By Karim Juade
“The art of negotiation is, practiced by everyone, But the craft of negotiation is, practiced by a few.”
“12 Keys to Negotiate the Best Deal Ever”
The following keys will unlock how to negotiate the best deals.
In this article, we will tackle the first three keys and in future articles we will tackle the remaining keys.
1. Everyone Negotiates
Every day, we negotiate with our spouses, children, bosses, employees, colleagues, bankers, or even our pets. We all negotiate all the time, every hour of every day whether we want to or not, over loans, projects, raises, dinners, dates, privileges, even the holiday leftovers. Some of us just do it better than others.
When my daughter was 15 years old, she wanted to buy a new phone called the Sidekick serviced by T-mobile. We had a contract for another year with Verizon, to cancel the contract would cost us $250.00. Obviously, my daughter is a good negotiator. She told me, “Daddy, I am a very a good student, am I not? I said, yes. All year I did not ask for anything, did I? No. I never asked for designer clothes or shoes did I? No. She said, in three months I’ll be 16, correct? Yes. You are going to give me something special when I turn 16, aren’t you? Yes. You don’t have to give me a car yet. All I want is a Sidekick, and I want it now.” Friends, with such negotiation skills, I could not say no.
2. Know what you want and what your options are. As well as your partner’s needs and options.
Do yourself a favor. You hear me saying it again and again: before you enter into the meeting, take a few minutes to know exactly what you want. What are your goals? What are your objectives? What you would like to achieve from the negotiations? And what outcome you desire? What other options are available to you? The more options you have, the better the deals you can negotiate.
Next, do your negotiating partner a favor: Know what their objectives are. Learn as much about them as you can: wants needs, aspirations, fears, limitations, etc. What other options are available to them? Then the negotiations will go smoother and you will get much better results.
Find out why they have to sell: Personal, financial, family challenges, moving out, partnership dispute, etc? Motivated sellers are excellent sources of bargain properties.
They have special reasons for wanting to close deals with you, which means you can buy at a reduced purchase price and/or attractive terms.
Look beyond the other party’s ‘position’ to learn their ‘interest’. Their position only outwardly declares what they want. Like a $2.5 million sale price.
However, their interest reveals the motivating need for that sale.
Paul is in the garment business. He needed to raise capital to buy inventory for his business. His inventory turnover was at least four times a year. The banks were tightening their credit and Paul was not able to get as much money from his bank as he needed. Paul wanted to sell his property for $2.5 million in order to get immediate capital. When I learned that, I told him he could put his building on the market and maybe if he is lucky it would take him 3-6 months and maybe get $2.3 million. Or, he could sell it to me at $2.1 million and I could close fast. Of course, he sold it to me and we both won.
Know the Sellers and Their Motivation
Ask the seller a lot of questions to lean as much as you can about their motivation. Make sure you gather as much information as possible. Ask everything that has to do with the property, why he is selling and what he wants to do with the money.
Here are some questions:
Are you the owner?
Are there other people involved in the decision-making?
Why are you selling, what do you want to accomplish?
What kind of finances do you have?
What is the loan balance; is there more than one loan?
Do you need all cash or will you consider carrying some papers?
What will you do if the property does not sell?
How long have you owned the property?
How long has it been for sale?
What improvements have you made since you bought it, and by when?
Tell me the property advantages.
What about the disadvantages, if any?
What kind of problems have you faced since you bought it?
What kind of people live in the area?
Remember, you can improve the building, but it’s very difficult to improve the whole neighborhood.
3. Always, ask to negotiate with the decision makers.
Do not negotiate with someone who does not have the power to make the final decision, and if you have to don’t show all your cards. In other words, don’t give your final concessions unless you are in front of the decision makers. Otherwise, you will be wasting your time and it can hurt your position because you are exposing your cards without the other party exposing theirs.
A few years ago, I was negotiating to buy an industrial building in Ontario, Riverside. After several offers and counter-offers, the owner and I thought we should meet face-to-face at the building to hammer out the final details. However, when I went there, the owner himself was not there, only his son and an officer of the company. I chose not to go through with the negotiations and arranged a lunch meeting with the owner halfway between Ontario and Brentwood on another date. At that lunch, we sealed the deal.
About the author
Karim has founded and operated 19 successful companies, and made his first million by age 26, by buying and fixing distressed properties and businesses. For 45 years Karim has developed, invested in, financed, brokered, and managed properties in 8 countries. Karim is the author of “The Smart Real Estate Investors Guide: Your Road Map to Wealth in Any Economy”. Karim hosts monthly real estate seminars in Los Angeles and Orange County. He mentors, writes, teaches, and speaks about real estate frequently and has been published in 115 business and real estate publications nationwide. Contact info: 310-471-0650, firstname.lastname@example.org, www.dynamicscapital.com