Author Topic: The art of Negotiating - tips, advice, stories  (Read 2948 times)

GreenEggs

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The art of Negotiating - tips, advice, stories
« on: April 05, 2017, 12:42:27 PM »
Negotiating seems to be an important part of real estate.  I figured MMM would be a good place to ask about negotiation advice & tips.  What are some key things you've learned about getting what, you want & protecting what you have? 
« Last Edit: April 05, 2017, 08:32:26 PM by GreenEggs »

2Cent

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Re: The art of Negotiating - tips, advice, stories
« Reply #1 on: April 06, 2017, 08:44:19 AM »
Obvious first rule is to know what you want and what you can give, and what that is worth to you and to the other party.

The best way with most people is to appeal to fairness. Especially when you want to maintain a relationship. What can also help is instead of focusing on who gets the bigger piece of the pie, focusing on making the pie bigger. So try to throw in things that are not very valuable to you but may be valuable to the other party. If you give a lot of little things, you can get the bigger thing. And you may be able to get things that the other party doesn't care about for free if you ask.

Drifterrider

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Re: The art of Negotiating - tips, advice, stories
« Reply #2 on: April 06, 2017, 10:43:15 AM »
Rather than say "I offer..." I say "I'd like to pay...".  Not "I can't afford" but "that isn't in my budget".

"What discounts do you offer" is another tactic.  Also, "will you accept..."?

Vindicated

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Re: The art of Negotiating - tips, advice, stories
« Reply #3 on: April 06, 2017, 11:45:12 AM »
I've recently checked this out from the library.  Really interesting.  I'm trying to build these speaking habits naturally into my sales calls.

http://www.goodreads.com/book/show/26156469-never-split-the-difference

One "tool" he discusses is to repeat the last three words that the other person has just said.  This encourages them to continue talking, and offering additional information.  I was telling my wife about this, and we started having what seemed like a really good discussion about it.  Then I realized she had just been repeating the last few words of my previous sentence each time.  Damn, she got me!  :)

GreenEggs

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Re: The art of Negotiating - tips, advice, stories
« Reply #4 on: April 06, 2017, 01:35:37 PM »
I've recently checked this out from the library.  Really interesting.  I'm trying to build these speaking habits naturally into my sales calls.

http://www.goodreads.com/book/show/26156469-never-split-the-difference

One "tool" he discusses is to repeat the last three words that the other person has just said.  This encourages them to continue talking, and offering additional information.  I was telling my wife about this, and we started having what seemed like a really good discussion about it.  Then I realized she had just been repeating the last few words of my previous sentence each time.  Damn, she got me!  :)


I like the title.  I'll check it out from the library.

It seems like negotiating is such an important skill that we need almost daily.   I hopefully I can learn to be better at it.   Wives can be really tough! 


jinga nation

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Re: The art of Negotiating - tips, advice, stories
« Reply #5 on: April 06, 2017, 02:20:29 PM »
My offers always go "I'm offering $XYZAB, CASH. I am ready to close in 10-14 days pending an inspection in the next 5 days."

Sometimes they ask for a best and final offer, which is an additional $1000. Keyword is CASH. My offers are +/-$5000 of the listed price.

To make it clear, I buy 1-2 bed/bath condos/townhomes in the $50-60k range to service a specific demographic in a specific area.

It's not Section 8. And it isn't college students. It is working professionals and retirees, no kids, maybe pets.

h82goslw

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Re: The art of Negotiating - tips, advice, stories
« Reply #6 on: April 07, 2017, 05:10:39 AM »
My offers always go "I'm offering $XYZAB, CASH. I am ready to close in 10-14 days pending an inspection in the next 5 days."

Sometimes they ask for a best and final offer, which is an additional $1000. Keyword is CASH. My offers are +/-$5000 of the listed price.

To make it clear, I buy 1-2 bed/bath condos/townhomes in the $50-60k range to service a specific demographic in a specific area.

It's not Section 8. And it isn't college students. It is working professionals and retirees, no kids, maybe pets.

