As a multi award-winning lawyer for almost 12 years, I have a lot of experience in negotiating and, since starting a property investment business with my husband, eight years ago, have used these negotiation skills to secure below market value (BMV) properties and creatively structure deals to grow our portfolio to 45 units.
Negotiation is a key skill for any property investor – whether it’s negotiating a purchase price with a seller, interest rates with a private investor or terms for a creative deal with an estate agent. Using the skills I'm about to teach you in this article, I've managed to buy two properties BMV, direct to vendor, negotiate a creative purchase lease option deal and numerous rent-to-rent contracts.
Firstly, I want to recommend some essential reading for any investor: a book called, Never Split the Difference, by Chris Voss. The author is an ex-FBI hostage negotiator and, while negotiating deals with estate agents or direct to vendor, isn’t a life-or-death situation (hopefully!) the book has some fantastic tips that you can apply to property… and life in general.
We started investing in 2016 but since 2018 all our deals have been secured direct to vendor. One of my favourite tools from the book for negotiating, is the RESULT acronym. Here’s how I obtain direct-to-vendor deals and secure properties with creative deal structuring, using the RESULT method:
RAPPORT: Property is all about relationships and building a strong rapport with the agent, vendor or other party is key. We do this in several ways, such as staying in close contact and regularly following up, keeping detailed notes of any conversations, calling them by their first name and focusing on what they’re saying, rather than allowing my attention to drift. I also look for common interests, which helps to keep the conversation going. For example, talk about similar hobbies, as a way of finding common ground.
EMPATHISE: Demonstrating empathy builds on the rapport. In a negotiation you should always be aware of the other party’s perspective. When I’m at a stalemate in a negotiation, I try to give them examples of how I have experienced this and say that we can find a way to resolve this together. Showing genuine interest and offering to help, will assist in building your relationship with the other party.
SITUATION: Always read the actual situation based on the facts you know. Don’t make assumptions! The key to a successful negotiation is to find out what their problem is and then to look for a solution that works for both parties. It’s important that the resolution is a win-win for both sides. Motivated sellers are more likely to agree to creative terms, as long as you are able to explain your offer in simple and clear terms.
UNDERSTANDING: Demonstrate that you understand their position and make sure that they understand what is being offered, especially where you are proposing creative solutions. Remember, whether you are negotiating with an agent or a seller, their main concern is finding a win-win for all parties. For example, offering to pay an agent their fees on exchange, for an exchange delayed completion deal, means the agents interests are met.
LISTEN: More than talking (we’ve all heard it before, but there is a reason we have two ears and one mouth). Don’t make assumptions, focus on the person and what they are saying, rather than thinking about what to say next (preparation helps with this). Also, listen out for what they’re not saying – if they’re not being completely open, ask questions to work out the problem. Let them talk while you listen and analyse.
TIME: Make sure you plan your viewings and meetings so that there is plenty of time to build rapport and have a good chat with the other party. The key is to find the real reason for their situation. It’s better to have one long successful viewing, than to go through 15 short viewings without results.
Be prepared – always prepare before going into a negotiation. Preparation ensures you don’t get carried away in the situation and allows you to design an ambitious but legitimate goal. Most negotiations nowadays are on the phone, so I usually have a list of bullet points I want to get across and figures to help steer the conversation. If it would help, role play how the negotiation could go with someone. Try to anticipate what their objections or questions might be and have responses ready. Always have an offer pack (or heads of terms) identification and proof of funds ready too.
Deliver – it’s a no-brainer but do what you say you’re going to do. My most recent deals have been secured because a deal fell through owing to an agent or buyer not delivering on what they promised. So, I live by:
Being on time.
Doing what I say I am going to do.
Over delivering.
Follow up – most deals are in the follow up, as opposed to during the initial negotiation conversation. This is another reason why having a good rapport is key.
Finally, remember that negotiation isn’t supposed to be an argument, the goal is to uncover as much information as possible and reach an agreement that works for all parties!
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LinkedIn Kim Opszala
