As a real estate professional, you are responsible for protecting your clients’ interests. This article covers the valuable skill of negotiation to help you close deals.

The Science Behind How to Close a Sale

Let’s start with a surprisingly insightful sales statistic.

A large majority of salespeople report giving up on a prospect after hearing “no” four times. Eighty percent of prospects report that it takes them four ‘no’s before they finally say ‘yes.’

Did you get that?

80% of people will say no to a salesperson at least four times before changing their minds and trying out a new solution. This statistic means that you shouldn’t give up on a lead after the first “no”, because it often takes multiple interactions to close a sale.

If you follow up with your leads, build relationships, and stay in touch with your best prospects, you will be better than most of the competition.

#1 Decide what you want to get out of the deal

Before you start negotiating, you need to decide what you want to achieve. You need to figure out what winning would mean for you and your client.

It’s not always about the money, though it often is. The amount of money you get back could vary depending on the terms of the agreement.

For example, do you represent sellers who are in a hurry to sell their homes because of a job relocation, divorce, or other life-changing circumstances?

If selling their home is not the seller’s main priority, then getting top dollar for the home is not a priority. Winning, in this case, means selling the home ASAP. To win, you would have to price the home to sell from day one.

Do your clients want to sell their home so they can buy a nicer, bigger, and more expensive one? Then getting top dollar IS the main priority. In this case, it would be wise to set a bottom dollar amount and not move from it under any circumstances.

Why does this real estate negotiation technique work?

You will be able to make more informed decisions on what type of deals you can make once you have clarified your intentions. There will be a greater understanding of where you cannot be lenient.



#2 Use an escalation clause on your offers

An escalation clause is designed to outbid other buyers in a bidding war. The app does this by automatically increasing the buyer’s offer by a certain amount up to a maximum limit.

To make that clearer, let’s look at an example.

You have a client called Mike. He would like to purchase the home you showed him for $200,000. As his real estate agent, you should tell Mike that the home is beautiful, it’s well-located, and he may not be the only one making an offer.

An escalation clause is a tool that can help a buyer secure a home by specifying an amount that the buyer is willing to pay above the listing price if another offer is made on the home. Mike thinks the property is a good deal and decides to add it to his buyer’s offer.

If another offer for the house comes in that is higher than Mike’s offer, his offer will automatically increase by $2,000 increments up to a maximum of $230,000.

If the home seller only gets one other offer, then Mike’s offer of $200,000 stays on the table. If someone offers to buy a house for $210,000, and the owner was previously planning to sell it to someone else for $212,000, the owner will now try to sell it to the first person for $212,000.

If Ben or a different buyer offers $230,000, Mike will no longer escalate his bid.

Why does this real estate negotiation technique work?

With this method, customers can make an offer for a range of prices instead of a set amount. This means that there is no one else who will offer more money than them for the same item.


An escalation clause can be confusing and may frustrate home sellers. An escalation clause is a clause in a contract that states that the price of the item being purchased will increase by a certain amount if the buyer’s credit score decreases. If you’re putting together a contract with an escalation clause, you may need the help of a real estate attorney to make sure the clause is enforceable.

An escalation clause is when the buyer states how much they are willing to pay for a certain property. By adding this clause, the buyer is revealing the maximum price they are willing to pay for the property. The seller may try to take advantage of this situation by asking for more money than the buyer is willing to pay.

#3 Make a conditional offer, based on market data

You would like to represent Charles and Darcy, a couple who fell in love with a 3-bedroom house that is listed for $500,000. You investigate the value of the house and find that it is worth approximately $430,000.

You tell the couple to bid $430,000 for the house. Although you had good market research to back up your offer, the sellers would not lower their price. “Our home is worth 500,000 dollars. Take it or leave it.,” say the sellers.

“Wow. These people are nuts!” — says Darcy. “The house is exactly what we were looking for. We’re not going to pay half a million dollars for it.”

Darcy is absolutely right. It is clear that only someone with more money than sense would pay that much for it. But you weren’t born yesterday. The sellers are making decisions based on their emotions instead of logic.

It is possible that the sellers purchased their home during a time when the market was at its highest point. They may have been convinced to spend a lot of money on renovations because a TV show promised it would raise the value of their home.

Perhaps the family raised their children in the home and have many fond memories tied to the place which prevents them from seeing the home’s real market value.

Even if they have a good reason for wanting to sell their house, eventually the monthly bills will start to pile up and they will come back to reality.

Make sure you include a home inspection contingency in the contract so you can get out of the deal if the home inspection finds any problems. If you want to convince your buyers to make a conditional offer, make sure you include a home inspection contingency in the contract in case any problems are found during the inspection.

“I’m interested in the business, but I’m only going to give you $300,000.” The owners are asking for $500,000 and you tell them that you’re only willing to give them $300,000. I doubt that any offers you receive will be higher than $445,000. If you can’t find a better offer than mine within 60 days, we’ll close at $445,000. Sounds like a deal?”

You physically write out the conditional offer and send it to the seller if they agree to your terms.

Why does this real estate negotiation technique work?

Time and monthly bills have a way of reminding sellers that they need to be realistic. As the house remains unsold for a longer period of time, the seller is more likely to lower the price.

If you include a clause in your offer that anticipates the seller’s inevitability to lower the price, you will be the first one to make a bid when the seller is ready to accept reality.


Some sellers are only listing their items to see what kind of offers they would get, rather than being interested in actually selling the item. If you have evidence that the price should be lower, they will not be willing to change it.