That's a pretty narrow demographic you're trying to attract.  How do you decline someone who doesn't have that background without appearing discriminatory?

jinga nation

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Re: The art of Negotiating - tips, advice, stories
« Reply #7 on: April 10, 2017, 07:26:29 AM »
My offers always go "I'm offering $XYZAB, CASH. I am ready to close in 10-14 days pending an inspection in the next 5 days."

Sometimes they ask for a best and final offer, which is an additional $1000. Keyword is CASH. My offers are +/-$5000 of the listed price.

To make it clear, I buy 1-2 bed/bath condos/townhomes in the $50-60k range to service a specific demographic in a specific area.

It's not Section 8. And it isn't college students. It is working professionals and retirees, no kids, maybe pets.

That's a pretty narrow demographic you're trying to attract.  How do you decline someone who doesn't have that background without appearing discriminatory?
Narrow demographic in national terms; There are three demographics in this narrow area: YUP, Retirees, Military (I don't accept short-term leases).
The rent price sets the demographic; if you can't afford the rent you won't apply.

Capt j-rod

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Re: The art of Negotiating - tips, advice, stories
« Reply #8 on: April 11, 2017, 10:19:58 AM »
I'm a cash guy which changes everything. If you are using other people's money there are strings attached... inspections, fees, blah blah... I meet you at the title office with a cashiers check. As stated above 10 days and it's done. I also don't get attached to anything. If I get it... great! If not I keep looking. My last one they refused my offer, took another offer, it fell through and I got it. Do your homework get a best and worse case number together, leave some room, and make the deal. There are times to pay more and there are times to walk away.

jinga nation

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Re: The art of Negotiating - tips, advice, stories
« Reply #9 on: April 11, 2017, 03:01:37 PM »
I'm a cash guy which changes everything. If you are using other people's money there are strings attached... inspections, fees, blah blah... I meet you at the title office with a cashiers check. As stated above 10 days and it's done. I also don't get attached to anything. If I get it... great! If not I keep looking. My last one they refused my offer, took another offer, it fell through and I got it. Do your homework get a best and worse case number together, leave some room, and make the deal. There are times to pay more and there are times to walk away.
+1

Landlady

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Re: The art of Negotiating - tips, advice, stories
« Reply #10 on: April 11, 2017, 03:17:33 PM »
If you are using a real estate agent (buy or sell side) you can negotiate down their commission before signing a contract.

If you are in a bidding war as a buyer always require proof of the other offers on the table if your offer is escalated or before contingencies are waived on your end.

If you are a seller it will benefit you to get an independent inspection to share with buyers before offers are made. This way there is no room for a buyer to renegotiate the price once under contract since they cannot claim not having known about inspection problems. Also it reduces the chance of transaction failure. This tactic based on the linkage principal which means that the more information a buyer has (good or bad), the higher an auction will climb. https://en.wikipedia.org/wiki/Linkage_principle

If you are a buyer, forgo an agent to make your offer 3% more competitive.

Fishingmn

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Re: The art of Negotiating - tips, advice, stories
« Reply #11 on: April 12, 2017, 08:32:26 AM »
1 - If you are using a real estate agent (buy or sell side) you can negotiate down their commission before signing a contract.

2 - If you are in a bidding war as a buyer always require proof of the other offers on the table if your offer is escalated or before contingencies are waived on your end.

3 - If you are a seller it will benefit you to get an independent inspection to share with buyers before offers are made. This way there is no room for a buyer to renegotiate the price once under contract since they cannot claim not having known about inspection problems. Also it reduces the chance of transaction failure. This tactic based on the linkage principal which means that the more information a buyer has (good or bad), the higher an auction will climb. https://en.wikipedia.org/wiki/Linkage_principle

4 - If you are a buyer, forgo an agent to make your offer 3% more competitive.

I'm a realtor and find issue with most of these. I numbered them above -

1 - Possibly. It's certainly more likely on the sell side. Don't forget to negotiate on the "Broker Commission/Admin Fee". In my market all large brokers add in $400-500 for each buyer and seller. This is negotiable too (I never charge it)

2 - I highly doubt you will get this. First off, it's up to the seller to decide if they even want to disclose other offers. Secondly, what kind of proof would be acceptable? No one is going to show you the actual offer. In addition, there is risk on their part to say they have an offer when they don't. I've seen plenty of buyers leave potential deals because they didn't want to get into a multiple offer situation so the seller would be risking that if they lied about another offer.

