a buyer's market

To determine the type of market, look at several indicators:

• ‍rising or falling sales prices: rising prices are often the sign of a seller's market, and falling prices of a buyer's market;
• ‍average selling time: a short selling time indicates a seller's market, while a long selling time suggests a buyer's market;
• ‍the negotiation rate: if goods are selling very close to their initial price, this is a sign of a seller's market. Conversely, sharp reductions indicate a buyer's market;
• ‍the number of properties available: a high supply with few completed transactions is typical of a buyer's market.

For example, in a large city like Paris, certain arrondissements are traditionally sellers' markets due to the high demand and scarcity of properties, while other districts on the outskirts may experience periods of buyers' markets due to the abundance of available properties.

{{cta-vert-en="/../style-guide"}}

WARNING: in the same local market, some properties may be in a buyer's market and others in a seller's market. We observed this in Paris during the crisis of 2013: for very beautiful apartments, sellers kept the upper hand, while for all other properties, buyers dictated the law.

Property valuation during negotiations

Once you've analyzed the local market, you can proceed with a precise evaluation of the property you wish to buy or sell. This will enable you to set a realistic price and strengthen your negotiating position.

Criteria to take into account when estimating the value of a property

Several factors influence the value of a property:

• location: this is one of the main determinants of price. Proximity to transport, schools, shops and green spaces increases the value of a property;
  
• general condition of the property: an apartment or house in good condition, recently renovated or with no work to be carried out, will be valued more highly than a property in need of major work.
  
• surface area and layout: a spacious property with a good distribution of rooms and an optimized layout will be more attractive;
  
• floor and exposure: an apartment on a high floor with a nice view or sunny exposure will sell for more. The presence of an elevator on higher floors will also influence valuation;
  
• additional features: the presence of a balcony, terrace, garden, parking space or cellar can also increase the value of the property;
  
• the type of building or construction can play a role: for example, certain periods of construction are more sought-after than others (Haussmann vs. 70s).

Tools and resources for carrying out this assessment

There are a number of tools and resources available to help you carry out an accurate valuation:

• real estate websites: (such as SeLoger, LeBonCoin, etc.) allow you to compare similar properties for sale in the same area. Please note that a listing price is not a selling price. If you look at the ads, you'll find that the prices are overestimated;
  
• official databases such as DVF (Demande de Valeur Foncière): these provide access to recent real estate transactions, so you can find out the real selling prices, not the advertised ones. DVF has one drawback: the references do not include important features such as floors, elevators, parking spaces, cellars, etc;
  
• the BIEN database of Parisian notaries: this provides documented references that will enable you to make refined estimates;
  
• local estate agencies: they have in-depth knowledge of the market and can provide estimates based on their experience and recent transactions;
  
• property hunters: they have a very good knowledge of property values;
  
• online price simulators: these use algorithms based on market data to provide an initial assessment. Use with caution, however, as these estimates are relatively unreliable.
  

By combining these tools with your analysis of the local market, you'll be able to establish a realistic value for the property and thus approach the negotiation with confidence. A good understanding of the real estate market and an accurate valuation will enable you to define an appropriate negotiation strategy, maximizing your chances of obtaining the best possible deal.

Preparing an effective negotiation strategy

A successful real estate negotiation requires careful preparation and a well thought-out strategy. Whether you're buying or selling, you need to know your objectives, understand the other party's motivations and structure your arguments to defend your position. Here's how to prepare an effective negotiation strategy.

VERY IMPORTANT: the basis of an effective negotiation lies in your ability to assess the fair market price*. I insist on this point because, from experience, I know that buyers (almost without exception) tend to overvalue their property, and all buyers (almost without exception) tend to undervalue the property they wish to acquire.

If your valuation isn't done properly, you risk having unrealistic expectations.

* Definition of a fair price: an amount that corresponds to the current market value. It's also a balanced price that benefits both seller and buyer.

Defining your negotiation threshold

The first step to a successful real estate negotiation is to determine your negotiation threshold, i.e. the limit beyond which you do not wish to go, either for a maximum price to pay as a buyer or a minimum price to accept as a seller.

{{cta-bordeaux-en="/../style-guide"}}

Setting a maximum or minimum price and a margin for manoeuvre

For a buyer, this means defining a maximum budget beyond which the purchase no longer makes financial or personal sense. This price must take into account not only your financial resources, but also ancillary costs such as notary fees, any work to be carried out and local taxes. For example, if your budget is €800,000, you need to include notary fees (around 7-8% of the price) and allow a margin for any work required. Set an amount slightly below your maximum financial capacity to avoid being forced to make major concessions at the last minute.

