The Negotiation Skills You Need To Know When Investing In Real Estate
Published 3:48 am 17 Jun 2019
Did you know that real estate isn’t always about the price? There’s a whole lot more that’s negotiable. There are many opportunities to create value when you’re negotiating your real estate deals. In this article, I will explain how you can take value from a deal that doesn’t involve dollars and cents, and also show you how you can create win-win solutions in your negotiations that suit your endgame in real estate, writes DGI Founder and CEO Dominique Grubisa.
There are two types of key negotiation you need to master in order to get the very best deals with the most profit and satisfaction.
The first is what is known as Distributive Negotiation. Distributive Negotiation is when there’s a finite piece of the pie, and you’re negotiating on one point, price, and everything I win is something that the other guy loses and vice versa because there’s only one pie and we can only split it two ways.
But, when we look at other opportunities to create value, we enter into the realm of what is known as Integrative Negotiations. Integrative Negotiations is when there are other moving parts, so it’s not just about price. To get to that level of negotiation, we have to ask lots of questions. Not just any questions, we have to actively listen.
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In most negotiations, the majority of people don’t listen because we’re too focused on ourselves. We get excited, we want to close a deal, and we want to talk. Successful people listen a lot more than they talk, so the key is, not just to listen, but to pull out information because the party with the most information will win in a negotiation, so for Integrative Negotiations to work in your favour, what you need to ask is known as non-leading questions.
Non-leading questions are ones where you don’t know the answer. In law, it’s when you’re getting a witness to give you information from the witness box, so they start with who, what, why, where, when, and how. It’s a fact-finding mission, so say to the seller or the agent or whoever you’re negotiating with, why are they selling, who are the owners, where are they going, what are they doing? Get the most information that you can. Try and talk to them so you can structure the deal to fit their needs, ’cause you may assume one thing, but there may be something else going on.
For example, can you get a longer settlement? Can you get an option on the property where you’ve got the right to buy, you’ve locked in the price for a period of time, but you don’t have to commit and you can walk away, or you’re buying time, remember the time value of money. What I pay now for a quick, sharp settlement may cost more later down the track.
Time is worth a lot to you in real estate, so there are a lot of moving parts. Will the seller take a discount if you can give him a guaranteed, ironclad, unconditional cash offer?
There’s a lot to consider here, and you need as much information before you can make that offer, so, remember, keep your powder dry, play your cards close to your chest, go in, and gain information, and then look at other ways to structure the deal.
Know what the owner wants, and how can you add value to your offer that isn’t about money, that suits you and helps out the owner. That is a true win-win negotiation, and one that you’ll get the most out of, whilst you’re helping someone else as well.
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