As a real estate investor, or if you ever have to deal with human beings, you will encounter a tough negotiator during your career. You know them by their demeanor and their brash personality. They talk the loudest, listen the least and obviously feel they are the smartest person in the room. The good news is you can turn all of these traits to your advantage if you understand what makes a tough negotiator tick.
Tips for managing a tough real estate negotiator
Tip #1: Swallow your pride (stroke their ego)
When negotiating with a buyer or seller who refuses to budge from their position, it literally pays to swallow your pride. A tense situation can often be diffused with a helping of humble pie.
I recently encountered such a seller. He was either delusional about what his house was really worth or figured there was no harm in pricing his house well above his expected price. Who knows, you might just get what you ask for. After nine months on the market, he had no offers so I made him an offer. One that I knew was probably well below his high expectation. Along with my offer, I submitted a personal letter to the owner. In the letter I explained how much I loved the house, the neighborhood and how it was perfect for my growing family. Apparently this struck a chord and softened his hard stance because he countered $50k below his asking price. Nearly 2/3 of the way to my offer!
Tip #2: Demonstrate your willingness to walk away
Nothing stops a tough negotiator faster than standing up and showing him you are not going to be pushed around. If they want something from you they will have to work for it.
This can often be the hardest part of negotiating. Following through on a threat to walk away from the deal is tough but clearly no deal is better than a bad deal. The key is to truly know what is your bottom line. How far are you willing to go before there is no benefit to making the deal from your perspective?
I encountered a seller who was unwilling to allow me to back out of the contract due to the inspection results. This is an unusual request and placed significant risk on me as the buyer. I firmly stated my position that while the house was “as is” I reserved the right to cancel the contract if I found something I didn’t like in the inspection. I ultimately had to walk from that deal.
Tip #3: Patience
After demonstrating your willingness to walk away, the next most important step is to demonstrate your patience. Coming back to the table after leaving it will completely undermine your position. You need to simply wait and wait some more. If the negotiator is merely posturing for advantage but really wants a deal to happen, then they will seek you out in time. As long as your offer still represents the best deal they can expect to get and is above their bottom line, you needn’t worry.
Continuing with my real life example, after nearly 8 weeks had passed, the seller I mentioned in #2 above reached out to me via their realtor. It appears they had run into our realtor and mentioned that they should figure out a way to make the deal happen. He relented on his hold out demand and allowed us to inspect the house. We were back in the driver seat thanks to our patience.
Real Estate Negotiation Resources
For more negotiation tips, visit one of my favorite negotiation experts out there. Roger Dawson at rdawson.com. I highly recommend his book he co-wrote with Mike Summey called the Weekend Millionaire’s Secrets to Investing in Real Estate. Every other chapter offers a wealth of negotiation tips you can apply today in your real estate deals.
There will always be people who simply don’t want to find a solution to a negotiation challenge. But for those who truly want to make a deal happen, even the toughest negotiator is likely to respond to a few of these tactics and will soften their position if used correctly.
Tell us about some of your negotiation horror stories and what tactics you employed to break the log jam.