real estate negotiation

Keep More Cash in Your Pocket with These Four Negotiation Tactics

April 17, 2020December 6, 2014 by Karysa

“Congratulations, they accepted your offer!”

Those are the sweet words that we all want to hear as investors.

Who hasn’t paced the room, checking their phone 20 times in 5 minutes, unable to focus on any conversation, just waiting for the seller’s counter offer?

Closing the deal and taking possession are exciting moments, but it is the negotiating of the deal that gets your adrenaline racing; The sheer happiness you feel as you jump for joy when the realtor calls with the news you have been waiting for. Or, facing the loss if a competing offer wins.

But, you can win more often – and get the best terms and price for your properties. Here are four ways to help your real estate negotiation:

Negotiation TIP 1: What’s the REAL Reason They Are Selling (Find their motivation)

Typically the more questions you ask, the more you will learn.

Get your realtor to ask some specific questions before you go to the house, and then again after your appointment.

You want to know things like:

How long have they owned the house,
Have there been recent upgrades,
Are there any issues with the house,
Why they are selling, and
What are the utility costs?

If you are negotiating directly with the seller, asking questions is a good way to build rapport and get information.

While you’re looking at the home, look for signs of seller motivation.

Bring a checklist of structural things you want to look for, and add “seller motivation” to that list. I look for things like 2 or 3 beds in a bedroom- maybe the sellers need more space for the kids. If the walls are bare and there isn’t much furniture, they could be moving out of province or there was possibly a marriage break up. Only two months ago I successfully negotiated an offer at $15,000 under fair market value because I knew, through asking pointed questions, that the sellers were highly motivated. They had already purchased another home and were under pressure to sell their current home.

Negotiation TIP 2: Create a Connection

As a realtor I get to hear the sellers side. I suspect most real estate investors would be surprised to know that one thing a lot of sellers say is “I hope a nice family moves into my house!”.

I’m selling my house right now and I actually feel the same way – someone with kids NEEDS to buy my house so that they can enjoy the play structure that my husband tirelessly put together over Father’s Day weekend 2 years ago!

Selling to a family often ranks higher in people’s minds than money.

Think about that one for a minute.

Sitting with a couple reviewing competing offers earlier this year, the couple was trying to figure out if one of the offers was from a neighbour’s friend. They didn’t even know. They just heard that the friend might be writing an offer and thought that those people should get that chance to buy their home. They were willing to take $10,000 less from those people than a higher offer we had!

Decisions are not always rational! So, what does this mean for you, the investor? When a homeowner sells their home, they are usually confused and disappointed if they see a corporate name on the offer. If that is how your offer will be submitted, I recommend including a letter that talks about you as a person instead of an investor. You may even want to include a picture of your family to really humanize yourself.

If you’re speaking with the seller directly, let them know that you purchase nice homes in good areas to rent to great families. Bring the softer side of the business to the table.

Negotiation Tip 3: Help the Seller Get What They Want (As Long as You Get What You Need)

Too many deals fall apart over the terms in the offer.

I have had clients say: “Can you write in the lawnmower, snow blower, and that pile of firewood beside the fire-pit? Oh, and I really love her china cabinet, I bet she doesn’t want it anyway anymore because it will be heavy to move. Do you remember if there was one freezer or two? I could use an extra freezer. And don’t forget to write in the offer that they take all their junk out of the garage.”

When the list of chattels gets too long, AND there are a lot of conditions, AND a small deposit- the offer starts to feel very unfair to the seller.

Everyone wants to think that they did a good job in negotiating their home purchase or sale. Be reasonable in your offers and negotiating.

Make sure the seller feels like they got a good deal too. Reputation matters, and you need to build good relationships in this business. A strong reputation will get you more referrals, more opportunities, and more profit.

Negotiation TIP 4: Know When to Fold ‘Em

When I was a kid, my Dad loved to sing that Kenny Rogers song “You gotta know when to hold them, know when to fold them, know when to walk away, know when to run”. It doesn’t just apply to card gambling- it’s true for negotiating in real estate.

Don’t fall in love with the house (or, the idea of doing the deal) and pay too much.

