Negotiation Tip – Be A “Don’t-Wanter” of the Deal
Negotiation Tip – Be A “Don’t-Wanter” of the Deal
By Lou Gimbutis
I’ve been involved in a lot of negotiations, and read a lot of books on the subject. There is a basic principal of negotiation that is fundamental; that is below the level of tactics and techniques. In fact, it doesn’t apply to negotiations alone, but to almost every type of human interaction. Here it is:
Other things being equal, when you push or move towards someone, they will have an automatic (and many times unconscious) tendency to pull away.
This can easily be demonstrated with the concept of personal space. The next time you’re speaking with someone, casually and slowly move closer to them. 100% of the time, they will move backwards. **
As an Investor, especially in a very strong Seller’s Market, your goal should be to do everything possible to get the property under contract as soon as is earthly possible – preferably at that first meeting. This will increase the percentage of your leads to turn into deals immensely, and besides, who wants to go back twice when one trip would have done it? I can promise you that if you leave without a signed contract, you have just cut your chances of securing the deal by half, at a minimum.
When negotiating price or terms on real estate, if you are over-eager and pushing very hard to get the deal under contract, the Seller will sense this psychologically and begin thinking, either consciously or unconsciously, “I must be giving away the farm! This person seems way to eager.” This will create uncertainty in the mind of your seller, hesitancy, and a tendency towards confusion and wanting to delay signing the paperwork so that he or she can “think it over.” There is an old axiom in sales that says “a confused mind says no.”
Think about this from your own perspective – have you ever sold something, even a smaller personal item, and had it immediately sell for 100% of your asking price, and then you found yourself questioning whether or not you let it go far too cheaply?
As strange as it sounds, if you make the Seller work for the agreed upon purchase price, even if it is their original asking price, they will be more psychologically satisfied with the transaction, and less likely to “shop your contract,” or back out later.
Many times, they will even be ultimately happier if you get them down on price a little, because they will then feel more certain that they have done a proper job of negotiating (especially for us men because testosterone demands that we exit this arena victorious). On a side note, you will find this tendency particularly prominent if your Seller hails from another country. In the US, we tend to have an aversion to negotiation, a built-in discomfort, or distaste for it. In many cultures, negotiation is considered an inextricable part of every transaction. The Seller will almost always have an original asking price far higher than he or she intends or expects to sell for. As strange as it may sound, if you unquestioningly pay it, the foreign Seller will feel cheated of an essential part of the transaction – the “fun” they missed out on by losing the chance to dicker with you.
But back to the original concept of push and pull, and the human tendency to unconsciously do the opposite whenever one of those forces is perceived. When you make your Seller “work” for the purchase price, you have given him or her a chance to “push.” This is likely to lead them to walk away from the negotiation with a feeling of pride, that his or her skill in negotiation (particularly his) effectively allowed the Seller to position for relative advantage, and secure a better bargain through this skill set.
An attitude of courteous disinterest while inspecting the property will work wonders on the negotiations later to come. Be polite, be pleasant, and do not beat up the house or talk it down. That is a tactic used by the unskilled negotiator, and it often has the exact opposite of its intended effect. “Wow, this is awful! You really used to live here?” There are far more subtle and polite ways to ensure that problems with the house have not escaped your attention. The Seller will likely be either following you around or giving you a tour of the house. If you see a major problem, a huge amount of mold, foundation issues, etc…simply take out your camera, and very, very slowly, take a bunch of pictures of the area. You don’t have to say one single offensive word, and the Seller will have absolutely no doubt that you are aware of the problem and will be weighing its significance into your offer.
If you’re only looking at one deal, disinterest will not come easily. When you’re working on several at a time, you know that this house will not make or break your short-term success in real estate. The Seller can sense this objectivity, and your closing rate will increase along with your discount percentages. Be a “Don’t Wanter” of the deal, and you will end up closing a lot more deals!
Lou Gimbutis, owner of Property Solutions, has been buying and selling houses full-time since 2004, first in Michigan, then after moving to NC in 2007. He is a member of the Metrolina Real Estate Investor’s Association.
** Editor’s note; this article was written before the pandemic. Please take appropriate caution when talking in close proximity with people and be sure to practice good social distancing. **