I know that one of the toughest
things for a beginning investor is negotiating deals.
We are often our own worst enemy when it comes to this. For the most part, I think that when we envision good
negotiators, we see smooth talking individuals with an answer for
everything. For many of us,
this is a horrifying vision because smooth and slick does not come
naturally to us and, if we’re honest, we don’t want to come across
that way. So how do we
negotiate a good deal when we don’t have the gift of “slick? and
we don’t want to become “slick?
I do not consider myself to be a
smooth and slick negotiator, but believe that I’m pretty good at what
I do. Negotiating didn’t
come naturally to me, but came together over time and with practice.
There were two things that made me a good negotiator and can help
you as well.
First, you must be willing to
stop talking and listen. When
dealing with someone in this business, whether you are the buyer or the
seller, you need to sell yourself.
You can not sell yourself without listening to the other
party’s needs. Listen for
what is important to the other party and then show them that you can
address it. In my
negotiating, I keep the other party talking as much as possible.
When they run out of things to say, I ask another question in
hopes of learning a hot button of theirs.
When I hear it, I ask a question that acknowledges I heard their
needs. An example would be as follows:
Seller: “My
house needs a ton of repairs, but I can’t afford to fix them in
order to put the house on the market.
Plus, we can’t really live here anymore because the water
is coming in through the roof.?o:p>
Steve:
“So basically you need someone like me who is willing to buy
your home as it sits right now to help you
out. Is that true??/font>
My question to the seller
acknowledges that I heard their need, provided them with the benefits of
dealing with me, and got them to acknowledge that dealing with me would
be good for them.
You must listen, it’s very
important!
The second thing that will make
you a good negotiator is knowing, without hesitation, what the deal
needs to look like to be a good deal.
Other investors often ask me how I get such good deals and I tell
them that I’m not willing to pay above a predetermined amount.
When dealing with sellers, know what your top dollar amount is.
For example, if I walk into someone’s home and know I will only
spend $150,000, then I’m firm in my convictions and all of my
questions are leading the sellers toward selling me their home for
$150,000. I don’t
negotiate up because the sellers say that they need more money.
Once they acknowledge that I’m the person to help them, we need
to come to the price that I’m willing to pay in order to help them.
If the sellers tell me that they want $170,000, I don’t give
them $170,000 because they say that is what they need. I stick to my guns and tell them the advantages of dealing
with me. Price eventually
becomes secondary to the seller and dealing with me, the person who is
guaranteed to solve their problem, becomes most important.
Be firm in your conviction of
what you need to pay. If
you are only hoping to get it for a certain amount, you will pay more
every single time. I get good deals because the price that I have in mind is all
I’m willing to pay. As
long as the number keeps coming in my direction, I will negotiate until
it reaches the level where I need it to be.
To be a good negotiator, you
need to learn just a couple of things.
First, listen to the other party, and second, know what it is you
are trying to accomplish before going in.
If you don’t know, the other party will get their way.
As far as being smooth is concerned, your flow will get better in
time. Just focus on getting
what you want and listening to the seller in order to lead them where
you want them to be.
Steve Cook is a real estate investor from Baltimore, Maryland. He is the owner of flippinghomes.com. For more information on Steve or his materials, click here
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