For a seller, setting a floor price is just as crucial. This minimum price must cover your financial needs, but also include a margin for negotiation. For example, if you want to obtain €1,200,000 net seller's price, set a floor price of €1,230,000 or €1,250,000 to give yourself some leeway in discussions with the potential buyer.

The importance of knowing your limits in real estate negotiations

Knowing your limits enables you to remain rational and not give in to the pressure of the moment. Without a defined negotiation threshold, you risk paying too much as a buyer or selling at a loss as a seller. An ill-prepared negotiation can lead to lasting financial regret. By having a clear limit in mind, you'll also be more confident and less likely to be thrown off balance by aggressive negotiating techniques on the other side.

Knowing the other side's motivations

To optimize your strategy, it's essential to understand the other party's reasons for buying or selling. This information can tip the balance in your favor if you use it wisely.

Find out why you're buying or selling

Ask questions and look for clues that might reveal the other party's motives. For example, a seller may be in a hurry to conclude the sale because he has to move for professional or personal reasons, or because he is experiencing financial difficulties. A buyer, on the other hand, may need to acquire a property quickly due to a change in family or professional circumstances.

Use this information to adjust your strategy

Knowing the other party's motivations enables you to adjust your approach. If the seller is in a hurry to sell, you can propose a slightly lower price, but with advantageous conditions, such as a fast transaction. If the buyer is interested but hesitant, offering a slight discount or including certain equipment in the sale may be enough to convince him.

Similarly, if the seller is under no pressure to sell, he'll be less inclined to lower his price. In this case, you'll need to find other levers to negotiate, such as the closing date or payment terms. In any case, showing that you understand the other party's motivations strengthens your credibility and your position as a negotiator.

Prepare your negotiating arguments

To effectively defend your position, prepare solid arguments based on concrete facts. Good argumentation can be influential. The soundness of your position can make it easier to reach an agreement.

Arguments based on concrete facts

Your arguments must be supported by objective, verifiable evidence. For a buyer, this may include :
‍

• work to be carried out: if major renovations are required, estimate their cost and argue that this will reduce the value of the property;
  
• market price: compare the asking price with similar properties recently sold in the area to show that the property is overpriced;
  
• the property's shortcomings: problems with insulation, heating or the lack of an elevator are all arguments to justify a lower offer.

For a seller, arguments may include :

• the property's assets: exposure, high floor, recent renovation, top-of-the-range fixtures and fittings, lack of overlooking, etc;
  
• neighborhood advantages: proximity to transport, schools, shops, etc;
  
• market trends: if prices are on the rise in the neighborhood, this is a good reason not to accept an offer that's too low.

The importance of presenting and structuring your arguments

It's not enough to have good arguments, you also need to know how to present them in a clear and structured way. Organize your ideas according to their importance, and adapt your speech or writing to the person you're talking to. Start with the most objective elements, such as price comparisons, before moving on to more subjective aspects. Be concise and to the point, avoiding unnecessary digressions.

Good preparation allows you to approach the negotiation with confidence and to reinforce your credibility. Whether you're negotiating the purchase or sale of a property, these steps will help you reach a mutually beneficial agreement.

Negotiation techniques

Real estate negotiation requires preparation, but also the ability to adapt to the context and the communication channel. Whether it's a face-to-face meeting, a remote discussion by telephone or e-mail, or the strategic use of silence, each technique has its own particularities and can be decisive in the outcome of a negotiation. Here's how Parlez-moi de Paris can optimize your approach to real estate negotiation, depending on the situation.

{{cta-vert-en="/../style-guide"}}

IMPORTANT: being yourself is the best attitude you can have for successful negotiation. The techniques we'll cover need to be perfectly assimilated. Otherwise, you risk becoming prim and proper, and losing sincerity. It's better to draw inspiration from these techniques than to apply them to the letter.

Face-to-face negotiation

Face-to-face negotiation is the most classic and direct form of negotiation, but also the most complex to master, since it involves non-verbal elements that can considerably influence the interaction. Your attitude, posture and even your eyes can say as much as your words.

Verbal and non-verbal techniques to reinforce your position

• Body language: adopting an open, confident posture can reinforce your position. Sit up straight, shoulders relaxed and avoid nervous gestures. Eye contact is also crucial: maintaining eye contact shows your commitment and confidence, but without being insistent so as not to appear aggressive;
  
• your voice: speak in a calm, poised voice. Avoid speaking too quickly, which can betray stress or impatience. Your intonation should be firm but benevolent, avoiding sudden fluctuations that can destabilize the person you're talking to;
  
• active listening: show that you're really listening to what the other person is saying by nodding, rephrasing and asking clarifying questions. This shows that you're open to dialogue and that you're taking their arguments into account, while preparing the ground to present your own more convincingly.
  

