Real Estate Negotiating for Beginners
I’m RJ Palano and you’re not! And I would be glad if I were you for not being me because it’s not easy being me. Let me just tell you something. This is going to be about negotiating everything. But first I have to give you a story recently. This guy I was talking to and he was talking about my success. And he said Matt I’d love to be you. And I looked at him I said you know what. I’m not sure you would have sacrificed and gone through all of this stuff all the pain all the troubles all the tribulations and trials that I’ve gone through. To me you’d need to just work on being you and be the best you that you can possibly be. You see we all got different gifts. We all have different strains. We all have weaknesses on that point hide your weaknesses. Don’t do the stuff you don’t like because if you don’t like it you’re not going to do it to the best of your ability. Contrarily if you love what you’re doing if you have passion about it and purpose you’re going to do it to the best of your ability. All day every day all the time and you’ll lose track of time because you’re caught up in the work that you love to do. And there is nothing better than being caught up in the work you love to do. Why. Because it gives us a sense of achievement a sense of fulfillment.
That’s where we derive the meaning in our lives from it’s how we’re able to interact with others and to build value and bring value in their lives. So I don’t know when I talk to you a little bit about negotiation today and the book that I wrote to buy sell machine. I have a chapter and negotiate everything. And the thing that is is some people are afraid to open their mouths they’re just afraid to talk or are afraid to ask for it. Now my story is I was born the day after Christmas so I was the youngest kid in school and my parents pushed me ahead. I also developed physically slow so when I graduated high school I was only bigger than one kid and that kid I later found out had polio. What did I do. I developed a mouth. I couldn’t compete in some of the sports because I was so young I was so small that wasn’t that good. I found out later in life I was a better coach and I was a player. That’s a story for another time. The thing that is is you have to build and the things that you’re good at. I learned to use my mouth. Now when it comes to negotiation here’s some basic premises that are so important and nobody does it better than the Dale Carnegie or of human relations or Human Relations seminar that they put out. It’s about 12 weeks and I did that in the mid 80s and it helped me tremendously. Be comfortable talking to you guys right now or to be talking to a roomful of 10000 people it doesn’t matter to me. I get more excited when it’s like that.
And the reason I’m able to do that is because I only talk about things that I know I don’t know something. Let me find out somebody who does and will get that person for you. If you talk about things that you know then it’s very easy to talk about. So when it comes to real estate I learned everything I could about real estate and how to meet people’s needs and how to develop report all these different things that are so critical to my success in it’s critical to your success because you have to be able to share in the human experience. You see when we buy houses we don’t buy them from dogs we don’t buy them from trucks. We have to deal with people. Some people can only deal with animals they should be veterinarians. OK. But the thing is when you’re dealing with people you’ve got to meet them where they’re at. You’ve all heard of the Golden Rule right. Treat others the way you want to be treated completely wrong. Throw the rule out doesn’t make any sense. It’s wrong. You treat people the way they want to be treated. Okay. Nothing is more important. You see even the video guy that’s videotaping me right now. His needs are different. If I talk to him about the things that are important to me they might not be important and that’s how it is with sellers. You have to talk first in terms of their needs you have to have some icebreakers in the conversation and that’s where it comes to the first and most important thing is developing rapport you see people have to trust you.
If they’re going to do business with you believe it or not they have to trust you. And the first thing they have to do is they have to like you at least a little bit so if you come off and you can’t converse in your free flowing in your conversation you talk about your cell phone or things that are germane to what’s important to what’s going on in their lives and the circumstances surrounding their property. You’re going to miss the ball. You’re going to be that guy with his uniform and he gets up to the plate he takes his swing. What you’re going to miss. Nine times out of ten because you’re thinking about you instead of thinking about them. Nothing is more important. You know Dale Kearney people like to hear their own names so early on in the conversation you talk you get their name and you use their name in the conversation. Often I always do that and if I’m on the phone I’m smiling that smile comes right through that gregarious generous happy to help you attitude just comes right through the telephone and especially when you’re in front of them you know you’ve got to be smiling it’s very important you need you need to be happy. There’s enough misery in this world. Everybody is surrounded by some kind of misery. Don’t believe me just ask. OK. We all got something that bothers us people want to be around people that lift their spirits. And in your case you are lifting their spirits and solving their problem and their problem is this house which could be your opportunity.
