It is easy to find a system that works and just keep using it. The saying goes, “If it isn’t broken why fix it?” Well that’s true but every now and then, do a stress test on a proven method to discover different paths. It also sharpens your skills. Some people preach that real estate should be boring; well that’s ok if you are boring but I am not. I love to sharpen my blade and sharpen my skills. Great negotiators say that if you get your emotions involved or if you show your desire up front, then you have just given away the store. You will pay top dollar. Most of the time I respect that but when I turn it upside down, it works great also. So let’s do that.
In this scenario we are looking at a house that’s a bit over priced in an area with 3 months’ inventory supply. The average selling price is $350,000 but this property is justifiably on the market for $450,000 because it’s higher end. I also do this with multimillion dollar commercial property not even for sale, where I approach the owner.
There are two feelings you have to portray during the negotiation process to get best buying price for yourself. One is to care but not that much (the norm), and the other is to care too much (upside down). Sounds like a contradiction doesn’t it? Not if you apply them at different spots along the negotiation timeline. So on this deal you show all your cards upfront. Display your 100% commitment to buy the property no matter what the price. Translate that anxiousness to their realtor, to the owner, and to the owner’s advisors. Put in the offer at asking price or whatever price they believe its worth. Still place subject to financing in 14 days (residential) or 22 days (commercial) as a clause. Show them what improvements and design changes you plan to do. Bring in a slew of designers to lay out a plan. Your plan here is to care too much, hoping to cause 3 things to happen.
1. The seller drops their guard because you did not approach them with an insulting or threateningly low price. Once their guard has dropped they are free to seek mutual benefit with you. They want you to have the property. They share your excitement about your plans and begin to get emotionally involved.
2. They begin to believe that the property will be sold and now that problem number one is almost solved, they have permission to move onto problem number two. Their problem number two is finding a new place, how to divide up the proceeds, spend it, or invest it. They begin to fall in love with that Idea. Now they are becoming more emotionally involved. This happens even if the property was not on the market and you had approached them with the idea. Remember that a great idea festers. They may have been thinking of selling for some time but now confirmed by your knock. You just need to plant the seed and provide the growth nourishment by displaying your excitement for buying it.
3. They begin to detach from the property. I just heard a song on the radio that goes, “Say something I am giving up on you.” Well they are giving up on their property. Once the decision to change happens, it’s hard to turn back. In fact change is the most powerful force on the earth. When someone tries to stop a person from changing, the harder they try, the greater the force required to stop that change. Well change requires a force, and that great force to stop the change is the catalyst that causes the change. Once they buy into the idea of the sale they are hooked.
Now it’s time to care, but not that much. Perhaps your financing has been approved but you are not satisfied with something about it. Now you have lost hope and anticipation so you translate that to the seller’s realtor, the seller, and their advisors. People like to see rise and fall. They love rise, fall and redemption even more. They bought into you and your plans and would like to see you succeed. Guess what will cause you redemption? A better price! They can sell to you at a lower price because they like you. They get you and your plans for their place being left in great hands. They benefit by moving on to their next property or adventure not upset because you insulted them with a lowball price for their prized possession from the start. You both win.