Negotiate the Deal You Want By Identifying Motivation

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There is a major difference between being a patient negotiator and a buyer who s unknowingly having their time wasted by an unmotivated seller or potential joint venture partner. Over the years I have spoken to many a frustrated investor who found themselves caught in the time waster s trap. They are a few months into negotiations and there is still no deal yet they continue to justify the time wasting since they seem to be making progress.

Time is money. Stop throwing it away.

You make your profits not by playing the negotiations game, although it can be fun and challenging. You make your profits by closing deals. Every time you find yourself spending an inordinate time trying to come to an agreement with a seller or joint venture partner, please consider how much this is costing you in missed opportunities with someone who actually wishes to do a deal. Also, before closing the deal or signing the contract, you must have a thorough understanding of the closing costs. Being aware of all forms of closing expenses may prepare you ahead of time about a few bucks that might be paid to third parties while completing a real estate transaction. Due to the complexity of the process, you may need to do some study or read a few blog entries such as https://riverratsrealty.com to gain a better knowledge of these additional costs.

Motivated or Fisher?

Your investment success depends on you closing real estate deals. Save yourself a ton of time by learning to avoid unmotivated vendors.

Regardless of how you meet a potential vendor – through a realtor, a friend or an on-line ad – it is critical that you quickly discern two things. The first is if the property has a remote chance of working as a real estate investment (a subject which I speak about continually). The second, and just as important, is to identify the motivation level of the seller.

The higher the level of real motivation the vendor has the better chance that you can create a deal that is fair for all parties involved. No matter what you are purchasing in your life, be it a new car, a new fridge, or a new investment property, the quality of the deal is determined by one thing the vendor’s willingness and eagerness to sell. If you may have noticed, when you go to a dealer to buy a new car and ask for a test drive, they will have specific vehicles for you to try. This is because they might have probably insured that vehicle under their commercial vehicle insurance (this website can help for more information). So, when a dealer is ready to take such an effort and present before you the best deals, you can notice their eagerness to sell the particular vehicle. Likewise, when you want to sell your vehicle and approach a car dealer or a reputed seller, you would probably notice that they use a number of technological solutions ranging from live chat to online financing. This shows that the sellers are ready to make effort to sell cars online at a good price.

However, keep in mind, when you are presented with deals, not to make any immediate decision. You always need to take a step back from the emotion of a possible deal and remember an unmotivated vendor can waste a ton of your very valuable time and leave you with nothing in the end. We call these vendors fishers. They are the people dropping their bait in the water just to see who bites.

Fishers have zero attachment to whether they sell or not, and are often just looking to see what their property is worth. They love talking about a potential deal, rather than doing one. Your time gets wasted with more questions, more push-backs, more delays, or requests for further information. Although frustrating for you, but often because there is enough glimmer that a deal may be struck, you continue to hang around, provide more info, have more conversation, drink more coffee, and drive across town for one further meeting. You let them be in control of the process and because they are not truly motivated, they have all the time in the world to hold out for their price and their terms without compromise.

It is also important to remember that, in all markets, hot and cold, there are vendors who want or even need to sell their properties and it is your job to help them do that. Motivated vendors will be much more flexible on price, closing dates and other terms. Remember, you are not taking advantage of their situation; you are helping them move onto the next stage of their lives, whatever that may be. A motivated vendor will be predisposed to making a deal.

The 7 AM Showing

But how do strategic investors tell the different between a motivated vendor and a fisher ? The investor, or their trusted real estate representative, will ask a potential vendor a few simple (and very direct!) questions, and then use his or her answers to guide their next steps. One of my all-time favorites is: Can I (or in the case of your realtor my client ) see the property tomorrow at 7am?

Extremely motivated vendors will jump at the chance to show the property at any time of day or night. Even if they can t do 7am, you will tell by their eagerness to provide reasons why and alternative times, what level of motivation they have. If you re brushed off, you ll know their motivation may not be super high. If they say absolutely, then you know you are dealing with a motivated vendor.

