______________________________________ CPP40307 Certificate IV in Property Services (Real Estate)
CPPDSM4017A (Elective) Negotiate Effectively in Property Transactions
Learner Guide © The Australian Salesmasters Training Co Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e |1 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
______________________________________ CPP40307 Certificate IV in Property Services (Real Estate)
Contact Page
Australian Salesmasters Training Co P/L Registered Training Organisation #6854
Phone:
(02) 9700 9333
Fax:
(02) 9700 8988
Email:
Info@thesalesmasters.com.au
Mail:
PO BOX 638, Rosebery, NSW 2018
www.thesalesmasters.com.au
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Š Australian Salesmasters Training Co P/L (ASTC) ASTC believes that the content of these notes and checklists are accurate and current at the time of printing. ASTC does not make any warranty of any kind, what so ever expressed or implied, with respect to the contents. It is the responsibility of the real estate professional using the notes and checklist to verify any information before relying on it. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e |3 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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Table of Contents
UNIT DESCRIPTOR .................................................................................................................. 5
LEARNER ACTIVITIES ............................................................ Error! Bookmark not defined.
ELEMENT 1. – ESTABLISH NEEDS AND EXPECTATIONS OF RELEVANT PARTIES .................... 7
ELEMENT 2. NEGOTIATE WITH PARTIES INVOLVED IN PROPERTY TRANSACTIONS TO REACH A DESIRED OUTCOME .............................................................................................. 24 ELEMENT 3. MANAGE POTENTIAL AND REAL DISPUTES WITH PARTIES TO PROPERTY TRANSACTIONS .................................................................................................................... 50 CONCLUSION ........................................................................................................................ 61
ACTS, LEGISLATION AND FORMS ...................................................................................... 62
OUR MOST SOUGHT AFTER PRODUCTS AND SERVICES ...................................................... 69
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______________________________________ CPP40307 Certificate IV in Property Services (Real Estate)
CPPDSM4017A Negotiate effectively in property transactions UNIT DESCRIPTOR This unit of competency specifies the outcomes required to manage effective negotiations in relation to the sale, lease or management of property. It includes establishing the needs and expectations of relevant parties, negotiating to achieve desired outcomes and managing potential and real disputes between parties. The unit may form part of the licensing requirements for persons engaged in real estate activities in those States and Territories where these are regulated activities.
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1. ESTABLISH NEEDS AND EXPECTATIONS OF RELEVANT PARTIES 1.1 Clear and open discussions are held with relevant parties to clarify issues and identify desired outcomes in line with agency practice and legislative requirements. 1.2 Consequences of not reaching agreement are identified and other alternatives are determined.
Be ready when opportunity presents itself! Use it. No matter how small the opportunity may be. Use it!
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ELEMENT 1. – ESTABLISH NEEDS AND EXPECTATIONS OF RELEVANT PARTIES What is Negotiation? Negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument. In any disagreement, individuals understandably aim to achieve the best possible outcome for their position (or perhaps an organisation they represent). However, the principles of fairness, seeking mutual benefit and maintaining a relationship are the keys to a successful outcome. Specific forms of negotiation are used in many situations: international affairs, the legal system, government, industrial disputes or domestic relationships as examples. However, general negotiation skills can be learned and applied in a wide range of activities. Negotiation skills can be of great benefit in resolving any differences that arise between you and others. Negotiation can be a structured process using many different interpersonal skills.
Why Negotiate? It is inevitable that, from time-to-time, conflict and disagreement will arise as the differing needs, wants, aims and beliefs of people are brought together. Without negotiation, such conflicts may lead to argument and resentment resulting in one or all of the parties feeling dissatisfied. The point of negotiation is to try to reach agreements without causing future barriers to communications.
The Importance of Negotiating Skills for Real Estate Agents Negotiating skills for real estate agents are an integral aspect of a successful career. While most real estate professionals possess an inherit ability to express themselves during deal negotiations, educational and training courses are encouraged. Achieving not only closure of a real estate deal, but garnering the best price and commission are the mark of a successful real estate agent. Strong negotiating tactics, along with effective communication techniques are crucial skills for real estate professionals. Getting a buyer and seller to sign a contract is only part of the battle. No commission is earned until the ink dries on all documents placed upon the closing table. The negotiating actually begins when the first contact with a potential client occurs. Selling yourself as an agent, the brokerage, and services provided for listed properties is the first step in earning a commission. Negotiating with a potential seller or buyer can be conducted on the phone, via email, or in person. Confidence and an outgoing personality bolster the way an agent's knowledge and experience come across to clients. Body language and public speaking courses are often a part of an agent's continuing education training. Technology courses and special "E-Pro" licensure designation are growing trends in real estate education. Clients should expect Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e |7 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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their agent to be able to market their property to the fullest extent possible, in multiple venues, including virtual tours online, and with media buys for real estate related television spots. Competition is the name of the game in real estate. Thousands of agents across the country volley for the right to represent clients, and add another notch to their closure belts each day. Buyers and sellers benefit from the competitive environment, and the frenzy to offer the best array of services and promotion of the listed properties as possible. Potential clients should shop around for the best producing agent, or real estate brokerage, and thoroughly interview each agent on their sales records, and level of experience. Real estate educational centers offer courses in negotiating skills and sales tactics for agents. While such courses are not a required aspect of the required continuing education curriculum, successful agents and brokers strive to hone their skills and earn higher commissions. The art of the deal does not involve one particular formula, but the ability to read the client quickly, and choose the right words to comfort them during deal obstacles, and close the deal. Networking with lenders, title agencies, real estate appraisers, and insurance companies is also an important aspect of developing a streamlined system of services to offer a potential client, and close deals without a lot of red tape.
Stages of Negotiation (Note: we will use a couple of examples of this. Later in this text you will see an 8 stage process. Good to have a couple of viewpoints.) In order to achieve a desirable outcome, it may be useful to follow a structured approach to negotiation. For example, in a work situation a meeting may need to be arranged in which all parties involved can come together. The process of negotiation includes the following stages: 1. 2. 3. 4. 5. 6.
Preparation Discussion Clarification of goals Negotiation towards a WIN-WIN situation Agreement Implementation of a course of action
1. Preparation Before any negotiation takes place, a decision needs to be taken as to when and where a meeting will take place to discuss the problem and who will attend. Setting a limited timescale can also be helpful to prevent the disagreement continuing. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e |8 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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This stage involves ensuring all the pertinent facts of the situation are known in order to clarify your own position. In the work example above, this would include knowing the ‘rules’ of your organisation, to whom help is given, when help is not felt appropriate and the grounds for such refusals. Your organisation may well have policies to which you can refer in preparation for the negotiation. Undertaking preparation before discussing the disagreement will help to avoid further conflict and unnecessary wasting time during the meeting. 2. Discussion During this stage, individuals or members of each side put forward the case as they see it, that is their understanding of the situation. Key skills during this stage are questioning, listening and clarifying. Sometimes it is helpful to take notes during the discussion stage to record all points put forward in case there is need for further clarification. It is extremely important to listen, as when disagreement takes place it is easy to make the mistake of saying too much and listening too little. Each side should have an equal opportunity to present their case. 3. Clarifying Goals From the discussion, the goals, interests and viewpoints of both sides of the disagreement need to be clarified. It is helpful to list these in order of priority. Through this clarification it is often possible to identify or establish common ground. 4. Negotiate for a WIN-WIN Outcome This stage focuses on what is termed a WIN-WIN outcome where both sides feel they have gained something positive through the process of negotiation and both sides feel their point of view has been taken into consideration. A WIN-WIN outcome is usually the best outcome, however it may not always be possible but through negotiation it should be the ultimate goal. Suggestions of alternative strategies and compromises need to be considered at this point. Compromises are often positive alternatives which can often achieve greater benefit for all concerned rather than holding to the original positions. 5. Agreement Agreement can be achieved once understanding of both sides’ viewpoints and interests have been considered. It is essential to keep an open mind in order to achieve a solution. Any agreement needs to be made perfectly clear so that both sides know what has been decided. 6. Implementing a Course of Action From the agreement, a course of action has to be implemented, to carry through the decision. Failure to Agree: If the process of negotiation breaks down and agreement cannot be reached, then re-scheduling a further meeting is called for. This avoids all parties becoming embroiled in heated discussion or argument, which not only wastes valuable time but can also damage future working relationships. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e |9 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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At the subsequent meeting, the stages of negotiation should be repeated. Any new ideas or interests should be taken into account and the situation looked at afresh. At this stage it may also be helpful to look at other alternative solutions and/or bring in another person to mediate. Informal Negotiation: Apart from situations when it is appropriate to employ this more formal process of negotiation, you will no doubt encounter one-to-one situations where there is a need to negotiate informally. At such a time when a difference of opinion arises, it might not be possible or appropriate to go through the stages set out above in a formal manner. Nevertheless, remembering the key points in the stages of formal negotiation may be very helpful in a variety of informal situations.
LISTENING SKILLS Listening is the ability to accurately receive messages in the communication process. Listening is key to all effective communication, without the ability to listen effectively messages are easily misunderstood – communication breaks down and the sender of the message can easily become frustrated or irritated. Listening is so important that many top employers give regular listening skills training for their employees. This is not surprising when you consider that good listening skills can lead to: better customer satisfaction, greater productivity with fewer mistakes, increased sharing of information that in turn can lead to more creative and innovative work. Good listening skills also have benefits in our personal lives, including: a greater number of friends and social networks, improved self-esteem and confidence, higher grades in academic work and increased health and wellbeing. Studies have shown that, whereas speaking raises blood pressure, listening brings it down. Listening is not the same as hearing. Hearing refers to the sounds that you hear, whereas listening requires more than that: it requires focus. Listening means paying attention not only to the story, but how it is told, the use of language and voice, and how the other person uses his or her body. In other words, it means being aware of both verbal and non-verbal messages. Your ability to listen effectively depends on the degree to which you perceive and understand these messages. “The most basic and powerful way to connect to another person is to listen. Just listen. Perhaps the most important thing we ever give each other is our attention.� Rachel Naomi Remen
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We spend a lot of our time listening Adults spend an average of 70% of their time engaged in some sort of communication, of this an average of 45% is spent listening compared to 30% speaking, 16% reading and 9% writing. (Adler, R. et al. 2001).
