One of the most important parts of investing in real estate is negotiation. This process affects every aspect of property sales from submitting an acceptance-worthy offer to getting a person to work according to a schedule that’s best for you. In spite of how incredibly important negotiation is, there are still lots of investors who are completely uncomfortable in this area. They have a fairly modest understanding of the philosophy behind negotiation, but they don’t really know all of the nuances of negotiating effectively. It’s important to know the motivations and goals of the person you’re working with. If you make these things your focus, negotiating effectively will become much easier. Following are 5 tips to help you negotiate like a pro.
Never Be Afraid To Ask Questions. More often than not, negotiations are over even before they’ve started. You have to be willing to ask for exactly what you want if you’re to have any chances at getting it. If you never make an offer at a price that reflects your target, you can’t know if the seller will accept it. Rather than being scared of what the other person might think, say or do, you have to approach the negotiating table confidently. This certainly doesn’t mean that you can lowball people or banks all the time, so long as you have confidence. Instead, it means that you should be willing to pursue opportunities when they rear their heads. There are going to be times when the other party laughs at your offer outright. To negotiate like a pro, you have to have thick skin. Top negotiators understand that they can frequently get what they want just by asking.
Have A Clear Understanding Of What You Want. Before you start negotiating or making any offers, you want to have a clear understand of what you want. While this certainly sounds easy enough, people leave the negotiating table with feelings of disappointment far too often. The most common cause for disappointment is a failure to get exactly what you were hoping to get. Although negotiation always entails some form of compromise, you have to know what your walk away point is or where you draw the line for compromise. Begin by listing the things that are of greatest importance. This might be cost, time, commitment or any other factor that stands out. Once you determine what this is, it will need to be balanced out according to the motivations of the other person. In the very best negotiations, each party leaves happy. If you do not have a clear understanding of what you want to get, you will never fully appreciate the outcome.
Make Sure Your Points Are Justified. No matter who you happen to be in negotiations with, you have to make sure that each point of your argument is justified. This is all the more true when attempting to tilt the discussion in your favor or arguing for a discount. You have limited chances of having any lowball offer accepted if you’re unable to present supporting documentation. If you have the documents to justify your argument such as estimates for repairs, proof of funds, data on comparable sales or listings, your odds will be significantly improved. In all negotiations, it is important to use as much firepower as you possibly can to highlight your side of the argument. Consider the different things that you’re bringing to the table as well as the reasons why a person might want to work with you. More often than not, an ability to set yourself apart from the crowd will place you in an optimal position. You have to fully convince the other party that yours is the best offer or that you happen to be the best for the job. Before starting negotiations, go over your selling points and see how these can be justified.
Lean In, But Avoid Being Pushy. Knowing exactly who you’re in negotiations with is critical to your success. At all times, you should have a clear understanding of who’s in charge. In nearly all negotiations, there will invariably come a time when you’ll have to make a very important decision. This could be choosing to accept an arrangement, setting an offer amount or opting to walk away from the deal entirely. These decisions do not usually allow for changes of heart once they’ve been finalized. If you find that you feel good about what’s on the table, you don’t have to keep pushing on. No matter how motivated the other individual is, pushing too hard could cause this person to opt out. They’ll keep looking for someone to work with if they get the sense that you’re trying to take advantage of them. It’s important to strike a balance between getting what you want, without being overly pushy. Rather than pushing a person, try leaning in to see how low he or she is willing to go. Never push for quick decisions or make irrational demands unless you’re willing to face the consequences.
Keep Your Cool. A lot of people will remember you for your negotiating skills. If you remain fair and balanced, people will want to work with you. If you come across as demeaning and rude, people will have a negative perception of you and won’t want to work with you again. Surprisingly, you will probably cross paths with these same individuals again. As hard as it might you seem, you have to keep your cool at all times. Don’t say things that could come back to haunt you. Even if you get what you want, a real estate agent or lawyer will know who you really are and this could end up causing future problems. Success in one negotiation is certainly not worth the loss of a positive business reputation.
Success in just one to two business negotiations each year can have a very dramatic effect on your company. Always remember to strive for your goals while diligently protecting your reputation.