Win More Negotiations With These Five Important TipsBy JD Esajian on July 26, 2019
There is negotiation is almost everything you do in business. Whether you are looking to get a seller to agree to your offer or a contractor to agree to your price, you negotiate every day in business. Winning most of these negotiations can completely change your business for the better. Think of the impact of getting your number accepted on a buy and hold rental property. You would instantly increase your monthly cash flow which would dramatically improve the prospect of the property. On the flip side if you settle for the seller’s number you will be forced to play catch up from the moment you take ownership. You will never win every negotiation, but by winning just a few more over the course of a year it will have a huge impact on your bottom line. Here are five tips to help win more negotiations.
- Gather Info: There is always something that motivates us to take action. In the world of negotiation one of the first things you should do is discover that motivation. Even before you throw out the first number or first request you should gather as much information on the other party and their situation as possible. If you are dealing with a lender on an REO property you should research their previous deals and what prompted action. If you are negotiating with a traditional seller listen to what they say in your initial exchanges and store it for later. Many times a seller, or another party, will tell you what they want from the deal if you really listen to them. If you make this the focus on your offer, you have a much better chance at getting it accepted. Before you do anything, always gather as much information as you can find.
- Never Make First Offer: There is a rhythm and pattern that successful negotiators follow. You can be the best public speaker, but that doesn’t make you a good negotiator. In fact, talking too much will have an inverse effect. When negotiating with anyone always let them do most of the talking. You should ask questions to prompt dialogue and just say as little as possible. There is an adage when it comes to negotiation that the person who makes the first offer loses. You want to avoid this by beating them to the punch. If you are working with a seller simply ask them what they are thinking for a value or what they would feel is a fair price. If the question is asked of you give some items that the property needs or say that you need to look at the market. Whoever gives the first number sets the benchmark for negotiation whether they know it or not. If you come out with a number that is way off in either direction you may lose the deal right there. By letting the other party throw out the first number you can pivot from there and control the negotiation.
- Don’t Oversell: There are ways to express your desire for the property or service without coming right out and saying it. You can follow up diligently, but you never want to oversell. In fact, you should find ways to throw cold water on the property without being too negative. If the property needs work you should point out what is needed and attach a rough price tag to it. Of course, you need to find a balance because the seller may have a personal attachment to the property and doesn’t want to feel too negative about it. On the flip side if you try too hard to push the negotiation in your favor you may push too far and the other side will feel intimidated and won’t be very comfortable with you. Expressing your interest and desire for the property is fine, but never go too far over the top.
- Make Small Concessions: Prior to going into any negotiation, you should have a few items in your back pocket you can use if you have to. Sometimes getting a good deal is not enough for the other party. You will have to sweeten the pot with some concessions. These concessions don’t necessarily need to be too big, but they should seem meaningful to the other party. Paying for a service in cash or letting a seller stay in the property for a few extra weeks can tilt the negotiation in your favor and get the deal done. You should always look at the big picture and win the war sometimes by losing the battle.
- Avoid Steamrolling: There are times when everything is lined up in your favor. The other party is desperate and there is little competition against you. For the novice these are the times when you simply steamroll the other party and get the deal done. However, the best negotiations are the ones where both parties leave satisfied. If you take advantage of the other party and the feel they are being walked over they are going to find some kind of recourse. They will eventually ask somebody their opinion on the matter or talk to someone online and have a change of heart. By being fair right from the start you ensure the other party will not look elsewhere and you will end up securing more deals.
To be a truly great real estate investor you need to be a good negotiator. Use these five tips to help improve your skills and change your business.