Negotiation is the name of the game
Let’s catch the best deal of all possible worlds! This is how you will negotiate for it.
The way you negotiate is critical, Whether you are interested in investing in Real Estate and whether you are seeking to buy a yourself a house. Owing to the fact that Real Estate is a competitive market with limited resources (land), and the fact that this is going to be, probably, your biggest purchase, we have written down a few tips to help you be a real good pokered face negotiator.
Let’s begin with moving aside 2 common psychological barriers that ruin every negotiation:
- “No way he’ll go for that, he will definitely say no” - no. give it a try. You might be surprised. Stick to your interests, not the other side’s interests, and give your best offer (best for you). When you take your proposal seriously, the other side will too. For example, when we are searching for a property for sale below the market’s price, or interested in selling our property above the market’s price, we naturally tend to think that no one will want to sell us / buy from us the property. WRONG. First, many people are not aware of the market’s price and the property’s value. Second, people are affected by psychological factors, such as pressure to sell fast (because, for an example, they are leaving the country or are in debts), pressure to buy (because, for an example, they sold their house), they are tired of searching for buyers or sellers, and many more reasons.
- “This is the lowest I will get / this is the highest I’ll go”- lie. Just like you are not offering your best offer, the other side isn’t either. There is always a better offer.
A few principles of negotiating:
- Get personal - always try to have a personal conversation. When there is intimacy, it’s harder to say no. tell the other side about yourself, try to maintain a relaxed body language, smile, look in the eye, use their private names, shake hands.
- Avoid correcting their factual mistakes, offending them, and don’t mention competitors and other candidates (it creates an atmosphere of distrust).
- If you are the one that is buying, don’t insult the property. The seller may be sentimental about it.
- Furthermore, try to arrange as many meetings. Each meeting creates more and more intimacy. Stay for a drink and chat.
- Information is a key - If you’ll know the reason why the other side is selling/buying, it’s an advantage. You will know whether he is eager to sell/buy, or quite indifferent. Do it in a respectable way - don’t be straightforward. For example, if you are the buyer, ask the seller where is he moving to. After he’ll answer, you can ask why is he moving. Than you’ll know if he already found a new house, which means he needs to sell his quite quickly, or he hasn’t found one yet, and he’s not in a rush to sell - he won’t compromise on a price, he’ll keep looking for a buyer that is willing to pay more. Maybe you can also find out what does the seller want, that you, in oppose to other people, can give him. For example, you can pay in one payment, you can buy his entire furniture, you are flexible about the entrance date, etc. you can always find something that the other person will be interested in. get closer to the person, chat, get to know him, and learn his needs and intents.
- Listen, don’t speak - when listening, you learn and get information. When speaking, you reveal information. When listening, you cause the speaker to open up and feel closer to you. He will reveal more information that you can use in the negotiation. If you must talk, talk about matters that are not related to the negotiation, and create more closeness and intimacy. Tell them about your private life.
- Target price - you don’t start negotiating before you decide on a minimum/maximum price that you are willing to close the deal for. Don’t doubt your decision while negotiating. There’s a reason you decided that this will be your best offer, so don’t weaken.
- The importance of a compromise - the price you present to the other person at first, should never be your best offer. Always give a higher price (if you are selling) or a lower price (if you are buying), in order to leave a gap for compromising.
- We mentioned earlier that the first offer is never the best offer. However, when receiving a “first but last offer”, don’t say no. Instead, say that you will think about it. It will increase the other person’s expectation.
- Don’t expose all your cards at once. In order to improve the other person’s offer a couple of times, you will need a card for each time. Keep your cards for yourself as long as you can. Only start exposing them on the advanced levels of the negotiation.
Buying a house? Those tips are just for you:
- “I’m sorry this is too expensive” - Don’t. It jamms the conversation and creates distance between you and the other person.
- Don’t talk numbers. First of all, when you first meet the seller, don’t mention the price at all. This topic will make it hard for you to create intimacy and kindness. More important, don’t offer a price. First, maybe the other person was willing to give you a better offer and you’ll ruin it for yourself. Second, you might insult the seller, that thinks that his house is worth more. You need to let the seller decrease the price by himself, without you throwing numbers. You will be tempted and pressured into saying a number, but you must avoid it using your creativity. You may, for example, say that you can not give a number without first consulting with your partner. When do you start saying numbers? Only when the gap between your expectations and the seller’s is small.
- “This is exactly what I wanted!” - great. Do that. Show your enthusiasm. It is his house and he is sentimental about it. Flatter him.
- Set facts. Present yourself to the seller as the one that is going to buy the house from him. It isn’t arrogant, it just creates confidence.
- Pick a neutral place for your final negotiation, and not the seller’s house. Everybody will feel powerful in their house.