3 - Maybe. But you also risk identifying issues that you now must disclose. Once it's known it's a material fact. There is a possibility that this issue wouldn't have come up otherwise. In addition, almost every buyer is not going to trust your inspection and will probably hire an inspector to do their own anyway which could possibly identify some entirely different issues. Finally, just because you've identified an issue up front doesn't mean that the buyer won't ask for it to be addressed.

4 - This one is mostly wrong. When the seller signed the listing contract they agreed to pay X% (usually 5-6%). Just because the buyer is unrepresented doesn't mean the seller pays less. It's entirely up to the listing agent to decide what percentage they share with the buyer's agent and if they don't have a buyer's agent they keep the entire amount. It's possible that the listing agent will cut their commission somewhat if the buyer doesn't have an agent. That said, now the agent works entirely for the benefit of the seller and will negotiate solely on their behalf. Therefore, this will only really work if the listing agent kicks in part of the agreed to X% and the buyer is very confident about handling their side of the transaction.


Fishingmn

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Re: The art of Negotiating - tips, advice, stories
« Reply #12 on: April 12, 2017, 08:41:55 AM »
I do have a story for you that can maybe help in a multiple offer situation (I'm an agent) -

Toured a house in Minneapolis that was very nice with my daughter who was thinking about buying a home. We noticed that the seller had things on their walls that made them seem like they were into biking and liberal causes.

As a part of the offer my daughter wrote a letter that described why she liked the house, her background with being an avid biker and some of the activism she was engaged with as well. We submitted offer and waited for decision the next day.

Before we got an answer my daughter got cold feet and I called to pull the offer. Listing agent said the seller was going to pick my daughter even though her offer was lower just because they loved her letter so much and wanted her to live there.

I do think the majority of sellers will decide more on pure financial reasons but this may help in certain situations so be attentive to what you see in the seller's home.


Dee18

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Re: The art of Negotiating - tips, advice, stories
« Reply #13 on: April 12, 2017, 10:54:50 AM »
Best book I've read on the subject: Getting to Yes. 
+1 what 2cent said:  Recognize that there can be a "win-win" resolution in many cases.  I recently contracted to sell my house.  I chose a particular purchaser because he was willing to make the transaction super convenient for me, with an immediate sale but continued occupancy while I take a previously scheduled trip, pack, and find a new place.  Figure out what the other side wants.  Ask them.  As a prosecutor I once negotiated a great plea deal after learning the defendant's #1 priority was serving his time in federal prison in FL so he could see his kids.

Coach Carson

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Re: The art of Negotiating - tips, advice, stories
« Reply #14 on: April 12, 2017, 10:12:38 PM »
I second the recommendation to read Getting to Yes. Awesome negotiating book. The big takeaway for me was separating people and positions.  Most people get those two entangled, but if you can figure out ways to keep them separate you can often find alternatives that neither of you thought of. The normal, non-optimal negotiations are back-and-forth, meet in the middle kind of stuff.

I like negotiating directly with the seller. For buying investments I do a lot of marketing directly to owners. This allows me to have conversations to learn more about them and they can learn more about me.  This face-to-face process has led to many accepted offers at lower prices and with better terms (owner financing, options, leases, etc) than I could have ever gotten long distance. I've even driven 4 hours one time to meet someone in person and present an offer. I still have the triplex in a wonderful location that I bought as a result.

I'll also throw in The 7 Habits of Highly Effective People as a great negotiating book. Habit #4 (Think Win-Win), #5 (Seek First to Understand, Then Be Understood), & #7 (Synergize) have all been incredibly helpful for me in my negotiations.

Hope that helps!

Kroaler

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Re: The art of Negotiating - tips, advice, stories
« Reply #15 on: April 23, 2017, 07:02:34 AM »
I added "getting to yes" to my book list.  I needed a book on that subject, I'm glad you guys provided the suggestion.