How many times have you put in all the hard work to find a motivated seller only to walk away from the negotiation knowing you could have done better? You did all your homework and due diligence before you met with the seller, but still you didn't get the best deal possible.
I've watched hundreds of investors negotiate deals and find that almost all of them (except the most successful ones) chase the deal in the closing stages of the negotiation. This means that they give the final power to say yes or no to a deal over to the seller. These investors leave the negotiating table knowing that they've missed out on thousands in profits, but not knowing what they could have done differently. If only they knew the two most powerful words in any negotiation: “What if?” “What if” is so powerful because it commits you to nothing and commits the other side to everything.
For example, imagine you are negotiating a lease option on a nice 3-bedroom house. You've done most of your negotiating and your in the final stages of closing the deal. Rather than making an “offer” like “Mr. Seller, I'll pay you x dollars for your house, instead ask a what if question. “Mr. Seller, I don't know if I could do this, but what if I were able to pay you x dollars for your house, is that something that would work for you or probably not?”
Notice the subtle difference between these two ways of making your offer. When you make a formal offer you have given all control over the deal to the other party. You've made an offer; they get to say yes or no. When you qualify your offer using the “what if” phrasing you aren't really making a formal offer. Yet once the seller agrees to your what if offer, the seller has committed himself to saying yes! This is your way of never making an offer until the seller has agreed to accept it.
Think of it this way: Imagine you the Investor are a baseball pitcher. The seller is the batter who is waiting for you to pitch the baseball (the “offer”.) Once you as the pitcher have thrown the ball (i.e. made your offer) you have given all control over the next step to the batter (i.e. seller.) The batter can either choose to swing or not. Wouldn't it be nice to be able to fake throw the pitch to see if the seller was going to swing before you ever released your offer? That's exactly what using this phrasing does for you, it commits the seller to swing for your offer before you ever officially make it. Only when the seller says yes to your what if offer do you follow-up to close the deal.
To close the deal after the seller has agreed to your what if offer try a phrase like, “So if I am hearing you right, Mr. Seller, what you want me to do is to make you payments for 5 years and then cash you out at the $275,000 we talked through, is that right? It is Well I'm not sure if I could do that, but if I could do that are you sure that would really work for you?” Notice how you still continue to play the reluctant buyer right until the very end and the agreement is finalized on paper. You can even play out one more powerful technique here at the end to make sure the deal closes higher authority.
“Now Mr. Seller I want to make sure that before I ask my partner to go along with this deal that you're sure this a fit for you and you want to do this deal. So you're absolutely sure that you feel this is a win-win deal? OK, in that case lets put what we've just agreed to down on paper” And now you get to pull out your agreement and finish up the detail work. Put this simple yet highly effective strategy to work in your next negotiation and you're sure to get a better deal.