Negotiating is an emotional experience. It can be easy to lose site of your goals or stretch them a little in the process. Sometimes, you might feel like you’ve invested so much time you can’t walk away, or you’re worried you won’t find another deal quite so good, and you settle for terms that don’t make sense for you.

If it’s not the deal you wanted, walk away. So often that leads to an even better deal. Sometimes, the seller will call back days later and the investor then you can negotiate an even better deal because you’re back into a position of power and a calm rational state of mind.

Negotiating doesn’t have to be a stressful experience. Use these tips to make your next real estate purchase a successful one. It does take practice to become a great negotiator. But by using the guidelines above, and remembering to use Kenny Rogers’ advice too- you can save a lot of money and create an abundance of the great deals that you want.

Candice Bakx-Friesen has been successfully investing in real estate for 13 years. She has diversified her buy and hold strategy to include duplex, single family, multi-family, and commercial holdings. She’s also a realtor in Manitoba. Her passion for helping others is fierce and she loves to see people succeed. Candice welcomes your questions or comments; contact her at Candice@cbfteam.ca.

One Strategy to Find Tenants Faster, Negotiate Better Deals & Raise Money More Easily

April 17, 2020October 7, 2014 by Julie Broad

“Don’t play hard to get. Be hard to get.”

How do you sell a $20,000 purse? You keep it in short supply and only sell it to people who meet certain criteria. Once only a few people can have it, everyone will want it.

Of course, it is a lovely looking bag. And Grace Kelly reportedly fell in love with it when filming Alfred Hitchcock’s To Catch a Thief, eventually leading to it being named the Kelly Bag by Hermes.

There’s more to this than just being hard to get, of course. Few people can afford such a huge expenditure on an accessory which also makes it a status symbol but Hermes understands what makes people desire something to their core.

A big part of what drives our desire for something is not a rational need. Knowing other people want something, not being able to have it easily and fear of missing out, all drive us to want something more than we would otherwise. It also drives us to make decisions and take action. It’s the foundation of the simple principle of persuasion called the Law of Scarcity.

Understanding this law and putting it into practice in your real estate business can help you sign the tenants you want quickly, negotiate better deals with sellers and have your potential investors say yes to your deals faster.

Here’s how to use the Law of Scarcity in your real estate business:

The Law of Scarcity is a powerful tool to use in your real estate business. But there are many ways to do better deals and find great tenants. If you are looking for other ways to do better deals, here’s another video tip for you: https://revnyou.com/how-to-find-great-real-estate-investing-deals/.

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It’s Not What You’re Saying that is Ruining Your Deals

April 17, 2020September 24, 2014 by Karysa

“It’s really simple. These are the factors we have to put in the model…” and then he would rattle off a bunch of things so fast I had no idea what he was saying. Nobody in our group did.

We’d usually just look at each other, shrug and follow his lead. He was one of the smartest people in our entire MBA class so following his lead was usually a safe bet.

The challenge was when someone else in the group had an idea. It was tough for him to persuade the group. He thought on a different level than the rest of us and he spoke so fast that his arguments weren’t compelling. We just didn’t understand what he was suggesting.

As a real estate investor, communicating in a compelling manner is critical to your success too. It’s rarely the first subject people talk about in the real estate space. It’s usually about hiring your team, finding deals, researching your market or handling tenants, and yet your ability to excel at all of those things comes back to your ability to communicate effectively.

In fact, your entire business relies on your ability to negotiate deals, hire the right people for your team (and communicate what’s expected of them), and raise the money you need to do fund your deals.

Sure, you need to run numbers, and that requires a spreadsheet more than your ability to communicate, but beyond that your success in real estate is all about you convincing people to do what you want them to do!

The scary part is that so much of what allows you be effective or ineffective isn’t about WHAT you’re saying. It’s about how you’re saying it.

Your voice – the pace you speak at, the tone you use to communicate, filler words, and the energy that comes through in your voice – are all impacting your ability to influence and impress other people.

A quick look back at some of the most famous Seinfeld episodes will confirm the importance of how you deliver your message. They’ve had fun with every kind of talker … the fast talker, the close talker, and the low talker.

Remember, how Jerry was ‘low talked’ into wearing that white puffy pirate shirt on stage at his show by Kramer’s low talking girlfriend?

