How To Negotiate

Too often, people believe that negotiating is about ‘crushing’ the opponent. They enter into a negotiation as if it were a fight. They think about how to fight dirty, pull the ace out from their sleeve, and make the opponent eat their words. If someone is not suited to fighting dirty, gathering the ‘dirt’ on their opponent, or making people feel bad, they will typically tell you that they are not a good negotiator.

One of the best courses I ever took in my real estate investing career was a course in negotiation. As a real estate investor - this is priceless. Let me first make it very clear that negotiating is not about winning. It is about reaching an amicable solution, where both sides feel satisfied with what they got out of the deal. A good negotiator can get what he/she wants, but understands the art to getting what he/she wants is understanding the other party, in order to ultimately make the other party feel satisfied with what they can get out of the deal for themselves. It is very similar to selling. A bad salesperson immediately boasts the exciting features of their product or service. They won’t sell a thing until they know what the prospect WANTS, NEEDS, and objects to.

There is an old adage that says “first seek to understand - then seek to be understood“. In negotiations you never want to give up more than you have to. It stands to reason that you won’t know the minimum that you have to give up, if you don’t begin with questions.

Questions that are important in any real estate negotiation are:

• Why are you selling?
• What did you pay?
• What is it worth?
• What will you take? (or even better - what do you need out of the deal to move on?)
• What if you don’t sell?

To me, Negotiating is the art of asking questions.

1. Listen
2. Seek to understand and solve their problem
3. Be direct, humble, and honest
4. It’s not about the money it’s about helping the other side. Otherwise they sense you’re only about the money, and they become defensive.

To disarm people:

• Make them RELAX
• Build rapport
• Begin by showing them I understand

Another secret (to helping anybody understand anything that you want to convey to them) is that the mind thinks in images … not words. Furthermore, decisions are evaluated on facts, but decided on emotions. Try using analogies that project into the future and make them envision that outcome.

One of the keys to Donald Trumps early success was of course Trump Tower on 5th Avenue in New York. Donald realized the value of offering great views from the windows of the units in his building. In a city where builders build up and up, the only way to secure the value of his building, was to buy the air rights to the building next door to the site where he built Trump Tower. He had his artist draw a beautiful rendering of Trump Tower (as we see it today), and he also created a disgusting rendering of an absolute horrid looking building. Donald approached the owner of Tiffany’s (next door) and said “If you don’t sell me the air rights over your store, I’ll build this horrid looking building. If you do sell me the air rights, I’ll build this gorgeous building next to your upscale store”.

Donald Trump plays hardball, and I’m not suggesting that blackmail is the best policy. In fact I believe that Donald could have achieved the same result with the same pictures, but in a more subtle and conversational manner that would have left the owner of Tiffany’s feeling good about himself.
But what Donald Trump did understand was:

1. The mind thinks in images, and his vivid drawings painted the picture black and white for his opponent
2. Decisions are based on emotions
3. He knew his opponent ran an upscale jewelry boutique and preferred an upscale building next door

Don’t forget the Law of Adaptation:
- The other person will adapt to the state of mind you are in.
- If you are in a relaxed mood, they will be in a relaxed mood.
- If you are rushed, abrupt, and too serious, they will be the same.

FINALLY, here are some more tips for negotiating a real estate deal:

1. Ask for everything, expecting to get it.

1. All negotiations should take place in the kitchen (the most emotional for sellers).
2. The first person to mention numbers/amounts loses.
3. (Always turn the conversation back to their feelings, emotions, needs, expectations, etc rather than respond with a number)
4. Never be afraid of silence - it always works in your favor.
5. Whenever they state their price, always ask CAN YOU DO ANY BETTER and remain silent.
6. Ask WHY/HOW they came to the price they did.
   (Rather than simply go back with a different number, this makes them feel like you care about their thought process, and it will actually help you understand their thought process.

Good Luck!

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