Based on the research of: Adler, R., Rosenfeld, L. and Proctor, R. (2001) Interplay: the process of interpersonal communicating (8th edn), Fort Worth, TX: Harcourt.
10 Principles of Listening to follow A good listener will listen not only to what is being said, but also to what is left unsaid or only partially said. Listening involves observing body language and noticing inconsistencies between verbal and non-verbal messages. For example, if someone tells you that they are happy with their life but through gritted teeth or with tears filling their eyes, you should consider that the verbal and non-verbal messages are in conflict, they maybe don't mean what they say. Listening requires you to concentrate and use your other senses in addition to simply hearing the words spoken. Listening is not the same as hearing and in order to listen effectively you need to use more than just your ears. 1. Stop Talking “If we were supposed to talk more than we listen, we would have two tongues and one ear.� Mark Twain. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 11 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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Don't talk, listen. When somebody else is talking listen to what they are saying, do not interrupt, talk over them or finish their sentences for them. Stop, just listen. When the other person has finished talking you may need to clarify to ensure you have received their message accurately. 2. Prepare Yourself to Listen Relax. Focus on the speaker. Put other things out of mind. The human mind is easily distracted by other thoughts – what’s for lunch, what time do I need to leave to catch my train, is it going to rain – try to put other thoughts out of mind and concentrate on the messages that are being communicated. 3. Put the Speaker at Ease Help the speaker to feel free to speak. Remember their needs and concerns. Nod or use other gestures or words to encourage them to continue. Maintain eye contact but don’t stare – show you are listening and understanding what is being said. 4. Remove Distractions Focus on what is being said: don’t doodle, shuffle papers, look out the window, pick your fingernails or similar. Avoid unnecessary interruptions. These behaviours disrupt the listening process and send messages to the speaker that you are bored or distracted. 5. Empathise Try to understand the other person’s point of view. Look at issues from their perspective. Let go of preconceived ideas. By having an open mind we can more fully empathise with the speaker. If the speaker says something that you disagree with then wait and construct an argument to counter what is said but keep an open mind to the views and opinions of others. 6. Be Patient A pause, even a long pause, does not necessarily mean that the speaker has finished. Be patient and let the speaker continue in their own time, sometimes it takes time to formulate what to say and how to say it. Never interrupt or finish a sentence for someone. 7. Avoid Personal Prejudice Try to be impartial. Don't become irritated and don't let the person’s habits or mannerisms distract you from what they are really saying. Everybody has a different way of speaking - some people are for example more nervous or shy than others, some have Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 12 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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regional accents or make excessive arm movements, some people like to pace whilst talking - others like to sit still. Focus on what is being said and try to ignore styles of delivery. 8. Listen to the Tone Volume and tone both add to what someone is saying. A good speaker will use both volume and tone to their advantage to keep an audience attentive; everybody will use pitch, tone and volume of voice in certain situations – let these help you to understand the emphasis of what is being said. 9. Listen for Ideas – Not Just Words You need to get the whole picture, not just isolated bits and pieces. Maybe one of the most difficult aspects of listening is the ability to link together pieces of information to reveal the ideas of others. With proper concentration, letting go of distractions, and focus this becomes easier. 10. Wait and Watch for Non-Verbal Communication Gestures, facial expressions, and eye-movements can all be important. We don’t just listen with our ears but also with our eyes - watch and pick up the additional information being transmitted via non-verbal communication. Do not jump to conclusions about what you see and hear. You should always seek clarification to ensure that your understanding is correct.
BARRIERS TO EFFECTIVE COMMUNICATION There are many reasons why interpersonal communications may fail. In many communications, the message may not be received exactly the way the sender intended and hence it is important that the communicator seeks feedback to check that their message is clearly understood. There exist many barriers to communication and these may occur at any stage in the communication process. Barriers may lead to your message becoming distorted and you therefore risk wasting both time and/or money by causing confusion and misunderstanding. Effective communication involves overcoming these barriers and conveying a clear and concise message. Some common barriers to effective communication include: •
The use of jargon, over-complicated or unfamiliar terms.
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Emotional barriers and taboos.
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Lack of attention, interest, distractions, or irrelevance to the receiver.
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Differences in perception and viewpoint.
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Physical disabilities such as hearing problems or speech difficulties.
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Physical barriers to non-verbal communication.
•
Language differences and the difficulty in understanding unfamiliar accents.
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Expectations and prejudices which may lead to false assumptions or stereotyping. People often hear what they expect to hear rather than what is actually said and jump to incorrect conclusions.
•
Cultural differences. The norms of social interaction vary greatly in different cultures, as do the way in which emotions are expressed. For example, the concept of personal space varies between cultures and between different social settings.
A skilled communicator must be aware of these barriers and try to reduce their impact by continually checking understanding and by offering appropriate feedback. A CATEGORISATION OF BARRIERS TO COMMUNICATION Language Barriers Clearly, language and linguistic ability may act as a barrier to communication. However, even when communicating in the same language, the terminology used in a message may act as a barrier if it is not fully understood by the receiver(s). For example, a message that includes a lot of specialist jargon and abbreviations will not be understood by a receiver who is not familiar with the terminology used. Regional colloquialisms and expressions may be misinterpreted or even considered offensive. Psychological Barriers The psychological state of the receiver will influence how the message is received. For example, if someone has personal worries and is stressed, they may be preoccupied by personal concerns and not as receptive to the message as if they were not stressed. Stress is an important factor in Interpersonal relationships. Anger is another example of a psychological barrier to communication. Physiological Barriers Physiological barriers may result from the receiver’s physical state: for example, a receiver with reduced hearing may not grasp to entirety of a spoken conversation especially if there is significant background noise. Physical Barriers An example of a physical barrier to communication is geographic distance between the sender and receiver(s). Communication is generally easier over shorter distances as more communication channels are available and less technology is required. Although modern technology often serves to reduce the impact of physical barriers, the advantages and disadvantages of each communication channel should be understood so that an appropriate channel can be used to overcome the physical barriers.
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Systematic Barriers Systematic barriers to communication may exist in structures and organisations where there are inefficient or inappropriate information systems and communication channels, or where there is a lack of understanding of the roles and responsibilities for communication. In such organisations, individuals may be unclear of their role in the communication process and therefore not know what is expected of them. Attitudinal Barriers Attitudinal barriers are behaviours or perceptions that prevent people from communicating effectively. Attitudinal barriers to communication may result from personality conflicts, poor management, resistance to change or a lack of motivation. Effective receivers of messages should attempt to overcome their own attitudinal barriers to facilitate effective communication.
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CLARIFICATION Clarification involves offering back to a speaker the essential meaning, as understood by the listener, of what they have just said, checking that the listener's understanding is correct and resolving any areas of confusion. The purpose of clarification is to: •
Ensure that the listener's understanding of what the speaker has said is correct.
•
Reassure the speaker that the listener is genuinely interested in them and is attempting to understand what they are saying.
As an extension of reflecting, clarifying reassures the speaker that the listener is attempting to understand the messages they are expressing. Clarifying can involve asking questions or occasionally summarising what the speaker has said. A listener can ask for clarification when they cannot make sense of the speaker's responses. Often, the difficulties a speaker is explaining can be highly complex, involving many different people, issues, places and times. Clarifying helps you to sort these out and also to check the speaker's priorities. Through clarification it is possible for the speaker and the listener to make sense of these often confused and complex issues. Clarifying involves genuineness on the listener's part and it shows speakers that the listener is interested in them and in what they have to say. Some examples of non-directive clarification-seeking questions are: •
“I'm not quite sure I understand what you are saying.”
•
“I don't feel clear about the main issue here.”
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“When you said…what did you mean?”
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“Could you repeat...?”
Clarifying involves: •
Non-judgmental questioning.
•
Summarising and seeking feedback as to accuracy.
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Questions? When you are the listener in a sensitive environment, the right sort of non-directive questioning can enable the speaker to describe their viewpoint more fully. Asking the right question at the right time can be crucial and comes with practice. The best questions are open-ended as they give the speaker choice in how to respond, whereas closed questions allow only very limited responses. Open Questions? If your role is to assist a speaker to talk about an issue, often the most effective questioning starts with 'when', 'where', 'how' or 'why'. These questions encourage speakers to be open and expand on their thoughts. For example: “When did you first start feeling like this?” “What made you feel this way?” Closed Questions? Closed questions usually elicit a 'yes' or 'no' response and do not encourage speakers to be open and expand on their thoughts. Such questions often begin with 'did you?' or 'were you?' For example: “Did you always feel like this?” “Were you aware of feeling this way?” Questions are generally used for clarifying and should not be asked just for the sake of questioning or to fill in pauses or periods of quietness.
GUIDELINES FOR CLARIFYING •
Admit if you are unsure about what the speaker means.
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Ask for repetition.
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State what the speaker has said as you understand it, and check whether this is what they really said.
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Ask for specific examples.
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Use open, non-directive questions - if appropriate.
•
Ask if you have got it right and be prepared to be corrected.
Summarising A summary involves reviewing what has taken place in the conversation. It is important to keep only to the essential components of the conversation, and it must be given from the speaker's frame of reference, not an interpretation from the listener’s viewpoint. The aim of a summary is to review understanding, not to give explanation, to judge, to interpret or provide solutions. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 17 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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Summarising should be done at the end of a conversation, although sometimes it may be appropriate midway through as a way of drawing together different threads. At the start of a conversation, it is useful to summarise any previous discussions or meetings as it can help to provide focus. Whilst the summary is likely to be the longest time a listener will be speaking during a conversation, it is important to be as concise and straightforward as possible. Summary of Clarification In reflecting, clarifying and summarising, speakers must be allowed to disagree with, and correct, what the listener says. They should be encouraged to express themselves again, if necessary, giving the listener another chance at understanding, and to check understanding until agreement is reached. Reflecting, clarifying and summarising are all tools used by active listeners to enable them to demonstrate understanding and encourage a speaker to talk openly. It is essential that the listener and speaker both have the same understanding of the discussion and the speaker must have the opportunity to correct the listener's understanding. These are the tools of any good relationship and are important interpersonal skills.