Clearly, how you’re delivering your message is critical. So what can you do to ensure your message has the greatest impact on delivery?

Here are three things to ensure what you say is not getting ruined by HOW you say it:

1. Do you believe in your message?

Have you ever tried to convince somebody of something you don’t really believe?

How’d that work out for you?

The first key is to having an influential voice is to believe in what you’re saying. This is challenging for some new investors who are trying to build a team or raise money. They are telling a realtor about what they are going to do, but they haven’t built the belief that they will actually make it happen (you can also read my article about finding a good realtor). Or, they are speaking with a potential joint venture why 50% 50% is a fair split when they don’t really know if it is.

In Grant Cardone’s book, the 10X Rule he talks about the danger of not being fully committed to whatever it takes to achieve your goal. He says:

“When you have underestimated the time, energy, and effort necessary to do something, you will have ‘quit’ in your mind, voice, posture, face and presentation…However, when you correctly estimate the effort necessary, you will assume the appropriate posture. The marketplace will sense by your actions that you are a force to be reckoned with and are not going away – and it will begin to respond accordingly.”

Belief and determination will shine through your voice. So before you try to convince and engage anyone, get connected with what is driving you to invest in real estate in the first place. Get into the mindset of ‘let’s do this – whatever it takes’ and pursue what you want with moxie. That alone will overcome a lot of the other potential voice issues you could face. People will sense your determination and your belief and will hop right on board.

Dave always talks about the power of looking someone in the eye and saying “I’m going to take care of your money because if we don’t make you money, we can’t eat. We only make money when you make money, and this is our primary business.”

That kind of determination and belief in what you do is powerful (and works to raise a lot of money)!

2. Record Yourself Speaking … And Listen Carefully

If you just groaned, I get it. Listening to your own voice is pretty painful for most people. It is, however, the best way to catch if you have any of these other potential voice issues that are making it hard for you to influence others.

Ideally record your side of a business call. Afterwards, listen for:

1. Vocal Tone – does your voice come through as a command or a question. If you’re asking a question – ok your voice should go up at the end of a sentence to indicate a question. Otherwise, a flat or even drop in your tone at the end of a sentence is much stronger.
2. Filler Words – Are you using them? You know, um, the ones, ah, like … right?
3. Vocal Pace – Are you speaking too fast, too slow, or are you just speaking at one pace and at one tone the whole time which will put people to sleep?

Have an honest friend give you input. Then, consciously work to change it!

3. What Do You Look Like When You’re Speaking?

This is an entire article unto itself. You can damage your credibility, look totally insecure or just not be likable to someone in an instant just by showing up in the wrong clothes or looking totally disheveled. Let’s be blunt … nose and ear hair really hurt your impact too.

You could also ruin any sort of positive message you’re saying with gestures like rubbing a beard while you’re speaking, constantly flicking your hair or rubbing your nose.

If you look nervous, the other person will feel nervous.

Besides the fact that these things are distracting, they don’t set someone at ease. In order to influence someone, they need to be comfortable.

The bottom line is that you need to look appealing in most cases so people want to look at you and feel comfortable doing so. It’s not necessarily fair or right, but the more attractive you are, the easier it will be for you to influence someone. You don’t have to believe me … you can just read Invisible Influence by Kevin Hogan and you’ll learn all about it.

People have to be ok to look at you while you’re talking so that they can feel comfortable and will easily engage with you.

Ask a kind but critical friend what you could improve. Hire a stylist. Video tape yourself speaking. Identify where you can improve your appearance and reduce the gestures you make that are taking away from your message.

If what you’re doing is working for you right now – you’re negotiating great deals, raising all the money you need, and work with a team you love, you could make a few tweaks I am sure (we all can I suspect!), but you’re probably actually good. If, however, you’re having trouble hiring the right people, your raising money efforts are falling flat and you never seem to get what you want in negotiations, it’s time to pay attention to HOW you’re saying what you are saying.

Good luck!

1st Image: © B-d-s | Dreamstime.com - Young Woman At The Desk Gesturing OK Photo

2nd Image: (& fun info about the Puffy Shirt episode) http://seinfeld.wikia.com/wiki/The_Puffy_Shirt