The art of asking the right questions to guide the discussion

Questions are a powerful tool for steering the discussion in the desired direction. It's essential to ask open-ended questions that encourage the other side to express themselves further:

• Open-ended questions: “What are your priority criteria for this sale/purchase?” or “How do you envisage the next few months if the deal doesn't close quickly?” These questions provide valuable information about the other party's needs, expectations or constraints;
  
• Guided questions: “Given the work involved, what would be a fair price for you?” or “If we agreed to close quickly, could you envisage a slight reduction?” These questions guide the other party towards a reflection that favors your position.

Remote negotiation (telephone, e-mail)

Remote negotiations present particular challenges, as they eliminate the visual cues and proximity that make it easier to read the other person's intentions. However, they also offer advantages, such as the ability to take a step back before responding, and to better structure your arguments.

How to adapt your strategy to your communication channel

• by telephone: tone of voice becomes the main element of communication. Adopt a warm tone. Be careful not to speak too quickly, to avoid sounding stressed or impatient. Take the time to ask your questions and listen carefully to the answers. In the absence of eye contact, you'll need to rephrase regularly to show that you're following the thread of the conversation;
  
• by e-mail: writing allows you to take time to think before answering. Be clear and concise, setting out your arguments in a structured way. Start with a brief summary of the points raised in previous discussions, then present your proposals or objections with precise arguments. Always end your e-mails with an open-ended question or a proposal for a meeting to keep the dialogue going.
  

The importance of keeping a written record

One of the major advantages of long-distance negotiations, particularly by e-mail, is the ability to keep a written record of exchanges. This helps avoid misunderstandings and makes it easy to come back to points agreed or discussed. Each exchange must therefore be carefully drafted, avoiding ambiguous wording that could be misinterpreted. Keeping a record of exchanges can also serve as evidence in the event of a dispute.

The technique of silence in negotiation

Silence is often perceived as a sign of weakness or hesitation, but it can actually be a very powerful negotiating tool. Properly mastered, it pushes the other party to reveal more, and can even lead them to re-evaluate their position.

How to use strategic silences to get the other party to reveal information or reconsider its position

• Silence after an offer: after making an offer or counter-offer, resist the urge to immediately justify your position. Let the silence settle in. This can make the other party uncomfortable, prompting them to fill the void by talking, often to reveal information or make concessions they wouldn't otherwise have made;
  
• silence in the face of high demands: if the other party asks for something you consider unreasonable, don't react immediately. Silence shows your disagreement without verbalizing it, which may lead the other party to reconsider their request;
  
• silence for reflection: if you receive unexpected information or a new proposal, take a few seconds of silence before responding. This shows that you're taking the time to analyze the situation, reinforcing your position as a thoughtful and serious interlocutor.

{{cta-bordeaux-en="/../style-guide"}}

Using negotiation techniques means adapting your approach, depending on the context and communication channels. Whether face-to-face, at a distance or through the strategic use of silence, each technique can be decisive in reaching a satisfactory agreement. Regular practice and a sound knowledge of these tools will enable you to approach each negotiation with confidence and efficiency.

Handling deadlock situations in real estate negotiations

During negotiations, discussions often reach a deadlock. Knowing how to handle these situations can help you avoid talks getting bogged down or ending in failure. It's rewarding to know when it's best to conclude, how to react to an outright refusal, or how to propose a compromise to break the deadlock. Here's how to deal with these delicate situations.

Knowing when to conclude

Real estate negotiations can drag on unnecessarily if one of the parties fails to recognize the right moment to conclude. This can lead to stakeholder exhaustion and, in some cases, an unfavorable turn of events.

Identify the signals indicating that negotiation is at its peak

To determine when negotiation has reached its peak, it is important to pay attention to certain signals:

• reduction of concessions: if both parties start to offer smaller and smaller concessions, this often means that the margin for negotiation is shrinking. For example, a negotiation between buyer and seller over €1,000 to €5,000 shows that positions are becoming entrenched;
• repetition of arguments: when the same arguments start to come up again and again, this may indicate that each party has expressed all its points of view, and that the discussion is no longer bringing any new elements to the table. This is a good indicator that common ground has been reached, and it's time to move on to the conclusion;
• changes in attitude: a change in tone of voice, body language or general attitude can mean that the other party is ready to conclude, but doesn't dare to take the first step. For example, a change from aggressiveness to a more conciliatory attitude is a signal that the other party wants to get it over with.