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CONSEQUENCES OF NOT REACHING AGREEMENT ARE IDENTIFIED AND OTHER ALTERNATIVES ARE DETERMINED It is essential to effectively manage negotiations with all parties to property transactions in line with agency practice and legislative requirements that will result in mutually acceptable agreements for the negotiating parties. You and the negotiating parties must be aware of the consequences of not reaching agreement and other alternatives are determined. Typical issues and problems in property management that may need to be negotiated with tenants and landlords, including: ▪
access to property
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bonds and security deposits
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condition reports
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disclosure statements
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leases and tenancy agreements
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property inspections
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renewal of leases and tenancy agreements
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rent reviews and increases
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rent or lease payments
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repairs and maintenance
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termination of leases and tenancy agreements
Typical issues or problems in property sales that may need to be negotiated with sellers and buyers, including: ▪
access to property during settlement period
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offers
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conditions of sale
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deposits
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marketing activities and budget
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methods of sale
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property conditions and improvements
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property inspections
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reserve price
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selling price range
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settlement period
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The alternative outcomes of not reaching agreement may include: ▪
property management - new lease or agreement, and voiding lease or agreement
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property sales - amendment or new condition in contract of sale, and termination of contract of sale
Alternative ways of resolving dispute may involve application to the following: ▪
courts
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conciliation and mediation
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tribunals
Courts Agency agreements to act on behalf of a principal, Agreements for Sale of Land and leases are contracts. Many states utilize a mix of statutory and common law to provide remedies for breach of contract. Depending on the contract and circumstances of the breach, the ‘wronged’ party may have several basic choices of remedies. The Courts provide two general categories of relief for breach of contract: ▪ ▪
damages - monetary compensation for a breach of contract performance - forcing the other side to do what they originally promised in the contract agreement
Monetary Damages for Breach of Contract Types of damages for breach of contract include: •
Compensatory Damages - money to reimburse you for costs to compensate for your loss
•
Consequential and Incidental Damages - money for losses caused by the breach that were foreseeable (foreseeable damages are when each side reasonably knew that--at the time of the contract--there would be potential losses if there was a breach
•
Liquidated Damages - damages specified in the contract that would be payable if there is a fraud
•
Punitive Damages - money given to punish a person who acted in an offensive and egregious manner in an effort to deter that person and others from continuing to act in this way. You generally cannot collect punitive damages in contract cases.
The controlling law, the conduct of the violating party, and the extent of harm suffered can influence which of these damages for breach of contract will be awarded. The more egregious and intentional the behavior, the greater the chance of the Court awarding larger, punitive damages. If the breach was unintended and arose from negligent behavior, compensatory or consequential damages will probably be awarded.
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Requesting Performance of the Contract Sometimes money just cannot fix the problem. Instead of asking for damages, the “wronged” party can seek actual performance or modification of performance of the original contract. Performance remedies for breach of contract include: •
Specific Performance - a court order requiring performance exactly as specified in the contract; this remedy is rare, except in real estate transactions and other unique property, as the courts do not want to get involved with monitoring performance
•
Rescission - the contract is canceled and both sides are excused from further performance and any money advanced is returned
•
Reformation - the terms of the contract are changed to reflect what the parties actually intended
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Conciliation, Mediation & Tribunals The NSW Consumer, Trader and Tenancy Tribunal (CTTT) is a low-cost and accessible service for the resolution of disputes between landlords, tenants, consumers and traders in NSW. The CTTT uses alternative dispute resolution methods such as conciliation to help parties settle their disputes, by negotiating and reaching an agreement often without the need for a hearing. CTTT hearings are designed so that parties can generally run their case without legal representation. Orders made are final and binding, and are legally enforceable. Types of disputes resolved at the CTTT The CTTT deals with a wide range of everyday disputes between consumers and traders and disputes about residential property. •
Residential tenancies: Disputes between tenants and landlords such as rental bond, repairs, rent arrears and termination of a tenancy.
•
Social housing: Disputes between tenants and landlords relating to social housing tenancies.
•
Residential building work: Disputes between home owners, tradespeople and insurers about residential building work.
•
Residential parks: Disputes between residential park residents and owners.
•
Retirement villages: operators.
•
Strata and community schemes: Disputes about strata scheme and community scheme living.
•
Commercial disputes: Disputes about certain agent commissions
Disputes between retirement village residents and
Conciliation process Conciliation is an alternative dispute resolution process used by the CTTT. Conciliation brings people in dispute together to talk about their issues in an informal, private meeting and try to reach an agreement. The conciliation process is closely linked to the hearing process, rather than as a separate step of dispute resolution, and is regularly used in conjunction with group listings. Conciliation is also used extensively in matters involving multiple applications about the same dispute, for example in residential parks and retirement village matters. What happens during conciliation? During conciliation you would: 1.
Tell the other person what your issues are
2.
Show each other your evidence
3.
Try to understand and respect each other's different points of view
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4.
Negotiate your differences, discuss possible solutions and try to reach an agreement.
If you reach agreement during conciliation, the terms of your agreement will be made into a CTTT order. If the conciliation is unsuccessful, the hearing will then go ahead either on the same day or at a later date. Any negotiations discussed in conciliation cannot be repeated in the hearing room unless both parties agree. Tribunal Conciliators are provided at major hearing venues to assist parties during their conciliation discussions. In some regional areas the Tribunal Member will act as both Conciliator and Member with the consent of the parties. Benefits of conciliation Conciliation is a good way to reach agreement. Conciliation allows you to have control over the outcome of your dispute and is more likely to result in an agreement you find acceptable. Conciliation creates an opportunity for you to: •
Tell your side of the story in a private environment
•
Listen and get a better understanding of the other people involved in the dispute
•
Resolve your dispute mutually, quickly and inexpensively
•
Find your own solutions without a Tribunal Member imposing a decision on you.
As conciliated agreements are voluntary and represent the self-interests of each party, they are also more likely to be honoured by both parties. Participating in the conciliation process may also help you deal with any future disputes you may have. Preparing for conciliation Being prepared and clear about the outcome you want is the best way to ready yourself for conciliation.
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ELEMENT 2. NEGOTIATE WITH PARTIES INVOLVED IN PROPERTY TRANSACTIONS TO REACH A DESIRED OUTCOME 2.1 Relevant information is collected, analysed and organised to inform the negotiation. 2.2 Negotiation approach is established in line with agency practice and legislative requirements. 2.3 Negotiation is conducted in a professional manner, showing respect for all parties in line with agency practice, ethical standards and legislative requirements. 2.4 Effective negotiation techniques are used to persuade and reach agreement between parties to the transaction. 2.5 Possible solutions are discussed and their viability assessed. 2.6 Effective techniques are used for dealing with conflict and breaking deadlocks where required. 2.7 Final position is confirmed, ensuring agreement and understanding between all parties. 2.8 As necessary, follow-up communication or reports are provided to all parties to confirm adjustments required to conditions of agreement.
The door to opportunity is always labelled push! - Anon
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HOW TO NEGOTIATE: 7 REAL ESTATE NEGOTIATION TIPS By J Scott
I love to negotiate! Whether it’s buying a two bed room unit or a house of my dreams, I love the challenge of trying to get a great deal for myself while at the same time making the other person feel like they got a great deal too. And while you may think that the skills required to negotiate small purchases are much different than the skills required to negotiate the purchase of big-ticket items (like cars, real estate and companies), in reality, the basics are the same. While you can spend your entire lifetime trying to perfect the art of negotiation, learning a few key negotiation strategies can put you far ahead of most of your competition, and can help navigate those times when you’re up against an unmotivated seller, a savvy buyer or a head-strong contractor. This article will offer seven powerful negotiating tips that you will likely find very useful while pursuing future real estate deals (or any other deals, for that matter). Here are 7 Essential Real Estate Negotiation Tips: Tip #1: Let the Other Party Speak First You’ll often hear people say, “Never make the first offer…let the other party do it.” This is great advice, but do you know why that will help your negotiating position? There are two reasons: 1. First, it allows you to define a mid-point. Many inexperienced negotiators will find themselves “splitting the difference” in their negotiations; for example, if one inexperienced negotiator starts by asking $200 in the negotiation and another inexperienced negotiator starts by offering $100 in the negotiation, the negotiation result generally will end up somewhere around $150 (the mid-point). This is human nature not to want to give more or less than you’re getting, so people tend to increase or decrease their offers by the same amount as the other party. But, when the other party states their position first, you have the ability to define the mid-point of the negotiation!
