Anyone who has spent any time as a real estate investor should already know that it is of vital importance to know how to temper quick action with patience.  There are countless examples: knowing when to pass on a deal and wait for the next one, versus jumping on a great opportunity; knowing when to deal politely with tenants, versus dropping the eviction hammer;  examples could be listed all day.  What is striking however, is that although many investors have mastered the art of patience in its various forms, few have learned to effectively bring that skill to the negotiating table.  Patience in negotiations—or more accurately, knowing when to wield patience instead of proactive force—is an invaluable tool that may ultimately be the difference between getting a fair price and your asking price.  In other words, this can be the difference between being a good investor and a great investor.

As always, this skill comes in many forms.  Clearly, at its surface layer, patience means dealing politely and empathetically with the buyer or seller you are facing.  But it goes much deeper than that.  Where many investors go wrong is by confusing the notion of patience with that of appeasement.  Being patient does not mean you are simply willing to get walked on like a doormat while the opposing party misses deadlines, fails to meet expectations, etc.  In negotiating it is always good to be strong, and patience should never be a weakness.

Rather, patience in negotiating is acceptance of the notion that you are in no urgent need of anything.  You must of course demonstrate your interest in and commitment to the transaction, and your presence in negotiations should be forceful, but you must not be overly-eager to get things done.  Even if it is counter to your interests (everyone wants a quick, easy deal), slowing the transaction process down can have a dramatic effect on the balance of urgency between you and your opponent.  That is, while you may desperately need to do this deal, and maybe even relatively quickly, if the opposing buyer or seller thinks you have all the time in the world, then eventually he will be the one pushing you to get it done.  And in the world of business, urgency to progress translates to a willingness to make concessions; and in the world of real estate investment, concessions translate to money in your pocket.

It can’t be emphasized strongly enough that this article is not a recommendation to weaken your stance at the negotiating table.  As always, do your research, come prepared with firm numbers in mind, and stick to your plan with undying resolution.  Simply add to that repertoire the understanding that you stand to gain a great deal by demonstrating your willingness to slow things down.  Patience, while frustrating—even infuriating—behind closed doors, can be your ticket to walking away from a negotiation with your ideal price on paper.

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When the wheels of the real estate market begin to slow down—and let’s face it, we’ve been driving on the rims for quite some time—it can be incredibly daunting to try to sell your home.  When the supply of available property so greatly exceeds the demand for it, the buyers hold all the chips.  Conventionally speaking, the most effective way to sell your property despite the economic conditions is to lower the price; but for most homeowners, this can become an unacceptable compromise.  There are alternative ways, however, to distinguish yourself from the hoards of other sellers out there.  Under these conditions, buyers are shopping for cake, and all you need to do is be the one to put the icing on it!  Distinguishing yourself and your property from the field is essential, and you can do this either using the transaction process or the property itself—or preferably both.

Using the property means making your home attractive, appealing, memorable, and livable.  It is crucial to strike the balance between how much you spend on improvements, and the value you receive for those improvements (as indirectly recognized by the marginal increase in sale price or appeal, which is very difficult to assess).  Empirical wisdom maintains that it is imprudent to overdo improvements like additions and major remodeling, but relatively inexpensive add-ons such as landscaping, improved windows and roofing, etc., can make an enormous difference in the impression your home makes on potential buyers taking nothing more than a cursory glance at it from the street.  Major renovations or repairs should only be taken when a property does not meet standards or codes, or when its features lag significantly behind similar properties in the neighborhood (for example, if yours is the only home in the neighborhood without a garage).  The key is to squeeze as much value and beauty out of your property as you can, while spending as little as possible.  Presenting a livable home means all appliances, outlets, doors, locks, systems, etc. are functional and up to code.  It can make for a much more appealing deal from the buyer’s perspective if they find a home which will require no energy to move in to and begin living.

Using the transaction process can mean any of a number of different strategies.  If you’re not willing to drop the price outright enough to attract buyers, then consider sweetening the deal with additional incentives (for example, offering a credit toward closing costs, or offering to pay closing costs outright).  Unique payment plans and rapid closing times are also factors which can serve to attract buyers, who may be choosing among 10 homes which they consider to be otherwise-identical.  You may groan about offering a couple thousand dollars toward closing, but you’d be groaning (and losing) more if you kept your home on the market for another year.

Distinguish yourself and your property from the rest, sweeten the deal with incentives, and get it sold now!

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Negotiation might be the most poignant single feature of the real estate investment process in determining your success or failure on a deal-by-deal basis.  While marketing is number one for a successful investment career, the ability to get what you want out of the customers you acquire is a very close second.  This ability comes in the form of skillful negotiation, which in turn comes in the form of diligent preparation.  The difference between failed and successful investors may by the ability to attract and sustain business, but the difference between all of the marginally successful investors and those few investing legends boils down to the numbers: How much do I want?  How much can I achieve?  How much can I compromise before I begin to lose?

The answers to these questions are the factors that will determine the three essential figures that must result from your negotiation preparation.  Those figures are: the ideal price, the acceptable price, and the breaking price (by my own classification).  For every deal you pursue, you must be absolutely clear on these three prices, whether you are buying or selling property.  The ideal price is the answer to the question, how much do I want?  Obviously, the answer cannot simply be some exorbitant figure like $50 million for a 2-bedroom town home if you are selling, or $10,000 if you are buying.  Although it is called “ideal”, it must still be based in reality.  This figure is the result of careful consideration of the condition and location of the property, the state and trends of the local economy, and the personal needs of the parties involved.  It is an answer to the question, “What price would I be thrilled to pay/receive for this property?”, but it must be firmly rooted in reality.