But if you talk in terms of your opportunity you have no chance of getting it. If you talk in terms of solving the problem you have a lot of chances for getting it. So what we do. It’s the first thing that we do when we talk to people. Obviously we get 13 and we ask them how they found out about it so we can track our system of lead generation to see where our leads are coming from. And then we don’t start talking about how many bedrooms how many bathrooms nobody cares at this point. You know Mrs. Smith why are you selling a nice house like this. You want to find out right away early on in the conversation. And when you hear things like I inherited it which is one of the best things that you could ever hear because they’ve got nothing invested in the deal. Are looking for an easy solution. Sometimes it’s divorce for I mean housey court or it’s got too many problems with it or I lost my job I’m going to live with my parents I can’t afford it or I’m in foreclosure. You’re looking to find the name the buzzword word something that gives you a direction. You’re the way you’re going to channel your questions. You see in this business in any business in sales you have to lead to people with questions. You’re the one that’s controlling the conversation not them. You get some chain smoking coffee drinking mania. It has nothing to do but chew up four hours of your time because you’re lonely and they just want somebody to talk to. And if there’s enough equity in the deal I would tell them to stay there.
But if there not bad. Just get right to the point right to the point because some people really are lonely. And unless that’s your goal in life is just to make people feel comfortable in May Company for them and do it. But if your phone is ringing off the hook with opportunities you need to decide quickly if this is an opportunity or if this is something that you’re going to be very polite and get off the phone and exit stage left as fast as you can so as you’re going through the questioning process and you’re asking them about their circumstances surrounding their property and you finally think you’ve unveiled the reason whatever it was I might have just said or it could be and a lot of other reasons lost a job loss of husband kids or bad whatever you try to peel a little bit more information. You got the onion you peel another little leaf of the onion I’ll put it at that point and try to find out through timeframes because a timeframe tells you a play goes right in conjunction with their needs is how soon they need it done. Well we’re thinking about selling any year son of a gun. What a waste of time. Usually it is but not always because there’s a way to deal with it you try to get an option on the house or we can buy it now. Put some money down and we’ll close it out when you leave in a year if you’d like to know that it’s done. I didn’t mean to go into a negotiation right now but that’s how I handle stuff like that.
I hate to hear a year. I want to hear that they need to sell it tonight by 5:00. That’s usually the best thing or very soon so that we have this timeframe dial. So you need to know when you can meet their needs. OK. Very important. Two top things why they’re selling how fast they need to sell. Nothing’s more important now then you start to acquire other bits of information about them and other bits of information would be how big is a house how many bedrooms how many bathrooms when was the last time the AC was repaired. What year was it Bill. How many square foot cross. How many feet under air conditioning. Garage. How many car garage stuff like that but none of that stuff matters. Does it matter if you don’t identify the needs and you don’t identify a time frame because none accounts if they say no now you know we owe three hundred thousand dollars. We know it’s only worth 200 thousand dollars. Maybe you can do a short sale maybe you can’t do anything with it all. But finding that out early in the conversation will direct it. So as you continue to gather information particular information about the house any other amenities that you’ve done any new improvements you know what type of condition is a property now. And you really want to take good notes on the condition of the property so when you get there you might be able to use that against them if they say the kitchen’s been modernizing you go there and it’s got the old cabinet but a new countertop and the cabinets are 50 years old.