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In the example above, if the seller had stated the $200 ask first, the buyer could easily have offered $60, thereby reducing the mid-point of the negotiation (where they expect to end up) down to $130. On the other hand, had the buyer offered $100 to open the negotiation, the seller could have increased his ask to, say, $260, thereby increasing the midpoint to $180. As you can see, the person who states the first position is at a disadvantage to the person who waits, as the person who waits can define the mid-point. 2. Second, it’s quite possible that the other party’s first offer will be better than the first offer you would make. For example, let’s say you want to hire a plumber, and your budget is $500 for a particular project. While you could state upfront that you have $500 to spend on the plumbing work (in the hopes that the plumber doesn’t ask for more than that), what if the plumber was only planning to charge $300? You’ve now told him that you’re willing to pay $500, so he has little reason to quote you anything less than that. By stating your position first, you’ve given away valuable information to the other party (your maximum price), and he will use that information to extract the most money possible from you. Tip #2: Stop Talking and Start Listening One of the strongest maneuvers when negotiating is to keep your mouth shut. Unfortunately, it’s also one of the most difficult. People are naturally uncomfortable during a negotiating silence, but this is exactly why you should work to ensure those silent periods occur. If you’re uncomfortable, you can be sure that the person you’re negotiating with is uncomfortable as well. And the common result of this uncomfortable situation is that one party will make a concession to break the awkward silence. Next time you are negotiating and the person on the other side of the table throws out an offer, make a point to say nothing. Whether it be 10 seconds or 10 minutes, make the other person break the silence. You’ll be surprised to find that he or she will often interpret your silence as anger or disappointment, and will break the silence by revising their offer or offering a concession. Master negotiators will use this tactic to get less experienced negotiators to make successively lower offers without ever having to throw out a counter-offer themselves. This may be the most basic — but most useful — negotiating tactic you’ll ever employ. Tip #3: Information is Power I’d estimate that in 95% of all negotiations between experienced negotiators, the one with the most information (pertaining to the negotiation) will walk away with the better outcome. When negotiating, it’s important to know as much as possible, not just about the object of the negotiation, but also about the party you’re negotiating with and their motives. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 26 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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Most people tend to assume that negotiation is always about money, but often it is not. Smart negotiators realize that in many cases, it’s more important to solve a problem than to offer the most money. For example, let’s say two buyers show up at an open house and both want the house. The first buyer assumes that the seller wants the most money possible, and offers full asking price, but needs two months to close in order to get financing in order, get inspections, etc. The second buyer asks the seller why he is selling, and the seller says that he has received a job offer in another state, and needs to move in the next two weeks; the second buyer makes an offer for $10,000 less than asking, but agrees to close in two weeks, and has no financing or inspection contingencies. While the first buyer offered more money, the second buyer likely solved a problem that was more important than the difference in the offers. All because he gathered some information from the seller before making an offer. Tip #4: Always Get the Last Concession Part of being a good negotiator is “training” the other party to do what you want, without them even realizing it. Here is one way to do that with someone you will be negotiating with multiple times: Always make sure you ask for and get the last concession in the negotiation (a concession is something the other party gives in a negotiation — a price drop, better terms, etc.). By always asking for — and getting — the final concession, the other party will, over time, learn to stop asking for things once he essentially has what he wants/needs from the negotiation. If the other party realizes that every time he asks for something, he will need to give something, he will naturally shy away from asking for more than what he needs in fear that he will be asked to give up something important in return for additional (nonessential) demands on his part. For example, when negotiating with a contractor, let’s say that he throws out a final price that you both agree on. Instead of saying, “I agree with that price, we have a deal,” instead try saying, “I agree with that price, if you can start first thing tomorrow morning.” Maybe he’ll come back with, “I can’t start tomorrow, how about the following day?” Your response could be, “That works, but I’ll need you to finish in three days instead of four.” As long as he counters your request, continue to ask for additional concessions. Eventually, you will train the other party that by “resisting,” they are encouraging you to
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ask for more and more; they also learn that by just giving in, they end up giving up less in the end. It should be obvious how this will help in future negotiations with this person. Tip #5: Implement a Penalty for Asking for Concessions Have you ever been on the phone with a customer services representative from some company negotiating some point (for example, you’re on the phone with your cable company trying to get your monthly fee reduced by $20), and find that every time you ask for something, the rep puts you on hold for 10 minutes while they “check to see if they can do that.” You can bet that it doesn’t really take them, 10 minutes to determine whether they can give you $20 off your bill. But, they realize that when you ask for $20 off, then wait for 10 minutes, and then they come back and counter-offer you $5 off your bill, you’re going to be less likely to go another negotiating round (“How about $15 off?) if it means you’ll have to wait another 10 minutes to get the response. What they’ve done is implemented a “penalty” for each time you ask for a concession; while you’re sitting on hold, you’re powerless — you have the option to wait for some unknown amount of time, or hang up and get nothing. If you want to discourage others from asking for concessions in your negotiations, do the same thing — implement a penalty each time they ask (though don’t let them know you’re doing it on purpose). And the penalty doesn’t need to be same for each “offense.” Making them wait (like the example above) is a great example of a penalty. Perhaps you say, “I’ll have to think about that, I’ll give you a call tomorrow and we can discuss further.” Or perhaps the penalty is that they have to fill out a bunch of forms to get their desired concession. Or perhaps they’ll have to drive somewhere to pick up that extra thing that they want. If you make the penalty for asking more cumbersome than what they asked for, it’s quite possible they’ll decide it’s not worth the effort — like having to wait 10 minutes to find out if you can save $10 extra. Tip #6: Friction is Your Friend On the surface, a negotiation that ends quickly and smoothly without too much back-andforth appears to be a good one. But this isn’t necessarily the case. Can you remember the last time you went into a negotiation, and the other person quickly accepted your offer without too much protest or countering? How did it make you feel? If you’re like most people, you probably felt like you didn’t get as good a deal as you could have. You probably felt that, because the other party didn’t put up too much Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 28 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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resistance, they were likely very happy with the deal, and therefore, you got the worse end. Oftentimes, though, the other party feels the same way! There wasn’t enough friction in the negotiation to make both parties feel like they earned a great deal. And because of this, what you will often find in negotiations that go quickly and smoothly is that one or both parties will want to back out of the deal. So, if you really want to ensure that the other side doesn’t back out after the negotiation is finished, make them work hard to get to a common agreement; this hard work will often translate into feelings of successful outcome for the other side. This is especially important in Real Estate Investing, when the other party often has several days (if not weeks) to back out of an agreed-upon deal. Tip #7: Check Your Ego at the Door Oftentimes, we assume that the other side is looking for something tangible in the outcome of a negotiation: more money, better terms, etc. But, a lot of people who pride themselves on their negotiating skills are more interested in having their ego stroked than they are in any real tangible outcome. While some people are going to be all about getting every extra penny in the deal, there are those who will happily give a discounted price (assuming they are still above their minimum threshold) in return for some solid ego stroking. In Real Estate negotiation, this might mean telling a contractor how highly recommended he comes; it might mean reminding a potential investor/buyer how good he is at rehabbing on a shoestring budget; or it might mean “confessing” to your wholesaler how much you hate buying from him because he is such a good negotiator. You’d be very surprised how far some sincere flattery will go in getting you a better negotiating outcome. Not only will it encourage the other party to put their defenses down, but they will feel an obligation to “return the favor” in some way — make sure you give them a way to return it right then in terms of a lower price (or whatever else you might want). Remember the last time you negotiated with someone who was really nice? How about the last time you negotiated with someone who was not nice? Which one did you feel better about “sticking it to them?” And which one were you happy to give a break to?
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10 TIPS FOR IMPROVING YOUR NEGOTIATING SKILLS Negotiation is a discussion between two or more parties, intended to reach an understanding, agreement or to gain an overall advantage in outcome. Each party will try and gain the advantage for themselves by the end of the negotiating process. So as a buyer, your primary goal is securing an investment property at the lowest possible price. The vendor, conversely, wants to get the best price for the property for sale. Negotiation is largely about choice. What do you choose to offer or concede and what do you choose to accept or reject? These ten tips can help you with your next negotiation. 1) Learn to flinch This is a noticeable visible reaction to a price or counter-offer. The objective of this is to make the other party feel uncomfortable about the offer they presented. 2) The person with the most information usually does better The more information you have about the vendor's position and the property, the better off you will be. Remember to ask questions and thoroughly research the property and its suburb. 3) Practice makes perfect Many investors will hesitate or be wary of negotiating because of a lack of confidence or due to fears such as: •
Drying up – forgetting what to say.
•
Missing out on the deal that you have worked so hard researching.
•
Not capturing the vendor's or agent's interest.
•
Facing difficult questions which you cannot answer.
You can also develop your confidence by negotiating frequently on less high value items – e.g. ask for a discount at your local retail store. Then when the time comes for probably your most important negotiation on your next property investment purchase, you will remain calm and confident. 4) Remember, you can always walk away It is always better to walk away from a deal rather than make too large a concession and jeopardise your property investment career. One poorly judged purchase, for example, could seriously affect your cash flow and ability to grow your portfolio over time. There is nothing to be gained by striking a deal at all costs; it has to be beneficial for you. So if you feel the price is not right, walk away.
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There will always be other opportunities and of course the vendor may react to your rebuttal by accepting a lower offer. 5) Don't be intimidated Remember, as the vendor you ultimately have the option to walk away and so have the upper hand. So as long as you have completed research that you are confident in, you have nothing to lose and everything to gain. So what if the agent laughs at your offer. As long as you have an arsenal of research you can counter this laugh with a barrage of accurate property and suburb data that can strengthen your position. 6) Control your emotions Your emotions will play a part in the negotiation process one way or another. It is up to you to ensure it is a positive role. Which of us has not acted in a regrettable manner because of negatively heightened emotion? If you start to feel negative emotions such as frustration or annoyance towards the real estate agent or vendor, it can lead to irrational behaviour or cause the negotiations to break down or worse still, you agree to a deal that you will regret with the benefit of hindsight. Whereas if you enter the discussions in a positive mood, you will enjoy them more, stay calm and keep your overall objectives at front of mind, rather than having your logic and decision making process clouded by negativity. Each individual will have his or her own way to enter the negotiations in a positive mood. One simple tip is to remember securing the deal at the right price could mean thousands of dollars in instant equity. Worth remaining upbeat about! 7) The nibble This works on the premises that: •
You don't have to ask for everything up front.
•
The mind tries to reinforce a decision once it has been made and may be more open to additional suggestions.
So when you feel the negotiations are reaching their conclusion, you can try asking for further small concessions. Your major goal will most probably be the best possible price, but there are other considerations, for example a settlement period that best suits your needs, that you can request towards the end of the discussion.
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If the other party is expecting or wanting to close the negotiations, they may be more likely to accede. And of course this can work both ways, so be wary of the other party using this technique on you. One way you can counter this is by responding with a smile and stating that the deal is done and both parties seem happy, so let's not over complicate things unnecessarily and risk it falling through. 8) Body languages – use your body when negotiating To reach your goal, you will have to effectively communicate your point of view throughout the negotiations. This applies to verbal communication and body language too. Body language is non-verbal communication consisting of posture, gestures, expressions and eye contact. Most of us tend to give and receive this form of communication sub-consciously, but if you take a step back, you can: •
become more aware of it and
•
learn to use it more effectively
This links back to remaining positive - you want this to come across in your actions as well as your words. Some things to consider are keeping eye contact, giving a firm handshake and remaining assertive. The other party will know you are someone to reckon with due to the amount of research and information you can produce about the deal. Back this up by delivering it positively and also showing receptivity to information coming your way. Appear relaxed and in control, and you probably will be. 9) Don't celebrate until the contracts are signed The negotiation process can have many twists and turns, particularly when it comes to purchasing an investment property. Don't tempt fate! Keep your feet on the ground and only celebrate when the deal is completed. 10) The post mortem After every negotiation, you can conduct some analysis on the proceedings while they are fresh in your mind. Consider: •
What went well? Why?
•
What didn't go well? Why?
•
Were you sufficiently well prepared?
•
Did you question to gain information effectively?
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Did you use that information to guide your proposal?
•
Were you happy with the outcome?
•
What will you do differently next time?