‍
How to conclude without showing too much eagerness

Concluding a real estate negotiation without showing haste is a delicate exercise. Rushing can be perceived as a sign of weakness and encourage the other party to demand more:

• Summarize the points of agreement: before finalizing the deal, summarize the points on which both parties have agreed. This highlights the progress made and consolidates the other party's commitment;
• propose a positive conclusion: use phrases that suggest a positive ending, such as “I think we've found a good compromise that satisfies both parties” or “We've made good progress, it would be a shame not to seize the opportunity now”. This suggests the end of the negotiation without appearing to be in a hurry;
• offer a final concession: sometimes, a small last-minute concession (for example, agreeing to a shorter payment term or leaving some furniture in the property) can be enough to finalize the agreement. This final concession, if well calibrated, shows your willingness to conclude while leaving the other party with a feeling of satisfaction.
  

Dealing with refusal

It's not uncommon to come up against an outright refusal during a negotiation. Rather than seeing this as a failure, it should be seen as an opportunity to redirect the discussion and explore other possibilities.

How to react to a categorical refusal and get the discussion moving again

• Remain calm and ask questions: when faced with a refusal, the first reaction should be to remain calm and ask for clarification. “I understand that you're not happy with this proposal, but can you explain exactly what the problem is?” This shows that you're listening and ready to understand his or her needs;
  
• re-explain your arguments: sometimes, rejection comes from a misunderstanding of your proposal. Rephrase your arguments in a different way, emphasizing the benefits for the other party;
  
• show empathy: for example, if the buyer refuses a price because he finds it too high in relation to his budget, show that you understand his situation, but also explain why your price is justified (condition of the property, market price, etc.). This empathetic approach can unblock the situation by showing that you're sensitive to his concerns.
  

Propose creative alternatives

• sales or purchase deadlines: adapting deadlines can sometimes unblock a situation. For example, propose a quicker signature if the buyer is in a hurry, or on the contrary, give the seller more time to find a new home;
  
• Inclusions and exclusions: you can propose to include or exclude certain elements of the property. For example, include furniture or appliances, or exclude an outbuilding or part of the land to reduce the overall cost.
  

The compromise option

Compromise is often the key to breaking a deadlock. It enables you to find common ground by giving in partially on certain points, while obtaining concessions from the other party.

When and how to propose a compromise to avoid a failed negotiation

• When to propose a compromise: compromise should be proposed when you feel that positions are irreconcilable and that the negotiation is on the point of collapse. It's a last resort that shows your determination to find a fair solution;
  
• how to formulate the compromise: be clear about the points on which you are prepared to give in and those that are essential to you. For example, “We can agree to lower the price by €5,000 if you agree to give us time to find a new apartment”;
  
• avoid unbalanced compromises: a compromise must be perceived as fair by both parties. Avoid making a compromise that puts you at too great a disadvantage. It should be a partial adjustment, not a capitulation.
  

To conclude on the art of real estate negotiation

Real estate negotiation is a complex exercise that requires a combination of preparation, strategy and flexibility. Whether you're buying or selling, mastering this art can save you a lot of money or maximize the value of your property. Throughout this article, we've explored the key steps to successfully approaching a negotiation: understanding the local market, evaluating the property objectively, preparing an appropriate strategy and knowing how to handle deadlock situations.

Real estate negotiation isn't just about getting a better price. Terms of sale, deadlines and even minor concessions can have a significant impact on closing a deal. Knowing how to correctly assess one's room for maneuver and understanding the motivations of the opposing party are major assets in reaching a balanced agreement.

Successful negotiation also depends on the ability to remain calm and creative in the face of obstacles. A refusal is not an end in itself, but an invitation to redirect the discussion and explore other solutions. Proposing intelligent, balanced compromises can often unblock a seemingly hopeless situation and help to find common ground.

{{cta-vert-en="/../style-guide"}}

Finally, don't forget that the best negotiation is the one that leaves both parties satisfied. An agreement in which everyone feels respected and heard is far more lasting and enjoyable than a victory won by forceps. With good preparation, an open attitude and the application of the techniques discussed in this article, you'll be better equipped to tackle your real estate negotiations with confidence and achieve your goals.

Whether this is your first transaction or you're a seasoned negotiator, remember: in real estate, as in life, the key to success lies in the balance between firmness and flexibility. Good luck in your real estate negotiations!