Most good negotiators establish a fall-back price, what is called the acceptable price.  During preparation, you must assume that your opposing party will not be willing to accept your ideal price (after all, if you’re thrilled, then they must be bummed).  You will be prepared with a compromise, which you determine in advance will probably be acceptable both from your opponent’s perspective and in terms of your business needs.  Most successful deals end with acceptance of what is effectively an acceptable price—a compromise.

The third, and probably most important figure, is where most negotiators go wrong.  This is the breaking price, and it is the careful determination of the price where this deal is no longer profitable, or acceptable, for you or your business.  This must be a firm figure, and should be calculated in a way that demonstrates to you that under no circumstances should you buy or sell beyond this limit.  The strength to walk away from a deal gone sour is perhaps more important than the skill to find the good deals in the first place.  The vast majority of leads you come across will not produce good deals, and it can be an enormous advantage (both in terms of confidence and strategy) to have a predetermined point at which you will simply walk away from each of those deals.  Saying “no” is often what makes great investors great.

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I have written quite a few articles containing advice about how to secure repeat business (multiple separate transactions) from your customers.  I devote a great deal of attention to this matter quite simply because the acquisition of customers is the single most integral part of success in any sales-oriented industry, and keeping the customers you find cuts your workload by a significant order of magnitude.  To say that it is an issue worth exploring would be a dangerous understatement; if you intend to succeed, you need to make this a priority.

As I reviewed my previous articles pertaining to client retention, I realized that I’ve omitted one glaring element which can be a critical factor in determining the outcome of a relationship between the real estate professional—you—and the customer: conversational skill.

If you’re in sales, you probably fall somewhere along the Spectrum of Gad toward gifted (you talk pretty).  But do you converse?  You may have gotten into your line of work in large part due to your ability to speak, persuade, and sell; but I’ve personally witnessed great salesmen destroy relationships with their customers by failing to do one simple thing: shut up and listen.

You can give a flawless tour, come up with a dynamite pitch, and do everything else perfectly by the books; but it won’t help you a bit if you’re selling the wrong product to the right customer.  That is why it is so critically important to make your interactions with clients exactly that—interactive.  You can’t tell someone what they want.  The best you can do is to ask them what they want, and tell them what you can provide.  Too many real estate professionals are in the business of assigning intentions to their customers, which is, of course, an impossible task.  Rather, take advantage of every conversational opportunity to explore your client’s interests, intentions, desires, needs, concerns, and even fears.

This is helpful for any relationship with a customer.  When you know your client, you know how to help your client.  But development of this skill becomes especially crucial when it comes to retaining those clients.  The difference is, when a client comes to you the first time, they come because of a specific property or an immediate need.  It will help your chances if they like you, but they’ll probably do a first transaction with just about anyone.  When they come back to you a second, third, and fourth time, it is because of you.  Because they know you will work to meet their needs and avoid their concerns, and that you are willing to put in the effort to find a way to help them (and not simply look for how they can help you).

Whether or not this form of altruism is truly one of your professional characteristics may ultimately be irrelevant.  The fact is, a real estate sale is a real estate sale is a real estate sale.  You don’t necessarily have to adapt your entire business model to meet every client’s idiosyncrasies.  All you have to do is give them the reassurance that you are on their side, and this can be done very simply by truly engaging the client in conversation.  Questions, not statements.  Interactions, not presentations.  You don’t necessarily need to befriend your clients, but you certainly should know them.

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People typically associate the negotiating bluff with an unreasonable determination of price (either a high selling or low buying offer).  One of the myriad factors and skills that distinguish average negotiators from those legendary sharks, is the ability to recognize bluffs in their more unconventional forms—and they are hiding everywhere!  To say the very least, negotiating bluffs are not limited to offers; rather, we see them at every stage of a potential deal (I suppose I should say some of us see them, most of us do not).  The key to spotting a bluff is to always remember that there is no such thing as rigidity when it comes to business—everything is, or can be made to be, flexible.  All you have to do is bend it the right way.

Here is an example that we all see, all the time.  The notions of “business policies” or “rules without exceptions” are laughable.  They are laughable because although they can be irritating speed-bumps or even deal-breakers in an otherwise-good deal (perhaps limitations on payment structures), they are completely nonexistent.  I find it amazing that so many people allow their deals to die because of often-senseless and always-frustrating rules and policies; they simply accept that frustration, and they choose instead to move on.

Not me.  I have learned that a policy is just the function of somebody’s decision to sit down and write the policy, which means it can be undone by somebody’s decision to amend, except, or even revoke the policy.  In a sense, a rule with no exceptions is nothing more than a business bluff (if you’re talking to the right person).  As I said before, all things are flexible—it just requires some persistence.

If you ever hear the phrase, “I’m sorry, that’s just our policy,” you are free to challenge that policy (just remember what they say about catching flies with vinegar…).  Appeal for an exception to the policy, and if you find that the person you are dealing with can’t make an exception, simply work your way up the business hierarchy.  Ask for the manager, the boss, the owner, keeping in mind that one of them wrote the “policy”.

Good business is always mutual, which is to say, both parties should get what they want out of the transaction.  This means they want your business as much as you want theirs, and they should be willing to compromise, amend, and appease to get it (after all, you do the same, don’t you?).  If they won’t give you exactly what you want, you don’t have to give them exactly what they want (following arbitrary standards); good business practice dictates there should be some middle ground over which a compromise can be established.

If it’s not a law, a rule is nothing more than a bluff.  Act accordingly.

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