Real Estate Dealmaking: A Property Investor’s Guide to Negotiating
There is a difference between simply negotiating and successfully negotiating.
A highly trained negotiator understands the importance of having a plan that contains various alternatives, ready to be used to your advantage at a moment’s notice. For example, if two investors were seeking to purchase the same property, the one who is a trained negotiator would have many basic advantages over an inexperienced negotiator.
The trained negotiator would:
- Be able to determine the specific reason for the sale,
- Have alternatives ready in a typewritten plan,
- Know how to conduct research on all aspects of the negotiation,
- Be prepared to overcome any objection or obstacle,
- Be able to use other professionals appropriately,
- Understand how to use flexibility as a strength,
- Know how to prepare a priority list and sequence of negotiating topics,
- Have strategies designed to meet deadlines in place,
- Have the awareness to discern the weakness of the other side, and
- Know when to use the technique of silence.
To live is to negotiate. Everyone negotiates for something every day. People negotiate for items from the simplest to the most important things in their lives.
Think of the untrained negotiator as an untrained hiker lost in a forest with no compass, no provisions, and no map. That doesn’t make for a pleasant hike and could even be dangerous. Would you prefer to be the one who comes prepared or the one who gets lost in the forest?
I genuinely enjoy training young real estate professionals in the art of negotiating. Sometimes the day before an important negotiation, I will ask a few of the junior brokers to come see me in my office.
I don’t tell them the nature of my request because I want to determine how much preparation they already have made for the upcoming negotiation. I’ll ask them to sit down and tell me, as best as they can, exactly what they expect to happen in the next day’s meeting. In response, they usually give me a quizzical, confused stare.
From there, I proceed to help them visualize or project what will happen in the negotiation session by asking these questions:
- In tomorrow’s negotiation, who will open up the session?
- What will be the first question asked by our team?
- How will the other side answer that question?
- Which of our opponents will be leading the negotiation?
- What will be the second most important topic we will cover?
- How will the other side reply to that topic?
- What will be the toughest question they will ask us?
- What is the toughest question we will ask them?
- From our point of view, how many components to the deal are there?
- How many components do you think they will bring up in the discussion?
- What will be the last topic we discuss?
Usually, first-time junior negotiators think I’m crazy when I go through this visualization session with them. It is only later, after they’ve acquired some negotiation battle scars, that they begin to appreciate this exercise of projection.
Quite often the night before an important negotiation, I find a place in my home to sit in solitude for an hour or two. In this quiet space, I visualize the actual negotiation just as if I were imagining a complete chess game. I can almost hear my opponent’s replies to each of my questions and recommendations.
Negotiating takes place in many arenas other than in the world of real estate. One example is the type used in hostage negotiations. Although the two kinds are inherently different, a few elements of hostage negotiations cross over with real estate negotiations. I believe that studying these elements can strengthen your skills and awareness.
- Establish common ground
- Probe causes
- Establish credibility
- Identify and assess problems
- Validate facts
- Use active listening
- Clarify meanings
- Facilitate prediction of outcome and consequences
To live is to negotiate. Everyone negotiates for something every day. People negotiate for items from the simplest to the most important things in their lives. The purchase of a home or any other type of property, for example, is a major event in a person’s life.
You’ll find that the better you negotiate, the better your life will be. I’ve observed that those who are adept at negotiating live more confidently and with less stress than novice negotiators. Because of that skill, they usually gain an advantage in all the opportunities that they pursue.
George Donohue is a speaker, author, and executive coach. Learn more about the book, Real Estate Dealmaking: A Property Investor’s Guide to Negotiating at www.george-donohue.com/shop/ )
George Donohue is not an employee of Equity Trust Company. Opinions or ideas expressed are not necessarily those of Equity Trust Company nor do they reflect their views or endorsement. These materials are for informational purposes only. Equity Trust Company, and their affiliates, representatives and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal.
Get answers to your questions and learn more about building wealth with tax advantaged accounts.Contact Us