I suggest that you follow my six basic rules when negotiating real estate option and purchase agreements with property owners:
Rule 1: As the old saying goes, first impressions are lasting impressions, and this is especially true when you begin negotiating with property owners. The image that you want to project is that of a savvy, polished professional investor. Please understand that when I use the term polished professional, I am not referring to the slick-looking bozos and bimbos who make their living by starring in infomercials on television. Polished professionals are individuals who are sincere, personable, confident, knowledgeable, well spoken, well mannered, well groomed, and in control of their emotions and not like the typical real estate investor who often comes across as a confused, uninformed, clueless flake, looking like he or she just came from a Grateful Dead concert. The point I am making here is that if you want to be taken seriously by property owners, you must act like a responsible adult who is ready, willing, and able to negotiate. Rule 2: As a negotiator, do not try to be what you are not. If you consider yourself to be a mild-mannered, soft-spoken type of person, do not try to assume the role of a pushy loudmouth just for the sake of negotiations. Instead, adopt a negotiating style that is more in line with your personality. This way, you can be a successful negotiator without having to change your natural personality. For the record, most mild-mannered, soft-spoken people usually make the best negotiators because they are generally noncon-frontational, and most people underestimate them at the bargaining table. But regardless of the type of personality that you possess, if you want to become an excellent negotiator, you must first become an excellent listener. Never forget that the reason we human beings have two ears and one mouth is the better to hear with. Please keep this in mind the next time you get the urge to speak out of turn while the other party is still talking. Rule 3: Limit the use of tall tales, little white lies, and fibs to describing fishing and hunting exploits and not your background. The fastest way to lose credibility during negotiations is to get caught in a boldfaced lie. I immediately cease negotiating with anyone who tries the old dazzle them with brilliance and baffle them with bullspit technique on me. I do this because I have adopted a zero tolerance policy, which prevents me from negotiating with people who employ games, gimmicks, and bullspit as a major part of their negotiating strategy. Years ago I made a solemn vow to myself that I would never again waste my valuable time and energy negotiating with ethically challenged people who cannot make the distinction between fact and fiction. Rule 4: When negotiating with property owners, use the time-tested KISS principle: Keep it simple, stupid. In other words, do not go off on a long-winded, full-blown technical tangent when explaining to a property owner how a real estate option transaction works. The point here is to never forget that the object of your negotiations is to obtain low-cost real estate options and below-market purchase prices, not to impress property owners with your real estate expertise. Nothing more! Any unnecessary tricky stuff has the potential to confuse the property owner and kill the deal. Save the fancy words and technical terms for discussions with your board-certified real estate attorney, the title or escrow agent handling the transaction, and your fellow real estate option investors!
Rule 5: Never negotiate with people who do not have the authority to say yes. In other words, do not waste your valuable time trying to negotiate a real estate option agreement through a third party, such as an attorney, accountant, or real estate broker, who is acting only as an intermediary. Instead, find out right upfront before negotiations begin whether the person that you are dealing with has the authority to make a final decision and say yes. This is especially true when dealing with married couples and people with so-called partners. If the person that you begin negotiations with claims to have a spouse or partner, tell him or her that the only way that you will continue negotiations is if you can sit down face-to-face with both of them. The last thing that you want to happen during negotiations is to be involved in a situation where the person you are dealing with has to go to a higher authority for approval.
Rule 6: During every negotiating session, there comes a point when it is time to stop talking. But it is usually right at this very crucial point that most amateurs talk themselves right out of a deal because they simply do not know when to shut up. The time to stop talking is immediately after both you and the seller have had your say. This is the time to put up or shut up! In other words, it is time to either close on the purchase of a real estate option or agree to meet again after the owner has had time to mull things over, but it is not the time to ramble on.
Was this article helpful?
The dynamics of investing can be very emotional and stressful if not properly managed. When you are aware of what is all involved you give yourself the power to avoid those situations or at least manage them effectively. That will make your investments more exciting, rewarding, and enjoyable. Those positive factors will only lead to greater success in all that achieve with investments and life.