Having strong negotiating skills can save you thousands of dollars on your next purchase, which will save you money upfront and also on your ongoing loan repayments as well. Remember: •
Be clear about your objectives.
•
Prepare thoroughly.
•
Practice your offer making use of all your research.
•
Face your fears. It won't be all that bad!
•
Think creatively.
•
Listen and take in information – you are strengthening your position.
•
Don't be constrained by what you have done before.
So consider these crucial tips before putting in the offer on your next investment property and you could be thousands of dollars better off.
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THE 8 STAGE NEGOTIATION PROCESS Read and absorb this information for negotiation success! This is a unique combination framework that puts together the best of many other approaches to negotiation. It is particularly suited to more complex, higher-value and slower negotiations. 1.
Prepare: Know what you want. Understand them.
2.
Open: Put your case. Hear theirs.
3.
Negotiate: Support your case. Expose theirs.
4.
Explore: Seek understanding and possibility.
5.
Signal: Indicate your readiness to work together.
6.
Package: Assemble potential trades.
7.
Close: Reach final agreement.
8.
Follow up: Make sure what is agreed happens. DONE!! 8. FOLLOW UP: Make sure what is agreed happens.
It’s easy step by step!
7. CLOSE: Reach final agreement. 6. PACKAGE: Assemble potential trades. 5. SIGNAL: Indicate your readiness to work together. 4. EXPLORE: Seek understanding and possibility.
3. NEGOTIATE: Support your case. Expose theirs. 2. OPEN: Put your case. Hear theirs. 1: PREPARE: Know what you want. Understand them. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 34 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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There are deliberately a larger number of stages in this process as it is designed to break down important activities during negotiation, particularly towards the end. It is an easy trap to try to jump to the end with a solution that is inadequate and unacceptable. Note also that in practice, you may find variations on this model, for example where there may be loops back to previous stages, stages overlapping, stages running parallel and even out of order. The bottom line is to use what works. This process is intended to help you negotiate, but do not use it blindly. It is not magic and is not a substitute for thinking. If something does not seem to be working, try to figure out why and either fix the problem or try something else. Although there are commonalities across negotiations, each one is different and the greatest skill is to be able to read the situation in the moment and adapt as appropriate.
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THE NEGOTIATION PROCESS FOR BEST PRACTICE AGENCIES Step 2.1 1) PREPARE – Relevant information is collected, analysed and organised to inform the negotiator. - When negotiating, information is power! Achieving the power edge in a business negotiation may be as easy as getting more information. The saying “information is power” is especially true in a negotiation. The party that knows the most can probably get the best deal. Let’s consider what happens when you don’t have enough information. Say you are traveling in a foreign country, and you don’t know whether taxis have meters. You get into a taxi, and the driver quotes you a flat fee to get to your destination. You don’t know what the fare would cost and you don’t know if you had the option of a meter. Depending on the honesty of your driver, you may or may not be getting a good deal. Clearly, having this information beforehand is going to give you the edge over the taxi driver. To increase your information power, follow these tips: Determine what information you need. Types of information you may want include: •
Personality style of other party(s)
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What are their wants?
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What will they concede?
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What will they not concede?
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Time pressures
Presentation of information Within the context of negotiation, information power is at the heart of expert power. Even in the simplest negotiation, the way that information is presented could make a large impact on the outcome. In the light of this it can be seen that visual aids like charts, graphs and good statistics have a substantial impact on a negotiation. Market research on other prices in the area, on consumer's opinions and on financial position and the interest of suppliers is important information to gather when preparing oneself. Care should be taken that this information is trustworthy, since if it is proved to be untrue this could damage the trust built through negotiation in a serious way. Information power is often used in a distributive way so that information is manipulated to control the options open to the other party. For example, the other's choice of behaviour is influenced by sending him positive information about the option we want him to choose, or by concealing information about an option we don't want him to choose. In some cases, experts are brought into negotiations since people are less likely to argue with a perceived expert in the area of his expertise. To really take on the challenge, the non-expert would probably have to consult with another expert, which is costly, time Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 36 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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consuming and somewhat risky. The lack of confidence of the non-expert is often quite visible in his body language, posture and manner speaking. Countering good information Countering information power can be a real problem. When information or an expert is brought in to counter the other side's information, it can lead to an escalation in conflict with either a negative result of no resolution of the conflict and hence agreement; or a positive result which leads to a search for other alternatives which could be beneficial to the negotiation process. So the best approach would be to: Explore all the information at hand See an expert for what he is. All experts have abilities in a certain field, but seldom over the whole field covered by the negotiation. Either specify or generalize depending on the posturing of the opposition. For example, if the opponent comes with very specific information, an effective counter would be to return with very general information.
Step 2.2 2) OPEN – Negotiation approach is established in line with agency practice and legislative requirement. Approaches to negotiation Styles of negotiating need to vary according to the circumstances and the people involved. Most negotiations will be a mixture of the collaborative and competitive approaches. It is generally more productive to steer the proceedings towards collaboration rather than competition. Negotiating roles Before we look at these approaches in more detail, let’s look at the roles that you might take on in a negotiation. It is possible to identify five, each of which has particular strengths. The factual negotiator •
knowing all the facts related to the negotiation;
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asking factual questions;
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covering all bases to ensure that no facts are left out; and,
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providing information
Factual negotiators tend to leave aside emotional issues such as “face” - a person’s desire for a positive identity. (People like to feel and look good and will react in a hostile manner to attacks that make them feel or look bad.) They can get most involved in details about the negotiation. The relational negotiator •
establishing relationships with the other party;
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being sensitive to the other party’s emotional issues;
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building trust; and,
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perceiving the position of the other party
Relational negotiation can lose sight of the reasons for negotiation and the objectives in their anxiety to build relationships. They can also give away information without realising it. Their sensitivity can make them become emotional and lose perspective. The intuitive negotiator •
coming up with unexpected solutions or ways of approach;
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sorting the wheat from the chaff - the key issues from the irrelevant detail;
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visualising the implications of a proposal;
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accurately guessing the progress of negotiation; and,
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seeing the “big picture”
Intuitive negotiators can be dangerous because of their wildness and lack of discipline. The logical negotiator •
set the rules of the negotiation;
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develop an agenda;
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argue a logical rather than emotional way; and,
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adapt their position to meet changing situations
The logical negotiator can sometimes see the process of negotiation as being more important than the content or outcome. The lead negotiator Finally, all these approaches or roles need to be co-ordinated by the lead negotiator, who is responsible for all of the above roles and who makes the final decision about strategy, etc. It is likely that you will exhibit some or all of these roles in your own negotiations. If your intuitive negotiator is strongest, you will need to develop discipline. If your logical negotiator is most prominent, you may need to develop relationship building skills. Conclusion Negotiation is a means of arriving at a solution to a problem in a manner which ideally results in an outcome which is of benefit to all parties; in other words, a win/win situation. Everybody is happy, and as a result of your different needs and objectives, it is possible for everyone to leave the table with substantial gains and inconsequential losses. The trick is to trade things which cost you little but which have a high value to the other party. Negotiation calls for assertive behaviour. You should collaborate to achieve an agreement satisfactory to all concerned. If you deal with an aggressor, someone who always wants to win at all costs, then the result would be win/lose. The danger of taking this stance is that Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 38 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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it may lead to a complete lack of co-operation - the other party dislikes and distrusts the aggressor’s style, and so will not bargain - so that the final outcome is lose/lose. Needless to say this must be avoided, otherwise the process becomes pointless. Useful tips The following pointers will help you when planning your strategy and conducting your negotiation: •
Be assertive.
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Respect the other party - they have objectives, too.
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Open with a realistic offer, be neither too greedy nor sell yourself too cheaply.
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Work out your objectives in advance - this makes it easier for you to compromise if that becomes necessary.
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Always trade - don’t give anything for nothing.
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If you need time to think, take it - ask for a short break and recap your notes. Don’t be pushed into a decision you haven’t thought through.
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Make sure that the outcome is mutually beneficial and that all parties leave with a feeling of well-being; that way they’ll be happy to do business with you again.
Step 2.3 3) NEGOTIATE – Negotiation is conducted in a professional manner, showing respect for all parties in line with agency practice ethical standards and legislative requirements. Throughout the following we will discuss a number of tips and techniques, which can be very helpful in conducting successful business negotiations.
How to Improve Your Real Estate Negotiating Skills As a real estate agent, you are constantly negotiating with buyers and sellers, other agents, solicitors, building inspectors, and valuers. Improving your negotiating skills will improve your success. So how do you go about improving negotiating skills? Here are some general real estate sales tips regarding negotiating that you may want to follow: 1. Learn as much as you can about the other side’s motivations. For instance, if you are attempting to get a real estate listing, find out why the seller wants to sell. Knowing the seller’s motivations will improve your chances of getting the listing. 2. Analyse all the issues. Be knowledgeable. The more knowledgeable party usually excels. If you are in negotiations with someone who is more knowledgeable, don’t show your lack of knowledge. Ask plenty of open ended questions like, “what will you do if that does/doesn’t happen? Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 39 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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3. Show confidence. If the other party believes that you are skilled, experienced and knowledgeable, you will get better results on your listing appointments and also for your clients when negotiating on their behalf. Dress the part of success. Look successful, act successful, but don’t be obnoxious or rude. 4. Establish a rapport with the other party. You need to assess the situation to see if the other side is going to be cooperative and the only way to successfully do this is to have at least a certain level of trust as soon as you can in your relationship. 5. Have a positive attitude. Be a solution based thinker. 6. Be patient. Being pushy will often lead to the other party withdrawing from the negotiation. 7. Be a good listener. Listening is how you will discover the other persons’ interests. While you are talking you are not learning anything about the other party and negotiation is all about knowing your prospect so you can best help them. 8. Have a reputation for personal integrity. Always keep your word and only tell the truth even if there is no chance of being found out, because at the end of the day you will always know that you are not trustworthy and this can often come across to other people you are looking to work with. We all have a great instinct, especially women and when you live by your word, it comes across to others and helps you defeat the obstacle of early trust which is and always will be the biggest barrier to business. 9. Be able to, resolve the conflict, with acceptable compromises. Always be looking for win, win outcomes. The world is a small place and your service area is even smaller, sooner or later most people will either be looking for your services again or know someone who is. Even if you have to be tough on people as long as they feel at the end of the day that the negotiation is fair, they will respect that and feel comfortable to work with you again. 10. Always be friendly and act in a professional manner. Most people love down to earth straight shooters. Pretend every prospect is someone you care about and respect and treat them accordingly. KNOWLEDGE: When you read through your information, and categorize and sort it cognitively, you turn information into knowledge. INTELLIGENCE: Stockpiling your knowledge, and revisiting it constantly, can create memory and understanding of your knowledge, and thus, an intelligence. Intelligence is also defined by being able to adapt the knowledge you have, and use it to your advantage, within certain contexts. WISDOM: Wisdom is a level of intelligence, whereby you’ve known and explored the angles of the information for a period of time, which makes you an expert, and understood authority of Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 40 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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the intelligence. You know how to find the right information, and you know how to use it, and contract it out. POWER: Power, in this situation, is both; a confidence in ability, and a desired state of being. Power is achieved by applying your wisdom to a negotiation. So, the idea is, if you gather enough data, and go through the necessary steps to become an expert of applying this data, you will hold the power in a negotiation. The broader your wisdom and power, the better chance you’ll have of success in a negotiation. IMPORTANT TIPS WHEN NEGOTIATING Here are some more tips and techniques to keep in mind, in any negotiation: •
No matter how knowledgeable, fearsome, or pushy someone seems, everyone has weak-points, and everyone has things they are willing to give up.