It will shock you just how much valuable information you can gather with a simple conversation. By the way, asking Is the vendor motivated? is not going to lead to a helpful answer since 90% of the time what you ll hear is Yes, they sure are. The seller and their representative are prepared for that question because that is the usual question the average buyer asks to try to get a lower price.
This is much too pedestrian for a strategic investor.

In the end, you need to understand two strategic things. First, if the vendor isn t motivated, leave him your contact information, most preferably in a hard copy to hang on his fridge or put on his desk. Yes, it is old school but in this case is often better than a technical solution. Since motivation changes with time, your business first approach may eventually bring that vendor back to you.

Second, a vendor s motivation can change with time and circumstances, so always set yourself a reminder on your phone, laptop, etc. to check to see if the property has sold or re-listed at a new price. Watch for properties that have been listed for a while and be prepared to re-visit vendors you once dismissed for lack of motivation. It doesn t mean an automatic motivation increase, but it may be a trigger point.

Motivated vendors have a problem to solve. They will welcome virtually any opportunity to help them sell their property. Remember – never take advantage of a desperate seller. Help them solve their problem by solving their problem for them. You will be rewarded with some or all of the following:

1. A below-market price. Not your biggest concern but definitely a bonus if it comes to you.

2. Terms and conditions that suit you. For instance, a closing date that is months in the future, thus locking in your price as the market rises. Or, you may receive more fixtures or chattels than you would with an unmotivated vendor.

3. Access to the property before closing so you can do minor renovations and conduct showings to potential renters/buyers. This is a wonderful opportunity to get the property ready for your renter, as long as you are not doing major renovations. You will find that many motivated vendors will allow this. Even if you don t have any plans on fixing up the property, having the ability to show it to potential renters is a great advantage.

4. The vendor may wish to remain in the property as a renter. You will be surprised at how many motivated vendors would like to sell their house yet stay in it as future renters. Strategic investors should ask this every time, especially in markets that have slowed down.

As with all aspects in real estate, being strategic in all that you do is critical. Protecting your time is one of the most difficult but also most important habits you can develop. Will you miss some deals by doing so? Absolutely. Will you have a much happier and more successful life with more free time? Absolutely. Your job is to find that magic balance of spending time on what really matters to your bottom line so you can spend the time on what really matters in your life.

Real estate is supposed to fund your life, not become your life.

Three Additional Strategic Tips:

Strategic Tip #1: Never give up outright. Time and circumstances change vendor motivation levels. If the property is one that you would eventually like in your portfolio, yet the vendor is currently unwilling to work with you on a deal, kindly leave them a short note that states that you would like to buy their property when the time and circumstances are right. Provide them with your contact information and then just forget about it. I have heard of deals coming back to investors six months later. A call comes out of the blue when the vendor is motivated and much more open to making a deal.

Strategic Tip #2: Sophisticated investors know that purchase price is one of their least concerns. So while the masses focus on price, investors can focus on terms. In fact, what you ll hear from most strategic investors is the following piece of advice Buy at Market Value Today, Make it Cashflow and Sell at Market Value in The Future. You will lose many potential deals by arguing over the last one or two thousand dollars, when in the scheme of things these figures end up meaning nothing in the end. Remember, you need to keep moving forward and if you lose a property with a $50,000 profit potential because you argued over the final $1,500, you just proved that the only thing you are a master of is stepping over dollars to get to dimes.

Strategic Tip #3: Think Like a Strategic Investor, Not Like An Average Investor. There is an old theory out there that vendors instantly become motivated after their property has been on the market for a long period of time. This is utterly false. If the vendor still is in no rush to sell, or their circumstances haven t changed, then you ll find the same old unmotivated vendor. It is only when a willingness to sell arises, does the willingness to make a fair deal become available.

began his investing career in 1985 with a house purchased in Mission, BC. He is Founding Partner and Senior Analyst at The Real Estate Investment Network and currently owns nearly 200 doors in BC and Alberta. A seven-time best-selling author, Don s expertise and passion for teaching Canadians how to create wealth through real estate are far-reaching and have made an impact on the lives of thousands. You can follow his daily thoughts on Twitter www.twitter.com/ and on Facebook at www.facebook.com/thereinman.

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