Selling a home is a very emotional thing. Some sellers may refuse to sell to you to avoid an argument or to prove that they were right.

#4 Make an offer at the home’s market value

Instead of going back and forth between the buyer making a low offer and the seller counter-offering, the buyer could make a counter-counter-offer, etc.

…why not just cut to the chase?

To find the market value of a home, you can compare it to similar properties in the area. Take that amount, and make it your initial offer.

Why does this real estate negotiation technique work?

Before making an offer for a house, you should research how much the market is willing to pay for it. This information can help you make a more informed and competitive offer.

If the seller has a competent real estate agent, the first thing the agent would do is appraise the home by looking at similar homes in the area. The agent would price the home 12-17% above the appraised value.

If you bid the market value of the home, then the sellers will see that you are serious and you know how much the home is worth. If the seller is offered an amount that is close to their asking price, they would be discouraged from counter-offering aggressively, for fear of losing the buyer.


If there are a lot of buyers interested in a property, offers at the market value are likely to be beaten out by other buyers.

A cold market is one where there are more sellers than buyers. In this case, a seller may be willing to accept an offer below market value because they want to sell quickly. If you make an offer that is very likely to be accepted, you will not get the chance to save money.

#5 Use the power of anchoring to find the buyer’s bottom line

Sometimes, playing games IS the right strategy.

This strategy is not for people who are easily upset or offended. It uses a strong cognitive bias called “anchoring” and if you are not careful with it, you may upset or even anger the other person.

Start your research by finding the home’s real market value. Then, make a lowball offer that is 20-35% below that number. Then sit back, and wait for the seller’s response.

When the seller responds to your offer, you will have an idea of how much they are willing to sell the property for. You can take the amount the seller gave you, apologize for your “rudeness,” and make a counter-offer that is somewhere between your initial bid and the amount the seller offered.

Why does this real estate negotiation technique work?

The main goal of this technique is to get an accepted offer. If it does get accepted, you will become your buyer’s idol for life. Instead, this technique does three things:

  1. It reveals the other party’s bottom line.
  2. It leverages the power of anchoring. People have the tendency to unconsciously rely on an initial piece of information (such as your lowball offer) to make any future decisions. Thus any future counter-offers, arguments, and estimates will revolve around the anchor YOU set.
  3. Any “concession” you make as you counter above your anchor price will seem FAR MORE reasonable. This lets you negotiate a final price that’s much closer to the other party’s bottom line.


An experienced real estate agent will be able to tell when someone is trying to use this tactic, and may just counteroffer at the original price.

If you make a lowball offer, it might upset the buyer (or an inexperienced real estate agent), and stop the negotiations.

#6 Find out why the other party wants to sell

When you know what the other party’s motivation is for selling, you have an advantage in negotiating the sale. But unlike poker, this isn’t cheating. It’s research.

Why is the seller’s client selling the home? This is something you can (and should) ask the seller’s real estate agent. Although agents are likely to give you a reason for why a property is priced a certain way, the answer is likely to be watered down in order to appease buyers. If you want to find out why they’re selling the home, you may need to ask more questions.

The best time to learn about a property is when the property is having an open house. If you have the chance to speak with the owners, take advantage of it to learn more.

Asking them requires a bit of finesse. Avoid going directly to the buyers and questioning them as if you were in a movie. Instead, go ahead and enjoy the open house first. Make a list of things you like about the home you are touring.

After you have completed that task, you are then able to start a conversation with the sellers. You don’t have to talk about real estate if you don’t want to. Just shoot the breeze, and establish some rapport.

Bring up the matter you want to discuss casually during the conversation. You should ask your client plenty of questions about their home, such as how long they have lived there, what made them sell the home, and where they are moving to. This will help you get a better understanding of their situation and needs. If the conversation is going well, you’ll be surprised how much information the seller will give you directly.

Why does this real estate negotiation technique work?

The strategy referred to is understanding the homeowner’s motivation for selling. This can give you an idea of what they are hoping to gain from the sale.

This means that you can use the information you have to get the best possible deal for your client.


None! Knowledge is power.

7. Options to close

With this strategy to close deals, you are giving your prospect a choice between two or more options, hoping that they will choose one rather than saying no. You might offer them two pricing plans that suit their needs, tiered levels of service with different features, or the choice to implement earlier or later.

The reason this is effective is because when people are presented with two options, they are more likely to choose one, or even choose the cheaper option if it is available. This is due to the feeling that they are saving money by making this choice.

When it is most effective: When you have different levels of service and know that your prospect would benefit from both of them.

Do not use this method when your product is not changing and when you do not have people interested in the unique features your product offers.

8. The Sharp Angle Close

Some people are very experienced with sales pitches and know how to get the best deals by asking for additional items or discounts. An expert salesperson can use the Sharp Angle Close to take experienced negotiators by surprise.

If you have approval, give them what they want but make sure they know that it’ll come at a cost.

This works because you give them something they want and in exchange they give you something you want.

This technique is most effective when you are negotiating with people who are frequently targeted by salespeople or those who request benefits or perks in exchange for signing.

You should not use this tactic when your prospect is not familiar with sales nuances and is not asking for anything special or unique from you.


While marketing and data skills are important for a successful real estate career, they are not the only skills needed. Your negotiation skills are what will get you the best deals and help you pay your bills.

Don’t be discouraged if some of these techniques make you feel uncomfortable. If you want to improve your real estate negotiation skills, it will be time well spent and you will make more money in the future.

What are some of the real estate negotiation techniques that you find to be effective? Let us know in the comments.