This is an excerpt from Finding & Funding Great Deals by Anson Young.
So you’ve created a deal-getting plan and perhaps even come up with a direct mail marketing plan targeting motivated sellers. You put 1,000 miles on your car driving your new target areas, and you found a good list of driving-for-dollars properties. Now your hand is cramped from writing letters and you have nightmares in which you cannot get the taste of stamp glue out of your mouth. You’ve started to get an idea on typical repairs, paying a contractor to walk through some sample properties and taking notes furiously. To sharpen your skills, you have scoured through a hundred properties in the area and found good high and low comps for properties you are targeting.
Then the phone rings. It’s a seller. A real, live human being who is motivated to sell, right on the other end of the telephone. Now what? Your palms are sweating and your tongue weighs a hundred pounds in your dry mouth.
You aren’t alone. Many investors I talk to laugh about their first dozen or so calls. The phone rings and you freeze. Now what? One investor told me she even threw her cell phone across the room the first time a potential seller called in. Fear of the unknown, of rejection, and maybe even of landing a first deal is powerful. Now the real work begins. While you may not realize it, negotiation started before you even picked up the phone. Now that you have them on the line, everything you say will dictate your future relationship and your potential to get the deal. No wonder you’re nervous!
You might be a natural negotiator—a phone expert, a people master who loves the subtle art of building rapport. Then again, you might be an introvert who dreads the back-and-forth interaction that comes with haggling, negotiating a car or—gasp—buying a house. While the natural negotiator will initially have an easier time, I think with some experience and motivation, both personalities can do well in this business. The same principles work when negotiating bigger items as when haggling for small things. You are either selling them on yes, or they are selling you on no. Most of the same basic pillars of negotiation apply.
Let’s go through some of the basic foundations of negotiating that apply to all situations we find ourselves in—real estate and beyond.
Getting over fear of rejection
“No.” Nobody likes to hear this little two-letter word. It might be the most powerful word in the English language. “No, you cannot have that raise.” “No, I will not partner with you on this deal.” “No” has an entire negative psychology attached to it, and we are always finding ways to soften its delivery so as not to offend. Hearing no may affect the way you approach similar situations in the future. To learn resilience in the face of rejection, there are two basic strategies—getting to no and getting to yes.
Getting to “no”
Go out in the world and get to ten nos as fast as possible. The more you hear no, the more you get used to hearing it. When I started out in real estate, I was knocking on doors of pre-foreclosure properties. My first day involved forty-five nos—and not all nos are created equal. There was the no followed by the door slam, the no followed by a threat to beat me up, and, of course, the no followed by a threat to call the cops. The more you get used to rejection, the less emotionally attached you get to the word. It’s just business; you aren’t being held over a cliff by your toenails, your family is not in jeopardy, and your life is not on the line. If someone says no to you in real estate, you move on to the next deal.
Getting to “yes”
Honing your skills and getting yeses builds up momentum. The more you win, the better you get. The better you get, the more you win. As they say, success begets success. Getting over your fear of rejection is key, and that means hearing no enough times that its impact no longer affects you—and hearing yes enough to build confidence in your abilities and start making money in this business. The more you get yes out of a seller, the more you internalize what worked in this or that situation, and your brain figures out how to apply that to the next situation. The experience of enough nos leads to an eventual yes, and the more yeses you hear, the more you will begin to get.
The end goal of a negotiation isn’t just for you to win, but for everyone involved to win. You might think, “I’m here to learn how to get great deals, close them, and get paid. That’s what it means to win.” Everyone I know in this business eventually recognizes that to have success with longevity, everyone needs to win. You aren’t trying to swindle or pull one over on the seller; you are trying to help them. A perfect real estate deal is a win-win deal, where the seller gets the help they need and you walk away with a deal. When you get to yes, you should feel confident that everyone is walking away satisfied. If you do right by people, it always comes back to repay you.
There is a saying in real estate: The goal isn’t to make money; it’s to solve problems. If you can solve problems, money will never be an issue for you again. Win-win scenarios will get you paid, both monetarily and in less tangible ways. You might be able to pull one over on a seller a few times, but it always will come back to bite you. Online reviews, BBB reviews— and even worse, lawyers—will eventually haunt you. You might be able to obfuscate numbers on a deal, but your reputation will get thrashed in the process. Creating win-win situations is a long-term investment in your future, your business, and your reputation.