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Gain knowledge from research, and gain power and confidence.
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Confident impressions can, sometimes, say as much as factual arguments.
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Try not to get emotionally invested in the negotiation, despite other investments. Remaining rational promotes good calculation and decisiveness, gives you a persuasive edge.
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Create an empathetic, understanding, environment with the other party.
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If one party becomes emotionally involved in a discussion, then logic can sometimes go unheard. In these cases, it can be better to seek resolution at a later date
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If a conclusion is not reached on the day of negotiation, always make a commitment to a time to continue the negotiations. Never leave open ended.
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Sometimes a negotiation can be seen as a battle (topic of negotiation), pertaining to a war (full negotiation/scope of relationship). Define the battles and the war, and learn which battles to win/lose, in order to win the war.
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Know who you’re up against.
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Know your arguments, strengths and weaknesses.
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Know your adversary’s potential arguments, strengths and weaknesses.
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Compare your opponents’ best and worst potential settlements with your own. The middle ground will be where you need to do the dealing.
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Look at the pros and cons of each settlement, and aim for the ideal!
STEP 2.4 4) EXPLORE – Effective negotiation techniques are used to persuade and reach agreement between parties to the transactions. An individual needs to adopt certain skills for a successful negotiation. Let us understand them in detail: Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 41 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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An individual before starting with the negotiation must be very clear with the agenda (topic) of the negotiation. Ask yourself - why this negotiation? What is the objective of the negotiation? One must be well informed. Negotiation Styles x 4 ▪
Win/Lose – High degree of assertiveness/low degree of cooperation
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Lose/Win – Low degree of assertiveness/high degree of cooperation
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Lose/Lose – Low degree of assertiveness/low degree of cooperation
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Win/Win – High degree of cooperation/high degree of assertiveness
Before any important deal, do make it a habit to go through as many details as you can. The second party might ask you anything, you must be well prepared to clear all their doubts and convince them. If you yourself are confused, he would never bother to listen to you.
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React sensibly - A good negotiator must react sensibly. He should never lose his temper or over react. If you are unhappy with the deal, show your displeasure. Don’t keep things to yourself or assume that the others will understand it on their own. One has to voice his opinions. Make the other person realize that you are not satisfied with the deal and it must be revised. Show your unhappiness to others. If your boss assigns you a project you are not very comfortable with, show your displeasure to your boss in a polite way and ask for something else. But make sure you are not rude; otherwise your job might be at risk.
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Patience - One needs to be patient enough for a good negotiation. It is not always that the other person will accept your suggestions in the first attempt itself. You need to convince him and it needs patience. Never be in a hurry to close the deal.
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Confident - One needs to be confident enough for an effective negotiation. You might need something but never show your desperation to anyone. They will take undue
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advantage of your helplessness. Take care of your facial expressions. Never be nervous in front of the second party. Don’t start sweating. ▪
Be dignified - One should maintain the decorum of the place and should not stoop to any level for getting the best deal. Present your ideas in a dignified way. Remember it is just a discussion, not a battle field. Avoid shouting or using derogatory statements against anyone. If you are not satisfied with the deal, it’s better to quit rather than fighting and using abusive languages.
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Be very clear in your communication - Stay firm on your quotes and do not change statements quite often. Don’t play with words or try to confuse others. One needs to be straightforward from the very beginning.
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Be a good listener - Don’t jump to conclusions; instead listen to what the other party offers. Understand his situation well. It is okay, to think about your personal interests but don’t be mad for it. If the deal is not benefiting the other party, he will obviously not accept it, don’t be after his life. If you don’t listen to others, they would obviously not respond to you. When a customer goes to purchase something, he must not forget that the store owner also has to earn his profits. The store owner should also understand the customer’s needs and pocket. Negotiation depends on mutual understanding.
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Be reasonable - Don’t quote anything just for the sake of it. Be reasonable. Don’t quote imaginary or unusually high figures. Don’t ask for anything you yourself know is not possible. It will just be wastage of time and no one would benefit out of it.
STEP 2.5 5) SIGNAL – Indicate your readiness to work together. - Possible solutions discussed Always try to offer more than one solution to any negotiation. These 12 points will assist you in indicating your readiness to negotiate and seek solutions. 1.
Listen carefully to the other party. Don't interrupt the other party, don't spend your listening time figuring out how you're going to shock the other party when he or she finally stops talking. Most people carry on an inner dialogue with themselves while listening to others. When you negotiate, turn off your inner voice. Then you won’t miss important nonverbal messages, and crucial facial expressions that tell you more than the actual words being used. The better you listen, the better you can learn, and the more likely you will be able to respond in a way that improves the negotiation's result. If you listen carefully, you will be able to understand the other party’s interests and weigh them against your own interests.
2.
Be open and flexible. This will also allow the person you are negotiating with to be open and flexible. Negotiation is a form of communication. Without trust, communication is not successful.
3.
Ask questions that will uncover the needs or interests of the other party.
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4.
Try to offer more than one solution to the problem. There could be more than one solution to the problem at hand. Moreover, if the person you are negotiating with knows that she has more than one option, she will not feel as if she is being forced into an agreement. Then she will be willing to listen to you and compromise.
5.
Separate people from the problem. You may not like the person you are negotiating with. But that person is not the reason you are negotiating. You are negotiating in order to solve a problem (which is usually of great importance to you). So concentrate on the problem.
6.
It’s not enough to know what you want out of negotiation. You also need to anticipate what the other party wants. The smart negotiator also tries to anticipate what the other party thinks he or she wants.
7.
If you have created the grounds well, be willing to say "no" to the person you are negotiating with if his demands are unacceptable. A bad agreement is much worse than no agreement.
8.
See to it that the other party wins, especially if it does not compromise your position. A happy opponent will not mind making you happy in return! Instead of "If you will do this, then I will do that" we should ensure that what each party has to bring to the negotiated deal creates more value than the sum of the parts that each contributes. Negotiation should bring about added value.
9.
Be patient. Negotiating what you want may take more time than you think.
10. Know what a win is. What is your best-case scenario? What is your worst-case scenario? The area in between is called settlement range. If you can reach an agreement within your settlement range, that’s a win! Stop when you will, not when you ‘defeat’ the other party. 11. Know your best alternative to a negotiated alternative (BATNA). 12. Know the other party’s BATNA. BATNA stands for Best Alternative to a Negotiated Agreement. The acronym was derived after research on negotiation conducted by the Harvard Negotiation Project. Before you begin a negotiation, know what your options are. Can you walk away from the deal? What other choices do you have? What are the pros and cons of each choice? However, you should consider the other party’s interests too. Consider the BATNA of the other party. That may allow you — and the other party — to climb down from a rigid position. Work at your negotiation skills You may not be aware of it, but you probably negotiate daily. Yet you may not think of yourself as a negotiator. That is because you may not be aware that, like everything else, a lot of work goes into negotiating and that you have been working.
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It is time, however, that you made this work methodical. Successful negotiators do their homework — even for ‘short negotiations’. They always have clearly defined goals. Know whom you are going to negotiate with before you begin. Does that person want a Win-Win solution or is he heading for a Win-Lose scenario? Does the person want to negotiate with you, does he dread the negotiation, or is this a neutral situation?
STEP 2.6 6) PACKAGE – Assemble options - Get the best alternative Assembling Options in Negotiation What happens in the average negotiation? A few greetings, a little sharing of information, followed by some hard bargaining or, worse still, hard haggling? The risk is that the negotiators rush into a solution that is less than optimal or worse still, a solution that cannot be implemented. So what happens when skilled negotiators are involved? Firstly, skilled negotiators appreciate the importance of having several issues on the table. This way they can bargain or trade one issue against another. Say, payment terms against delivery requirements or price against time schedule. When there is only one issue on the table, usually price, there is nothing to bargain with and the process degenerates into a haggle. This is also covered in an earlier article about the importance of selling first and negotiating later — you can only trade something if the other side ascribes some value to it and that will only happen if you have sold them the value of it. Secondly, skilled negotiators recognise the value of looking for a creative solution. In many cases, the parties to a negotiation become so involved in trying to concede as little as possible to the other side that they miss the opportunity to develop a solution that will give them, and often the other side as well, a better outcome. Fisher and Ury use the example of two sisters arguing about an orange. Both want the orange so their mother cuts the orange into two and each sister gets half the orange. But what if one sister wants the orange rind for cake that she is baking and the other wants the juice? The solution of cutting the orange in two only partly meets the needs of each sister. Although the example of the orange may be far removed from the day-to-day realities of modern business, opportunities do exist. The buyer thumping the table, demanding 24-hour delivery, faced by a seller arguing to justify the cost of 24-hour supply, may be missing the obvious: on-site storage at the buyer's premises.
