Negotiation is Simple: Eliminate Your Desires. Don't Want ANYTHING.
A reader emailed me with a question the other day. They were agonizing over the negotiation process they were in the middle of with a seller.
This person was trying to buy a house from a seller who was (apparently) not motivated to sell. This investor thought the house was only worth an offer of $150,000, but the seller wanted $220,000 and wouldn't budge.
These were my initial thoughts:
When it comes to negotiating, once you're confident in the amount you're willing to offer for a property (regardless of what model you're following or what rationale you've used to formulate your offer), it really doesn't matter what the seller, or the seller's agent thinks their property is worth, and it shouldn't have any influence on what you're willing to pay.
Suppose you've run the numbers and verified the facts and you know a property will cash flow if you're able to get it at your ideal price. Then the seller comes back with a higher counter offer that compromises the integrity of the deal. In this case, the right response is pretty simple, you walk away.
No matter how badly you may want the deal, no matter how much of an emotional investment you have into getting the property (this isn't just a rookie mistake, even experienced investors have to combat this), none of that matters if the numbers aren't showing you a slam-dunk investment.
And remember, if you've got a solid deal-finding strategy, this won't be the last opportunity you have a shot at. NEVER trick yourself into believing that everything rides on one deal because it doesn't.
Here's a quick excerpt I've posted on the blog in the past from Felix Denis's book The Narrow Road:
There will always be other opportunities and many of them will be better than the one you're currently looking at, so don't get sidetracked or give into a seller who is trying to play hardball. If they've got a "deal" that doesn't make obvious sense for you and your purposes, they can keep it.
Oren Klaff also talks all about this in his book Pitch Anything - which is another great read.
Are you ever willing to budge when negotiating your offer price? If so, how do you decide where to draw the line?
Seth Williams I like this. I have a 3x5 card I pull out when ever I need to call a seller back. It says "I love disappointing people". It's just one way to help me resist caving to people pleasing.
jawollbrink Jason Wollbrink last edited by
Very true. This applies to every area. This week I pitched a deal to a new funding partner. He tried to barter me up in interest rate (as expected). I stayed firm, and explained why. He said he would think about it and get back to me after a few days... On friday I quite literally thought to myself; "Maybe I should offer to increase it to get this funding relationship started.."
But I remembered the rule of sales: He who speaks first loses. I waited. A few hours later I received an email from him stating that he accepted the terms.
Be clear and intentional, not emotional.
Jason Wollbrink He who speaks first loses... in negotiations truer words have never been spoken... well played...
Seth Williams I love this. So... How do you turn this around and not care when you are the one selling? I think I'd do well to look like I care less, but I really want to sell properties, too. Advice?