Many aspiring property investors feel intimidated by the prospect of negotiating. Discover why you should actually look forward to it.
More often than not, people stress over negotiations because they want everything to be straightforward. They worry that they might mess things up if they attempt to get what they want from a deal.
However, this is the wrong way to view things. Negotiation isn’t a battlefield where one party wins.
Rather than looking at negotiation as exerting influence and persuasion, which may actually lower your chances of getting what you want, you should utilise the art of ethical negotiation.
Free of influence, persuasion, or aggression, ethical negotiation relies on seven principles to lead you to the desired outcomes. You get there by arriving at a win-win for both parties involved in the negotiation.
The Seven Points
Point #1 – Understanding
To begin with, you’ve got to understand the motives and motivations of the other side.
Whenever I speak to an agent and negotiate about a property, I want to know why the vendor is selling and who the person is. It could be that they’re selling because of a divorce, downsizing or upsizing, or any number of other reasons.
I need to know the why before I get into a negotiation. This is what you should do, too.
Understanding who the seller is and what made them put the property on the market makes it much easier to negotiate both the price and the terms of the deal.
Point #2 – Empathy
Knowing the motivation and standpoint of the other party gives you the upper hand in creating a win-win situation, which leads us to the role of empathy.
When you show empathy, you could shorten the other party’s sentiment. For example, if they need to make a quick sale, you can empathise with their situation to create an environment suitable for a quick settlement.
Show them that you understand and express genuine care. You’ll be surprised to see how far you can get if you just show some love for other people.
Most people want to take, take, take. But you’ll find that the best way to get what you want is to give, give, give.
Point #3 – Assertiveness
Assertiveness is knowing your position. But the key point here is that you can be assertive without being aggressive or rude. You can be proactive and authoritative without deriding somebody else.
Drawing from the previous points, you can have love, care, consideration, and respect as you state your position. Assertiveness is knowing what you want and deciding whether you’re going to get it or not.
The way to get what you want is to know yourself and the other person and show your respect. To be assertive is to be clear and concise and direct with what you want, but not overbearing.
When you intend to show respect and understanding, there’s no point in beating around the bush.
Point #4 – Knowledge
If you’re ready to pay up to $350,000 for a property that’s listed for $330,000, for example, you want to know why you’re willing to pay that much. This is knowledge.
You need to know the numbers and understand the mechanics of a deal.
There could be an easement on the property that you will want to be aware of, for example. And if the property is currently tenanted, you’ll want to know if you can get an inspection done with the tenant staying where they are.
You want to know all the moving parts involved in a particular deal, or else you’ll never get the best value proposition.
Point #5 – Flexibility
Flexibility is akin to water flowing around obstacles to get to where it’s got to go.
In a property deal, you’re going to run into obstacles like personalities, emotions, technicalities, and legislative barriers. Things could be changing and shifting at the last minute.
Imagine if a pest inspection finds termites in the property. You’ll have to know if you can navigate around that or step away.
If the value proposition is too good to dismiss out of hand, you still have to find out how much it’s going to cost you to remove the termites and how that’s going to affect your numbers.
Flexibility is about knowing how to move around challenges and whether it’s even possible.
Point #6 – Integrity
Integrity requires you to operate with a clearly defined set of moral guidelines.
After you’ve done your due diligence on a prospective investment, you call the agent and find that they’re rude and inflexible.
How do you respond?
You’ll probably hang up and never call that agent again. And in doing so, you’ll have shown that you adhere to a set of moral guidelines.
No reason to haggle when a deal clearly isn’t going anywhere.
Point #7 – Respect
Respect yourself and respect the other side. That’s essential because you can get to a point in a negotiation where you just can’t come to an agreement.
But you can clearly say that you understand what the other person is trying to achieve and show understanding for their position. So, don’t hesitate to voice your opinion that it seems impossible for the two of you to meet in the middle.
That may cause the other party to want to work harder to reach a deal. If not, you can just walk away from that deal, making sure not to use an emotional position.
The Blueprint of Ethical Negotiation
The principles of ethical negotiation are designed to bring you to the best deals in your quest to build the portfolio of your dreams. Not only that, but it also removes much of the stress of negotiation.
You should be able to assess your investments without emotion and respect the sentiment of the other party at the same time. This is how you can achieve the most favourable outcomes in property investment.
Keen to explore your own property strategy?