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So how should we ensure that we don't miss opportunities to develop options in a negotiation? In the average negotiation described at the start of this article both sides have leapt into bargaining without considering the information that they have gleaned from the other side up to that point. Once we are sure that we fully understand what the other side is looking for, what the difficulties are that they are facing, their fears and their aspirations we may be in a better position to develop options that we hadn't thought of before we came into the negotiation. We may try to develop options right there with the other side. However, this seldom occurs in negotiations unless there is a high degree of trust between the parties. At the least it is advisable to take a time-out from the negotiation and consider the options that are available. If we are negotiating in a team it is an opportunity to brainstorm options away from the pressures of the negotiation or to suspend the negotiation at this stage so that we can consult with our stake holders, then come back at a later date. Taking a breather before starting to bargain allows us to 'look before we leap', to make sure that we are not missing any vital information that should be taken into account in our proposals.
When things don’t go according to plan? Breaking Deadlocks •
A deadlock exists when negotiations reach an impasse or stalemate. Both sides appear to have exhausted all possible concessions which might get the negotiation moving again. Deadlocks can be recognised because there is no progress, frustration levels rise, emotions become more heated and there is a sense of going over old ground over and over. Deadlocks can be broken in two main ways: o changing something - making the situation different; or o explaining something - making the situation seem different.
•
Break-throughs can be encouraged by pursuing some of the following options. o Lead negotiators for both sides meet informally in a neutral environment. o Team leaders meet informally as above. o Form sub-groups to thrash out issues from various areas of the negotiation such as technical, financial, product testing etc. o Redefine the problem and then both parties work together to brainstorm possible solutions. o Bring in an outside “expert” to give a different perspective on the problem. o Repeat the department’s/agency’s position and add new support or a new angle.
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Change the subject to more easily resolved issues and then return to the deadlock issue. Suggest a recess for both parties to consider more fully the other party’s position. Offer a minor (pre-planned) concession as a gesture. Offer to trade concessions.
Hint It is always a good idea to summaries the negotiations to date, to identify issues agreed and those outstanding and Endeavour to identify some issue which could be conceded to bring the other party back to the negotiation table.
STEP 2.7 7) CLOSE – Final position is confirmed, ensuring agreement and understanding between all parties. Coming to an Agreement/Closing Once you have come to a final agreement, it is important that you have it down in writing along with both parties’ signature: this is not always possible or practical. Before it is signed, or formally ordered, it is wise not to say anything about the terms agreed because your next sentence could break the agreement: the best sales-people never over sell – well, not until they have to! If it is a sale/purchase that you are making, then officially, it isn’t a sale until you/they have actually approved your agreement. Usually, this will be a contract. In most other negotiations, one party sending a letter and fax to the other in which the agreement is outlined (to a sufficient degree) will form a legal basis. If the other party then amends the conditions in the agreement in writing to you, those amended terms then become part of the agreement, UNLESS you disagree in writing, and so on… Summary We use negotiation in everything we do but you have to be sure that it is done in the best way possible to achieve maximum benefit. The most important part is planning: preparing well will give you an advantage when negotiating. Only use the knowledge and experience you need to achieve your objective: having the business owner negotiating the supply of pencils is over-kill, and leaves you little room to power-bargain with the same supply company when you want them to supply you with, say, colour photocopiers. Have confidence and be sure that you can keep control at all times. Aim highly, but don’t under-estimate the opposition. They too may have just read the same advice. If you’re selling something, be persuasive and offer some incentive to keep the customer interested. Don’t close an agreement until you are happy. Remember, the preferred result is a win/win result for both parties resulting in a long term relationship. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 47 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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STEP 2.8 8) FOLLOW UP – FOLLOW UP! – Make sure what was agreed happens - Implementation is the realisation or execution of a plan, idea or policy. Implementation is the carrying out, execution, or practice of a plan, a method, or any design for doing something. As such, implementation is the action that must follow any preliminary thinking in order for something to actually happen. In an information technology context, implementation encompasses all the processes involved in getting new software or hardware operating properly in its environment, including installation, configuration, running, testing, and making necessary changes. The word deployment is sometimes used to mean the same thing. Even the most well-thought-out negotiations, the resolutions are just a stack of paper if not coupled with a plan for implementation. This is the part of the negotiation where you’ll clarify objectives, assign tasks with deadlines, and chart your progress in reaching goals and milestones. Here are some guidelines for successful outcomes implementation: Objectives: Your objectives should be crystal clear and specifically spelled out, since you’ll use them as a building block for the rest of the implementation plan. Tasks: This part details what must be accomplished to achieve your objectives. Include a task manager for each step, so that roles are clearly defined and there is accountability. As you enumerate tasks and assignments, these descriptions should be plainly and generally stated; don’t get into a step-by-step, micromanaged explanation of how the tasks will be carried out. Emphasize the expected results associated with these tasks. Continuing with the above example, the tasks section might read like this: •
Secure office space – real estate agent
•
Obtain licenses and permits – you
•
Set up office phones and computers – office manager
•
Begin recruiting clients – sales manager
•
Create marketing collateral – marketing manager
•
Solicit referrals from clients – relationship manager
This list is obviously very specific to this particular firm and is a brief illustration. You may wish to go into more details, assigning tasks to yourself such as obtaining financing, networking with prospective clients, etc. Time allocation: Each task should be paired with an appropriate time frame for completion. You should be aggressive but reasonable with your time allocation in order to ensure not just completion but competent work. For assistance in framing this timescale, use a program such as Microsoft Project, or just create your own Gantt chart – a helpful tool that shows how long it will take to complete different tasks and in what order the tasks should be finished.
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Progress: You or a member of your management team needs to be in charge of monitoring each task’s progress and the completion percentage of each objective. When delays occur, try to get to the root of the problem. Did the person responsible drop the ball? Did he or she have too many responsibilities to handle? Did a third party, such as a supplier or the bank, fail to hold up its end of a deal? Adjust your Gantt chart appropriately to account for the delay, and make a note of the previous deadline and the reason it was missed. While the above steps may seem like overkill, the early days of a startup are critically important; it’s a time when good management patterns are set and also probably a lean era when revenue has yet to start rolling in. The more efficiently you start implementing your business plan, the more likely it is that you will survive this early period.
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ELEMENT 3. MANAGE POTENTIAL AND REAL DISPUTES WITH PARTIES TO PROPERTY TRANSACTIONS 3.1 Areas of dispute are analysed and evaluated according to agency procedures and market expectations to enable resolution of dispute. 3.2 Further negotiation and clarification of lease or sale is carried out until agreement is reached to the satisfaction of all parties.
“If the window of opportunity appears, don’t pull down the shade.” -- Tom Peters
“A pessimist sees the difficulty in every opportunity and the optimist sees the opportunity in every difficulty.” -- Sir Winston Churchill
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CONFLICT MANAGEMENT Conflict management involves doing things to limit the negative aspects of conflict and to increase the positive aspects of conflict. The aim of conflict management is to enhance learning and group outcomes, including effectiveness or performance in organizational setting (Ra him, 2002, p. 208). Properly managed conflict can improve group outcomes (Alpert, Osvaldo, & Law, 2000; Booker & Jameson, 2001; Ra-him & Bono ma, 1979; Kuhn & Poole, 2000; Church & Marks, 2001). Conflict management is something that companies and managers need to deal with. Conflict significantly affects employee morale, turnover, and litigation, which affects the prosperity of a company, either constructively or destructively. (Lang, 2009, p. 240) Turnover can cost a company 200% of the employee's annual salary. (Maccabeus & Shudder, p.48) Conflict While no single definition of conflict exists, most definitions involve the following factors: there are at least two independent groups, the groups perceive some incompatibility between themselves, and the groups interact with each other in some way (Putnam and Poole, 1987). Two example definitions are, "process in which one party perceives that its interests are being opposed or negatively affected by another party" (Wall & Callister, 1995, p. 517), and "the interactive process manifested in incompatibility, disagreement, or dissonance within or between social entities" (Rahim, 1992, p. 16). There are several causes of conflict. Conflict may occur when: •
A party is required to engage in an activity that is incongruent with his or her needs or interests.
•
A party holds behavioral preferences, the satisfaction of which is incompatible with another person's implementation of his or her preferences.
•
A party wants some mutually desirable resource that is in short supply, such that the wants of all parties involved may not be satisfied fully.
•
A party possesses attitudes, values, skills, and goals that are salient in directing his or her behavior but are perceived to be exclusive of the attitudes, values, skills, and goals held by the other(s).
•
Two parties have partially exclusive behavioral preferences regarding their joint actions.
•
Two parties are interdependent in the performance of functions or activities.
(Rahim, 2002, p. 207) Conflict resolution and conflict management Conflict resolution involves the reduction, elimination, or termination of all forms and types of conflict. When people talk about conflict resolution they tend to use terms like negotiation, bargaining, mediation, or arbitration.