Listen more than you speak
When you think of an expert negotiator, you might envision a slick guy in a nice suit jabber-jawing incessantly with overpowering speech at a mile a minute. You would be wrong. The best negotiators listen more than they talk. Sure, their speech might be persuasive and carefully worded, but it’s strategically placed in the flow of conversation. Think of the 80/20 rule, where 20 percent of your efforts account for 80 percent of your successes. When talking to a seller, this rings true. Aim for that 20 percent, and let the other party do 80 percent of the talking. There is an old saying that states, “He who names the price first loses.” In most negotiations, there is a “meet in the middle” or “split the difference” mentality. It’s a compromise between two given prices, and your job is to define where that middle line should be. People don’t usually want to give away more than they have to or give less than they get, so they try to meet somewhere in the middle. Being an active listener will help you negotiate better and understand what is truly needed in the situation.
No is not the end
It’s easy to tell yourself that it doesn’t matter if a seller rejects you outright, but it’s harder to get your feelings on board. The more you hear no, the easier it gets—but only if you use it to better your negotiation skills in the long-term. What could you have done differently? Was it something you said? Something you didn’t say? In all honesty, you could do everything right and still get a big, fat no. When you spend time, effort, energy, and money to get leads in the door, each no might represent $150 expended just to get to that point. Some things you can’t control, no matter how hard you try. Just remember: Next week, it will not matter that Bob the seller said no to you. If you are consistently marketing, by then, you’ll be talking to Jim, then Sally, then Suzi, and on it goes. Maybe you get told no eight times—but you still get up and learn from those eight times when you go on the ninth appointment. You simply have to leave emotions out of the process.
Two keys here: Be detached from the outcome, and always be willing to walk away. You should separate yourself from the situation and imagine you are seeing this back-and-forth negotiation as a third-party observer, someone detached from the outcome. There are no hurt feelings, embarrassment, or awkward endings in this view. If a seller gets angry, threatens to call the FBI on you, slams the door in your face, or calls you a lowlife scum who preys on the weak, do not take it personally. This is a life lesson: Don’t take anything personally. You never know what someone has on their plate.
I saved the best for last. This is Social Skills 101, and it boils down to getting to know people. While you do want to remain emotionally detached from the deal itself, building rapport does mean genuinely getting to know the seller, which involves getting personal. A seller whom you have built genuine rapport with will sell to you over a higher offer placed by someone they don’t know.
There is no checklist or series of questions to cover when building rapport; it involves a natural flow of conversation. People sense disingenuous people. I could title this section “be a good person and listen to others,” but that might be above my pay grade. Break the ice, ask questions about family, and find common interests and hobbies. Maybe you grew up in the same town, perhaps their grandson is the same age as your daughter, or they may follow the same football team that you do. I usually don’t start off with anything about the property. I ask them how their week was, comment about pictures on the wall, ask about their kids and what they are into, etc. A sincere, genuinely interested person, ready to solve the problem at hand will get the deal. I’ve met insincere, smarmy, slick, disconnected buyers before, and they are just not pleasant to work with. A seller can tell who is there just for the house and who is there to genuinely help.
This strategy, of course, works with others that you network with, including agents, probate attorneys, the lady at the pro desk at Home Depot, title company reps, and pretty much everyone else. You are the ambassador for your brand, and everyone wants to work with a genuine professional. The guy who asks you about your kids and remembers details from the last conversation will stand out. I remember when someone texted me a week after I mentioned my son’s surgery to see how recovery was. “What a nice gesture,” I thought. That guy will get my business every time.
While a lot of this comes naturally, if you consciously work to build rapport, your business will be much better off. You can systematize some of this—put birthdays in your calendar, make notes next to your seller’s name about kids/hobbies/interests/favorite team, and jot in your to-do list to follow up with Jim about his wife’s knee-replacement surgery. Go the extra mile in these interactions, and it will repay you a thousandfold.
The conversation should be 80 percent about them—and very little about you. If you go on and on about how good you are at this business, the seller won’t feel a connection. Instead, get them to open up, answer their questions, and let them know you are there to solve their problems.
- What are their concerns?
- What are their fears?
- What do they need?
- What do they want?
Negotiation is a fine art honed by real-world experience. I don’t know many people naturally gifted in this skill or who learned it by reading a hundred books on negotiation. Get in front of people or on the phone and steel yourself to all the nos that will eventually lead to more consistent yeses as you get better. Becoming an expert negotiator will only benefit you throughout your life, from real estate to buying your next car to dealing with agents and lawyers. Build rapport, gain trust, and go forth and solve problems.
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Building Rapport and Negotiating with Sellers for a Great Deal is written by Anson Young for www.biggerpockets.com