Let's jump right into me explaining what are the best 3 negotiating tactics for real estate investors to use when dealing with motivated sellers, cash buyers and even the loss mitigator who works with bank owned assets.
1. I Call This One “The Switch Up”.
I use this technique when dealing with unruly, rude loss mitigation negotiators. Now remember that these people feel as if they have all the power. They want to intimidate you by talking sternly or simply telling you exactly “how it is going to be”! I actually really like these type of loss mitigators because they are very predictable and always follow the same pattern. At first they are an “Intimidator”, but after they realize you can't be bullied they turn a corner and try to win you over by being extremely friendly and helpful. Here are some tips and tricks to helping them turn the corner:
Always stay calm and stand your ground – In the beginning I am always a bit more aggressive just to prove I can hang, but I let up if the conversation gets ugly.
- Fight your case with facts (Comps, crime statistics etc.)
- Realize they are always testing you to see how you react
Focus on establishing rapport – If I get into a heated debate with a loss mitigator the next day I always call and say something like “I know we got off on the wrong foot yesterday and I know we both want to see this deal get done quickly. I just want this family to avoid foreclosure so let's try and work things out okay?” Then begin asking personal questions to try and get to know the loss mitigator and build a relationship.
2. Dealing With “Take It Or Leave It” Statements.
This comes in handy when dealing with Real Estate Agents that think they know everything. Many times I get a low ball offer from a real estate agent and when I call to begin negotiating they say something like “Don't you know it is a buyers market and my client is looking at many good deals. That offer is the best we will make…TAKE IT OR LEAVE IT.” Now this is obviously very difficult to overcome but I always try and redirect their statement by saying something like “I may be willing to meet your price but your client obviously needs to throw in some extra benefits that are worth the difference in what I am asking. How about letting me take back a note at reasonable terms for the difference?” Or “The price you are offering is obviously much lower than what I want to accept. If you won't raise your offer then I will have to think it over and get back to you.”
A statement like this takes the edge away from the “Take It Or Leave It” comment and allows you to continue negotiating. Your ultimate goal is to keep trying to bridge the gap and “make the deal work” even if you have to slow the negotiations down to fight another day!
Now if you are on the other side of the table and the one making the offer try saying “After reviewing all the numbers that's the best I can do”. This is a much nicer statement than saying “take it or leave it”!
3. The Alternative Close
People love choices. It makes them feel in control. A good negotiator always has the other party in the transaction “feeling” like they are in control. A good way to do this is by employing the “alternative close”. This works by saying something like “Well Mr. Homeowner I have looked at the property and have come up with a couple of offers that I believe are fair for both of us. Now the only decision you have to make is if you would rather have all your cash right now and take a small discount (and point to your written down all cash offer), or if you want to get a higher sales price for your property but wait two years and during that time I will make payments (pointing towards your terms offer). Which works best for you?
So appreciative in fact that I know you are just dying to comment below. Let me know if you have ever used any of these techniques in your investing adventures. Do you know of any others that you could share? Have you ever been in a situation where a great salesperson had you buy or sell something and then you looked back and said to yourself…”what in the heck just happened?!? Damn that salesperson was good!”