Top 5 Negotiating Tips To Use NOW

People outside of the real estate investing realm don’t realize just how many skills you need to be an all-star in this career.

As an REI, you might wear many hats: entrepreneur, salesperson, general contractor, landlord, office manager and marketing guru (not to mention – having a touch of legal knowledge, as well).

But maybe the trickiest role of all?

Psychologist.

This is where your negotiation skills come in. If this isn’t your strong suit, have no fear. Cody Sperber here letting you in on 5 of the tried-and-true negotiation techniques that have been majorly effective for my business...

#1 The “Phantom Partner”

This is a solid technique for negotiations. One way to think of it is that it’s kind of similar to the “good cop, bad cop” scenario. Only, in this case, you are the good cop and the bad cop is your phantom business partner who may or may not actually exist. (Shhh... I won’t tell, if you won’t.)

This is the “phantom partner” process in a nutshell:

Put on your personality. Motivated sellers will be swayed by your big smile, enthusiasm and confidence.
Ask the seller “optimistic” questions about the property, to further demonstrate your excitement and expertise.
NEVER give an immediate, blunt offer (even though you have a number in your head). Instead, tell the seller you need to run some numbers, take some time to jot down notes and put on your “I’m a serious thinker with serious thinking to do” face.
Then, say something to the effect of: “Okay… I have some wonderful news for you today. (Now show them the piece of paper with your calculations.) Because we have some available money right now, I can offer you $XX in cash and close within 14 days pending a small inspection from my partner.”
This will likely start the back-and-forth process of them offering a number, and you counter-offering. Always go back to, “Well let me see what I can do, but I don’t think my business partner will go for this.” Remember – the “business partner” is the bad guy – not you!
Your final offer: Write down a number in between yours and the seller’s best prices and say, “Now this is out of my hands, but if I can talk with my partner, I am certain I can get him to commit to that much money for the house.”

Also, as a bonus tip: never, never, never attempt to justify your lowball offer – this will make the seller frustrated, and makes you seem less confident.

#2 Nibbling

This is a super easy, super effective technique to use after the negotiation is complete and the price is agreed on. Think of it as the “bonus round” – you won’t win a brand new car, but you’ll still get something you want.

santa For example, slip one of these little comments into your convo:

“Now, I am assuming this property will come completely cleaned out before you deliver it to me?”

Or...

“You plan on leaving the appliances as part of the deal, correct?”

Once again – if you seem confident, and act like this is always part of your process, the seller will likely oblige. #Score

#3 The Switch Up

This technique is especially helpful when you’re dealing with unruly, rude loss mitigation negotiators. Think of these guys as the “bullies” who always want to know that they’re in power.

You have to match their aggressive demeanor, but without going overboard and making them completely angry. Then, just as they realize they can’t push you around, you “switch up” your tactic and become friendly. It’s the best way to break them down. *Insert Dr. Evil laugh here*

Other tips for this technique:

Always stay calm and stand your ground
Fight your case with facts (comps, crime statistics, etc.).
Realize they are always testing you to see how you react
Focus on establishing rapport – you can even throw in some personal questions to try to build a relationship

#4 Take It or Leave It

Is there really any phrase harsher than “take it or leave it”?

It reminds me of the grouchy lunch lady in your elementary school cafeteria. You know the one – with the horn-rim glasses and her hands on her hips. Okay, well maybe that’s a stereotype...

Anyway – if you’re selling a property, and the potential buyer’s Realtor gives you the, “This is our price; take it or leave it” line, reply with something that keeps the line open for further negotiation, such as:

“I may be willing to meet your price, but your client obviously needs to throw in some extra benefits that are worth the difference. How about letting me take back the note at reasonable terms for the difference?”

Or...

“The price you are offering is obviously much lower than what I want to accept. If you won’t raise your offer, then I will have to think it over and get back to you.”

Bonus Tip: If you’re on the other side of the negotiation, and the agent doesn’t seem willing to take your offer, don’t be tempted to use that ugly phrase. Instead, politely say, “After reviewing all the numbers, that’s the best I can do.”

#5 Educated Enthusiastic People Sell Themselves

Looking to raise money from private investors?

Then you need this negotiating technique.

kid Let me make this crystal clear and straightforward: When you’re asking people for investment money, you have to know what you’re talking about. You can’t pretend... you can’t go into it with any lack of confidence... and you certainly can’t approach it half-heartedly.

When my business partners and I first started approaching investors, asking for money for foreclosures, we had a very weak business strategy and a sad lack of expertise. And, guess what? No one gave us money.

No one.

Once we started going to property auctions, asking questions, taking notes and making “pretend” offers just to get an idea of how the auctions worked – we began to build our knowledge rapidly.

And when we went to our potential investors with our newly developed expertise, they were MUCH more willing to hand over the cash – about $3 million in total, to be exact. Not too shabby.

The bottom line: you can’t just act confident and smart – you need to be confident and smart.

Let’s Chat

Which of these negotiation tactics do you think will work best for your real estate investing business? Do you have any tried-and-true negotiating techniques that I didn’t cover? Share below.

Practice makes perfect. It may seem silly, but practice your negotiation techniques with a trusted friend or – better yet – an experienced REI who can help you out.

Don’t take it personally. You’ve got to develop thick skin. Making lowball offers and negotiating your way through conversations with unpleasant or stubborn people – it’s all part of the game. But it’s worth the effort; and, at the end of the day, it’s just business.

Know your stuff. Knowledge is the best “weapon” during a negotiation. Study up on neighborhood comps, repair costs, etc. before you enter the arena of negotiation, and your knowledge and confidence will be immediately detectible.