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Businesses can benefit from appropriate types and levels of conflict. That is the aim of conflict management, and not the aim of conflict resolution. Conflict management does not imply conflict resolution. Conflict management minimizes the negative outcomes of conflict and promotes the positive outcomes of conflict with the goal of improving learning in an organization. (Rahim, 2002, p. 208) Organizational learning is important. Properly managed conflict increases learning by increasing the amount of questions asked and encourages people to challenge the status quo (Luthans, Rubach, & Marsnik, 1995). Steps to Manage The first step is reactionary by assessing and reacting to the conflict. The second step is proactive by determining how the employee reacted to the decision. The manager tries to take (create) a new approach, and once again tries to discern how the employee reacts. Once the manager feels that the best decision for the organization has been chosen, and the employee feels justified, then the manager decides if this is a single case conflict, or one that should be written as policy. The entire process starts as a reactive situation but then moves towards a proactive decision. It is based on obtaining an outcome that best fits the organization, but emphasizes the perception of justice for the employee. The chart below shows the interaction of the procedures. Maccoby and Studder identify five steps to managing conflict. 1. Anticipate – Take time to obtain information that can lead to conflict. 2. Prevent – Develop strategies before the conflict occurs. 3. Identify – If it is interpersonal or procedural, move to quickly manage it. 4. Manage – Remember that conflict is emotional 5. Resolve – React, without blame, and you will learn through dialogue. (Maccoby & Studder, p. 50) Melissa Taylor's research on Locus of Control is directly related to individual abilities of communication, especially as it pertains to interpersonal conflict. She also states that conflicts should be solution driven which are creative and integrative. They should be non-confrontational, and they should still maintain control, utilizing non-verbal messages to achieve the outcome. (Taylor, p. 449) Rahim, Antonioni, and Psenicka's 2001 article deals with two types of leaders. Those that have concern for themselves, and those that have concern for others. (Rahim, Antonioni & Psenicka, 2001, p. 195) They also have degrees of conflict management style. 1. Integrating involves opening up, creating dialogue, and exploring differences to choose an effective solution for both groups. "This style is positively associated with individual and organizational outcomes." (Rahim et al., p. 197) Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 52 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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2. Obliging tries to find the same interests of the parties, while trying to minimize the true feeling of the conflict, to satisfy the other party. 3. Dominating is a coercive manager who forces their own way. 4. Avoiding is ignoring the problem in hopes that it will go away. 5. Compromising is a manger that is willing to make concessions and the employee makes concessions for a mutual agreement. (Rahim et al., p. 196) The avoiding and dominating styles are considered ineffective in management. The following chart shows the interaction between the styles. (Rahim et al., p.196)
TEN COMMANDMENTS FOR MANAGING DISPUTES These simple yet often ignored steps can help you better manage and minimise disputes in your business. 1. Maintain a good working relationship. 2. Do not allow complaints to escalate to a dispute by avoiding or ignoring your client. 3. Make time to communicate with your client face-to-face and give your client the opportunity to explain the nature of their complaint. 4. Do not interrupt while your client is speaking – no matter how ‘far-fetched’ you think their side of the events is. 5. Listen, listen and listen. 6. As your client talks, listen and take notes. 7. After your client has finished speaking respond in a calm, clear and nonthreatening manner. 8. Once you have both agreed on an appropriate course of action, act quickly to implement the resolution. 9. If you cannot resolve the complaint, seek help sooner rather than later. 10. In any building related disputes, you should apply sound commercial judgment by pursuing a course of action that minimises your loss (monetary/relationships). Strategies for dispute management will differ depending on the individual circumstances, so make sure you consider all the aspects before proceeding with a course of action. Doc ID: CPPDSM4017A - Workbook (L) eLearning Date: 28/03/2018 Developed by: SL Version: 4 Approved by: CEO P a g e | 53 File Location: S:\Learning & Assessment Resources\Real Estate\CPP40307 Certificate IV in Property Services (Real Estate) NSW\Assessment Tools\18. CPPDSM4017A\CPPDSM4017A - Workbook (L) eLearning.doc
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Further negotiation and clarification of lease or sale is carried out until agreement is reached to the satisfaction of all parties “Let us never negotiate out of fear. But let us never fear to negotiate.� - President John Kennedy
The below 10 top tips can help you prepare for and get the most out of the negotiation process.
Negotiation 10 Top Tips for Clarification and Satisfaction of Both Parties 1. Think about what you want Think carefully about your issues and the outcome you want to achieve. Write a summary of these issues. It keeps you focussed. 2. Work out how you will negotiate Be open-minded and flexible. Think about the other person's issues and how they will respond to your views. Negotiation may involve some compromise to reach a solution you both find acceptable. 3. Tell your side of the story Briefly explain your side of the story and show your evidence to the other person. Explain how you would like to resolve the dispute. Focus on solutions. Try not to argue about who's right or wrong, or why. Focus on the concern, not the person. 4. Listen to the other person Listen carefully to the other person and look at their evidence. You might want to take notes. Allow them to talk and don't interrupt. Try to consider their point of view, even if you don't agree. Their view is important to them. 5. Focus on the issues, not the emotions Stay focused on the issues, not on your emotions or the behaviour of the other person. 6. Start negotiating Start coming up with possible solutions. Make offers and counter-offers. A successful conciliation happens when both parties agree on a solution. 7. Only agree to what you think is acceptable Be sure you only agree to an outcome you find acceptable. Keep in mind there has to be some give and take by both parties when coming to an agreement. 8. Ask for help if you're having problems from a third party If you're having problems, ask the Conciliator, Tribunal Member or a Registry officer for help. If you feel threatened by the other person, let the Conciliator or security officer know immediately.
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9. If you reach an agreement Write down your agreement on the form provided. If a Conciliator is available, they can help you write it down. Before your agreement is made into a legally binding order, you will be asked if you understand the agreement, and confirm you made it voluntarily. 10. If you don't reach an agreement If you can't reach agreement, the hearing will go ahead on the same day or at a later date. Think about whether your issues are important enough to come back on another day which may increase the time, cost and inconvenience to you.
Role of conciliators The CTTT provides conciliators at major hearing venues to assist parties during their conciliation discussions. In some regional areas the Tribunal Member will act as both conciliator and hearing member with the consent of the parties. The conciliator's role in assisting parties come to an agreement is to: •
Facilitate open and honest discussions between the people in dispute.
•
Help to identify the issues in dispute.
•
Assist both people to come up with options and possible solutions.
•
Help write down any agreement you reach together.
Conciliators attend to a number of parties at the same time and therefore may not be able to stay in the room during the entire conciliation process. Please note: Conciliators do not provide legal advice or make decisions. They will however check that the parties understand the agreement and it is made with their consent.
Representation The CTTT is designed for people to represent themselves at hearing. This provides an affordable, accessible and efficient means of resolving your dispute. Generally, parties can only be legally represented where the amount claimed is more than $30,000 or if the matter is a strata or community schemes dispute. Requests for representation A request to be represented must be in writing and contain the following information: •
The file number and parties' names
•
The reason why a party seeking to be represented
•
The name and occupation of the proposed representative and whether or not that person is a lawyer/solicitor
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A statement that the proposed representative has a party’s permission to make decisions in their absence that are binding on them.
A party can apply to be represented in writing before the matter is heard or application can be made at a hearing. The Tribunal Member will decide on the day if a party can be represented. Representative may be a lawyer, a real estate agent on behalf of a landlord, an advocate, friend or relative provided that person is authorised to act and allowed to make a decision at the hearing on the respective party’s behalf. Grounds for representation Representation may be allowed in the following circumstances: •
In Home Building Division matters involving a claim or dispute for an amount over $30,000
•
Where the party to proceedings is: o
A landlord to be represented by the property managing agent
o
A residential park owner to be represented by the park manager
o
A retirement village operator to be represented by an employee or agent
o
A retirement village resident to be represented by a nominated resident of the village or resident’s committee
o
A corporation to be represented by one of its officers
o
An owners corporation (strata) to be represented by the strata managing agent
o
A community association to be represented by one of its members or the managing agent
o
A registered co-operative to be represented by one of its officers
o
A firm to be represented by one of its partners
o
An incorporated association to be represented by one of its officers
o
An unincorporated body to be represented by an elected member of the executive or management committee
o
An estate which is being managed by a trustee
o
A government agency to be represented by an officer
•
If the other party is to be represented by a legal practitioner
•
If the other party is a government agency
•
If the CTTT is of the opinion that complex issues of law or fact will arise in the proceedings.
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See clause 14 Consumer, Trader and Tenancy Tribunal Regulation 2009 for the full list of circumstances in which an application for representation can be made. Legal representation A party can apply to be represented in writing before the matter is heard or can apply at first hearing. If an application is made for representation in writing the CTTT will seek comments from the other party prior to making a decision. If the Tribunal Member decides a party can be represented can be represented, the other party will also be able to be legally represented. Strata and community schemes matters A party to a strata scheme or community scheme dispute is automatically granted representation, and the CTTT’s approval does not need to be sought. Section 193 of the Strata Schemes Management Act 1996 states that a party in a strata scheme matter may be represented before the CTTT. Section 93 of the Community Lands Management Act 1989 allows the same for community schemes matters. Disadvantaged persons If a Tribunal Member finds that a party is disadvantaged or not sufficiently competent to conduct his or her case, they may make orders directing that they be represented – section 36(6) Consumer, Trader and Tenancy Tribunal Act 2001. Under the Act, persons are at a disadvantage if they are minors or people who are incapable of representing themselves because of intellectual, physical, psychological or sensory disability, advanced age, mental incapacity or other disability. Mediation Mediation is compulsory for most strata and community schemes disputes before an application can be made to the CTTT. What is mediation? Mediation is a structured negotiation process. A neutral and independent mediator assists the parties to identify the issues in dispute and to consider and discuss options with a view to negotiating a settlement. Any settlement reached is binding for those involved. The settlement agreement may be made into an enforceable order by an Adjudicator. If settlement is not reached or the agreement breaks down, an application may be made to the CTTT for Adjudicator orders or Tribunal orders.
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Why is mediation compulsory? The Strata Schemes Management Act 1996 and Community Land Management Act 1989 state that mediation must be attempted before an application can be lodged at the CTTT. The following disputes types do not require mediation: •
Appointment of a compulsory strata managing agent
•
Allocation of unit entitlements
•
Penalty disputes.
Tenancy Disputes Living in a rental property means that a tenant has entered into a ‘residential tenancy agreement’ with a landlord. The CTTT's Tenancy Division deals with disputes between private landlords and tenants who have entered into such an agreement. The Residential Tenancies Act 2010 does not apply to hotels and motels, boarders and lodgers, protected tenancies, and commercial or retail tenancies. Disputes between social housing providers and tenants are dealt with in the Social Housing Division. Disputes Common disputes determined in this Division include: •
Termination of the residential tenancy agreement
•
Rental bond
•
Breaches of the agreement, for example rent arrears
•
Rent increases
•
Uncollected goods
•
Recognising occupants as tenants.
Mortgagee repossessions When a tenant is given notice to vacate by a mortgagee, they may apply to the CTTT to recover any rent paid in advance, or other fees and charges to occupy the premises paid during the notice period. Jurisdictional limits The CTTT has jurisdiction to determine Tenancy Division applications up to $30,000 for rental bond matters and $15,000 in respect to any other matter.
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Reading List – Books to Read Title
Author
Getting Past No
William Ury
Getting to Yes
Roger Fisher
The Secrets of Power Persuasion
Roger Dawson
The Secrets of Power Negotiation
Roger Dawson
The Negotiating Game
Chester Karrass
Power Questions
Andrew Sobel
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CONCLUSION Congratulations! You have now completed the content and assessments for this unit CPPDSM4017A Negotiate effectively in property transactions.
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ACTS, LEGISLATION AND FORMS • • •
Introducing NCAT Resolving disputes NCAT Conciliation
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