You can use it against. If you look at the roof and you seal up the shingles are peeling back. You can use against them and that stuff works all the time. The one thing you want to do is find out the price right away. What they’re hoping to get you on your best day what are you hoping to get from this and you might say are you negotiable with that number. You know after a tax assessment as you might it would you sell it for the tax assessment or if they have a mortgage would you sell it for the mortgage and often they won’t. Often they will but you know you can never find out unless you ask. And that’s why when we talk about negotiations and excuse me in general you ask about everything because everything in life isn’t negotiable. Probably should have put this in the front of this short video. But the thing of it is negotiation is the highest paid business in the world. And the real trick is if somebody has something somebody needs something you just want to insert yourself in the middle and get paid a fee to move it along. That’s really what negotiation is all about getting something from somebody and selling it to somebody else that wants more than those people that had you guys you paid in them. So remember that the first two things are OK. Finding out there and you have to develop rapport find out their needs. Find out their timeframe and you can continue to get more information on the House.
Now often if somebody tells us what they want for a house and let’s just pretend they don’t owe any money on it we’re not going to say that’s too much. We might ask. Are you negotiable. How much room do you really have. Hey if I could close it in your timeframe could this work for you. Never say no to what they’re saying at this point but you might ask what are you going to do with the money when you get it. And that opens up a whole new avenue of question. Some people need it for an operation they need 30 grand. OK. You write that I need 30 grand for an operation. You know they need 30 grand. That is going to be a condition of the sale. They have to have 30 grand. I had this happen recently. This is how I know well and I’ve only done this 3000 times. No exaggeration. So say listen you know Mrs. Smith and I’m assuming her name is Mrs. Smith. If I come out there today and we could work something out would you be ready to sign this or any other decision makers or is it you. Because when ever you go to the house you have to make sure the decision makers are there. Otherwise you just have a two step approach because now you’ve got to come back with the person that really makes the decisions. And usually that’s a waste of time.
But now that you get there and you get to the house and you know that they need 30000 dollars on this hundred eighty thousand dollar house that opens up a door of potentially creative finance you know if I gave you thirty thousand dollars down because your house does need somewhere it has you we’ve just gone through and I don’t want to knock the house. I like your house. Could I give you the rest of it like this. And then you give me a painter or you 150000 and I’ll pay you five hundred or seven hundred or a thousand dollars a month until it’s paid in full. No what you offer there is going to depend on what that house will produce and rent to. You make a positive cash flow going forward. But when you ask it like that and you write it off the way we read it up you end up buying houses at no interest rate is that important you guys. Did anybody watch the module and the time value of money. Because if you did you would see that that is critically important to your financial success and especially for young people because what you have that older people don’t have technically you have more time to live. More time for your assets to grow more time for mortgages to pay off. And so by using the wise use of leverage and creating creative financing situations where you get seller help financing you can get yourself involved in a lot of deals. A lot of opportunities will eventually be paid by your tenants paying the rent. Isn’t that why real estate is the best thing that we can buy. What do you think about that for one second. If we all bought of our gold we’re all going to pay the same amount we buy a stock. I think we’re paying the same amount of money. Mutual fund.
Same thing. CD in the bank. Same thing. Oil and Gas stuff same thing. Real estate is gauche everything about it is negotiable. The timeframe to close the down payment the terms of payment for cash. So that’s just a little snippet of what we do with negotiation and why it’s so important to you and if you stay tuned I’m sure we’ll have more stuff on this or we’ll see you live in one of our events. Thank you so much for watch RJ pull out of here for investors.
- Investing with No Money or Credit - May 30, 2018
- Real Estate Investing vs Stocks - May 27, 2018
- Real Estate Investing vs 401K - May 24, 2018
- New Rob Palano Real Estate Book! - May 23, 2018
- Investing in Your 20’s - May 21, 2018
- What is Buy and Hold Investing? - May 18, 2018
- Long Term Investing Planning - May 15, 2018
- Real Estate Investing Tips - May 12, 2018
- Investment Strategies for Today’s Rental Housing Market - May 7, 2018
- Real Estate Negotiating for Beginners - March 15, 2018