Prepare Like a Pro Athlete for Real Estate Negotiations

Have you ever listened to professional football announcers like John Madden?They’re always talking about players they admire having great “skill sets,” theones that help them win games for their teams. Well, as a real estate investor,you have to bring a great “skill set” to the negotiation table in order to winyour game.

Below are some basic negotiating skills that you need to acquire or sharpenin order to complete great deals.

Skill 1: Know Your Stuff! By this, I mean that you should know everythingpossible about the property, the market, the buyer/seller, etc. before you eversit down to negotiate. Professional sports teams employ scouts to find out asmuch as possible to determine the strengths and weaknesses of the competition.In other words, they’re looking for complete information in order to operatefrom a position of strength. You don’t have the luxury of hiring scouts, butyou can become a scout yourself. So, prepare yourself by researching dealscarefully and thoroughly before you ever enter into negotiations. All of thatresearch will help you build Skill 2 below.

Skill 2: Bring Facts to the Negotiating Process. Buyer, sellers,realtors?they can all get very creative with asking and selling prices, rehabcosts, etc. After all, that’s their job?to get the best price possible. Ofcourse, these figures are often inflated and have absolutely nothing to do withthe actual real estate market prices. To bring a dose of reality to thenegotiations, have the latest market information handy. Then, when anunreasonable offer is made, simply put that information on the table andpolitely but firmly let the other parties know that their offer is unreasonablegiven current market conditions. This act lets everyone know that you’re aprofessional and it’s time to get down to the real business of negotiation,instead of wasting time on frivolous offers.

Skill 3: Determine Seller/Buyer Motivations. Often, it’s very easy todetermine the motivations of buyers and sellers. Sellers may have a hard timemaking payments and need to get out from under the mortgage. Buyers may belooking for the lowest price possible. In some cases, motivations are morecomplex. But whatever the motivations are, it’s to your advantage to find outwhat they are before negotiations so you operate from a position of strength.After all, you’re in the business of meeting customer needs in a reasonableway. If you know those needs ahead of time and work hard to satisfy them (in aprofitable manner), then you can create the classic “win-win” situation, andeveryone walks away from the negotiation table happy.

Skill 4: Develop Patience and Objectivity. Your heart should never rule yourhead in negotiations! So, no matter how attractive a deal may appear at firstglance, don’t rush headlong into it. Keep a cool head and analyze the offer asobjectively as possible. It should make good financial sense. Rely on theresearch you’ve already done and use it as a measure of the quality of thedeal. If you rely on cold facts instead of a hot head, you’ll have manysuccessful transactions.

Skill 5: Think Long-Term, Not Short Term. Earlier, I mentioned that youshould work to create the classic “win-win” situation. I want to re-emphasizethat point here. Why? Because happy buyers, sellers and realtors come back formore deals! It’s as simple as that. Also, they spread the good word about you,and that brings in more customers.

In the truest sense, it’s an investment in your future. So, work toestablish your reputation as a fair and honest negotiator. It’s not only theright thing to do, but it pays off in great personal and financial dividends.At all costs, avoid unreasonable hardball tactics that create enemies. If youadopt this approach, your real estate career will either be short or not asprofitable as you want it to be because few people will want to work withyou.

Key Points:

- Research every deal thoroughly before you enter into negotiations.

- Negotiate real estate investment deals with your head, not your heart.