4 Rules to Negotiate Like a Closer
Last week I was on a call with one of my coaching clients. He was lamenting some deals that either died or stalled because he could not get the seller to commit.
Closers are some of the highest paid individuals in business, and for good reason. Their ability to transition the maybe into the yes means sales and revenue. It’s money in the bank.
Unfortunately it can take years of intense training to develop this skill. But by utilizing a few simple rules, I and my client have been able to close more deals.
Rule 1: The Goal is a Decision, Not a ‘Yes’
If you think the purpose of a buying appointment is to walk out with a contract, you are incorrect!
The goal for every appointment with a seller is to bring them to a point where they will make a decision. A ‘no’ is so much better than a ‘we’ll think about it.’ At least with a ‘no’, you can go on with your life and find another deal. You don’t have to keep your fingers crossed that you’ll have the highest offer while someone else comes in and gets the job done.
Enough no’s will eventually turn into a ‘yes’. Focus every appointment on getting the seller to make a decision.
Rule 2: If You Give Something, Get Something
The first law of economics is ‘There’s no Such Thing as a Free Lunch.’ Someone always has to pay. In the case of a purchase, that someone is you.
It’s not uncommon for a seller to counter your offer with a higher price. That’s to be expected. You will likely be tempted to consent to the counter, especially if it falls within your highest allowable offer price range.
Don’t be so hasty!
If you are going to give something, make sure you get something in return.
If the numbers work, you’re probably asking, why would I make things more complicated? The answer is that you want to make sure the seller knows that they aren’t getting anything for free. It prevents them from trying to renegotiate later.
If you give them something for nothing once, you’ll probably have to do it again later.
Rule 3: Make the Offer Time Sensitive
My favorite close is what I call the Pressure Release Valve. I walk into the property, do my inspection, work up my numbers, explain the comparable sales, explain the construction, and explain my process. The entire time the pressure is building. The seller is thinking one thing.
How much is this guy going to offer for my house?
That’s when I lay it on the line. My ridiculously low, terribly insulting, grossly unprofessional, low-ball offer. They respond accordingly with frustration, outrage, anger. I just listen, smile and nod my head. Ultimately they tell me they’ll think about it and get back to me.
After they’re done blowing off steam, that’s when I move on with the presentation.
“I completely understand. It can be a shock to see what an investor would pay for your house. Keep in mind that the offer is all cash and is good for the next 6 months. (Pause) Now I’d like to take few minutes and give you a brief introduction to my company.”
I’ve released the pressure. They think the negotiation is done. They’re not selling me the house. They’ll have to consider other options. They’re also thinking that this guy is pretty nice and I’ll listen to what he wants to tell me before walking him to the front door.
At this point in the presentation, I spend a few minutes talking about how my process works and why my company is better than any other investor in my market. They listen because they have already made up their mind not to sell me the house. No more defenses. No more anger. It’s a comfortable conversation.
That’s when I strike.
“If price wasn’t an option, doesn’t my company sound like the type of company you’d like to do business with?” Their heads nod.
“Every month I purchase 6 properties. That’s what I have the funds for. More than 6 properties I need to use another source for the money. That source is expensive. Very expensive,” I say. “The number I offered you earlier is the number I can pay no matter when you call me. Even if I use that expensive money, I can still afford to purchase your house at the numbers I quoted you.”
“But I’d rather give you the money I’d have to spend on that expensive financing.” Here’s my hook.
“If I know your house is one of the 6 properties I’m buying this month, I can afford to pay A LOT more for the property. If you can make me a promise, I think I’ll be able to bring my price up SIGNIFICANTLY.”
They always ask, “What’s the promise?”
“I need you to tell me ‘yes’ or ‘no’ today. That’s it.” At this point in the conversation, you’ll need to extensively emphasize this point. They need to commit to the promise.
Finally, I show them the very best price I can offer for the property. Don’t lay any more games or try to steal few bucks. Lay the cards on the table and wait for their answer.
This close works like a charm. The best part is not worrying about all of those offers dangling out there.
Rule 4: Don’t Be Afraid to Walk Away
At the end of the day, some of the best deals have been the properties I’ve walked away from. If you cannot get a price or terms that work for you, call it a day and walk away.
Negotiating is an essential part of business. As Real Estate investors we have the ability to add value to a transaction at each step of the phase. Using these negotiating tricks will help you add more value to each of your deals.
photo credit: mattwi1s0n