Negotiation is a big part of the real estate investing business. It has a direct impact on everything from getting your offer accepted to getting someone to work on your schedule. As important as it is there is a large segment of investors who aren’t comfortable negotiating. They understand the philosophy behind negotiating but don’t quite know all of the ins and outs. You don’t need to be a dazzling speaker to be a good negotiator. You need to know who you are negotiating with and what their goals and motivation are. If you can make this your focus your negotiating will be much more successful. Here are five tips to help improve your negotiation skills.
- Don’t Be Afraid To Ask. In many cases the negotiation is over before it even begins. You need to be willing to ask for what you want in order to get it. If you don’t submit an offer at a price you feel comfortable with you never know if it will get accepted. Instead of being scared at what the other party will say you need to be confident in your approach. This doesn’t mean you can lowball every bank or person you negotiate with. It means that if you see an opportunity you should be willing to go after it. There will be times when the other party will slam your proposal and laugh you out the door. The best negotiators are the ones with thick skin. They know that they can often get what they want simply by asking for it.
- Know What You Want. Prior to making an offer or starting negotiation you should have an idea of exactly what you want from it. As simple as this sounds there are too many times when you leave negotiation disappointed. The reason for the disappointment is because you did not get what you wanted. While there is always some amount of compromise in every negotiation you need to know what you want and where to draw the line. Start by writing down what is most important in the negotiation for you. This could be time, price, commitment or anything else you really want. From there you need to balance that with the motivation of the other party. The best deals are the ones where both sides walk away happy. If you don’t know what you want before you start you can never be full happy after you are done.
- Justify Your Points. Regardless of who you are negotiating with you need to be able to justify your side of the argument. This is especially the case if you are trying to get a discount or tilt the argument in your favor. The odds of getting a lowball offer accepted without supporting documents are slim to none. However if you can justify your offer with proof of funds, repair estimates, comparable sales and current listings your odds increase dramatically. In every negotiation you need to highlight your side of the argument with as much firepower as possible. Think about what you bring to the table or why someone would want to work with you. In most cases your ability to differentiate yourself from the pack puts you in the best possible position. The people you talk to need to be fully convinced that you are the best person for the job or have the best offer. Before you dive into any negotiation you need to think about ways that you can justify your selling points.
- Lean, But Don’t Push. It is critical that you always know exactly who you are negotiating with. You should have an idea of who has the upper hand at all times. At some point in almost every negotiation there will come a time when you need to make a critical decision. This could be deciding on a counter offer, what that offer is or if you need to walk away. In most cases you do not get a chance to change your mind once you make a decision. If you are comfortable with what is on the table there is no need to keep pushing for more. By pushing eventually the other party will have enough regardless of how motivated they are. They will find someone else if they feel they are being taken advantage of. You need to find the balance of getting the best deal for yourself without pushing too hard. Instead of pushing lean on the other party and see how low they will go. Never make rash demands or request a quick decision unless you are willing to deal with the consequences.
- Keep It Cool. You are often remembered by how you negotiate. If you are fair and balanced people will want to work with you again. If you were rude and demeaning this is the impression that is left. The real estate investing business is a small community. There is a great chance that you will cross paths with whoever you negotiate with again. As difficult as it may be at times you always need to keep your cool. Never say or do anything that you will regret. Even if you secure the deal an attorney or real estate agent will see your true colors and cause bigger problems down the road. One negotiation is not worth ruining your business reputation over.
Winning just one or two negotiations over the course of the year has a tremendous impact on your business. In every negotiation remember to always strive for what you want without ruining your reputation.
