Buying real estate, talking terms with a lender, talking rental rates with a tenant these and more are things that come up quite often in the real estate investing world. If your not sitting on a pile of cash or if you can't afford to make mistakes, then your going to need to sharpen your negotiation senses and make sure your getting the best deal you can get.
Getting a good deal isn't the bottom line, but it does help your bottom line...
A quote from a former FBI hostage-negotiator Chris Voss,
"People who view negotiation as a battle of arguments become overwhelmed by the voices in their heads. Negotiation is not an act of battle, it’s a process of discovery. The goal is to uncover as much information as possible. To quiet the voices in your head, make your sole and all-encompassing purpose the other person and what they have to say.”
Interesting...
Think of negotiation as not a battle, but as a conversation in which you are trying to uncover information, and as much information as you can. Make the other people feel "heard", do not threaten them, but only make them feel on an even playing field. If they felt like they won, and you felt like you won, then the goal has been met.... But who won more? That is always the question.
Building the relationship with the other party. As Voss puts it,
"Repeat the last three words, or the critical words, of what someone has just said. We fear what’s different and are drawn to what’s similar. Mirroring is the art of insinuating similarity, which facilitates bonding. Use mirrors to encourage the other side to empathize and bond with you, to keep people talking, to buy your side time to regroup, and encourage your counterparts to reveal their strategy"
Your trying to again make them feel like you have heard them while also buying yourself enough time to figure out where the negotiation needs to go.
Voss also notes that “mirroring will make you feel awkward as heck when you first try it. That’s the only hard part about it. The technique takes a little practice. Once you get the hang of it, it will become a conversational Swiss Army Knife—valuable in just about every professional and social setting.”.... practice makes perfect right?
Lets spell this out....
1.) Build the relationship/establish it.
The wise negotiator establishes the relationship before proceeding further. Doing so allows you to get a feeling for the person with whom you are dealing, and vice versa. This is key as how do you negotiate if you do not know what the other person wants/is thinking? Though often ignored, "feeling" itself is an essential part of negotiation. So, always be open and sincere. Honesty, integrity and dignity are palpable qualities, and the foundation upon which constructive negotiations are built. Constructive is the key word. Do not bring down the other party as this will not create a great foundation of a relationship.
You are best positioned to negotiate when the other party respects you, not only as a businessperson, but as a human being. Trust, which is gained through that respect, is the key to successful negotiation. If they trust you, they are more likely to bend your way in negotiation.
2.) Choose friend over foe
You will do better with friends than with foes, but the friendship must be genuine. Never underestimate the natural ability of other people to sense who you really are. Disingenuous, manipulative and secretive are feelings that simply cannot be hidden. This goes for everyone no matter how much of a poker face you may think you have. When negotiating, you too can sense if the other party's values are sub-par or lack integrity altogether. No greater red flag exists in the entire arena of negotiation. If you feel as if they are trying to trick you, or outsmart you in anyway you lose all respect for the deal and you will not bend their way in negotiation.
3.) Focus on a win-win
Going into the deal with this in mind will help you win. No one wants to feel like they lost. No one wants to feel like the other person won more. Understanding what all parties need, and working for all concerned is vital. Thinking of only win/lose situations is bad for both parties involved it clouds your judgement and thinking overall. Don't get caught beating around the bush, think big picture and stay focused.
4.) Rhythm of the relationship
Don't try and ask for too much. You build the relationship, but do not cause it to bust. All people have a breaking point. In the heat of the deal it is easy to want more and more, however sometimes less is more. Be the stable anchor, the respectful/reasonable adult at the table. Helping people come back into balance is often best done by example.If they feel cheated bring them back, give them something make their side of the deal sweeter. Also never, never, never argue with them, this brings out emotions that are often hard to counteract once brought out. Reason and discuss never argue!
Final Thoughts:
Maybe you are the best negotiator, maybe you are not good at all? It doesn't matter, all things aside its about a way of thinking. It matters not what you know or where your from in the heart of the deal. They have something you want and you have something they want. You may have the money they want, and they have the property. The plumber may have the knowledge and skill and again you have the money. They may have the money and you may have the need for that money... its all the same at the end of the day.
You need to build a strong foundation of a relationship, become friendly, make a win-win, and never rock the boat of the relationship too much. There is no one answer or one approach to negotiation, everyone comes at it differently, what works for one person doesn't work on the next person, but the basic principals are the same no matter what. If you can learn to adapt to the conversion then you have a chance achieve your goals.
What are some negotiation tactics you have used in the past? Comment below!
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America's Favorite
The Small Time Investor
www.reliablecounter.com
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