Negotiation as a real estate investor is crucial to your success. But at the same point, it’s a careful balance and setup to a win-win agreement between you and your seller. They’re in a tight spot or simply want the flexibility to leave, and you’re the one that can provide their solution.
Position of Leverage in Negotiation:
1:54: Life is negotiation, and the better you are at negotiating, the better you will be at life.
4:25: It's okay to ask for what you want in a respectful way.
6:15: We always need to be willing to walk away. The person most willing to walk away is usually the one who'll get the better end into the deal.
Motive for Negotiating:
8:15: when you make a seller an offer and they hit you with a “Let me think about it”, in their mind, they have their house in your money.
10:48: What is the key to finding out what is motivating a seller in particular?
13:40: For sellers, it’s often more about the freedom or the flexibility in quickly getting out of the house or apartment.
16:20: In Ryan’s typical negotiation, he’ll come up $1,000 or $2,000 for every $10,000 - $20,000 - $30,000, the seller is coming down.
18:35: You don’t want to be negotiating with yourself. If the sellers don’t counter, then we can’t really see where we're at from a negotiating standpoint and that's not going to end well.
Anchoring For Leverage:
21:13: Anchoring is a psychological concept where you can use a numerical or qualitative “anchor” to position yourself at the start of negotiation.
23:26: Every seller underestimates actual rehab costs. Leverage that as another critical anchor point since you know the actual rehab costs.
25:13: Use your phone, pull up the retail costs for a new roof. Your guys can likely do it cheaper, but you can leverage that better cost.
Weakness In Negotiation:
29:55: Confrontation is hard, but you need to push one step further. If they say no, ask “well what could you do?” This keeps dialogue open.
31:48: Don’t get wrapped up in the story where you end up overpaying. It’s happened to all of us.
33:45: The best skill you can have in this part of business is empathy. Being able to put yourself in someone else’s life situation to be able to identify their point of view.
16:14: Never Split the Difference by Chris Voss
Connect with the Good Stewards:
Amanda: (00:00) What do you want out of this? And to get you out of this, how can we make it work for both of us? You don't have those guys to do that work and you can't do it for this and we do. And we're kind of getting there, but kind of talking it through so that you both come out of it with what you want.
INTRO: (00:24) Welcome to The Good Stewards podcast, the only podcast dedicated to seasoned real estate investors who want to maximize the cashflow potential in their business. We are “buy and hold” investors with a thousand plus properties and markets across the U.S. who bring an insider's view into the nitty gritty details of real estate investing. If you're looking to develop the mindset teams and systems that can dramatically build your real estate business and network, you're in the right place.
Ryan: (00:57) Welcome to this episode of The Good Stewards podcast. I'm Ryan Dossey.
Amanda: (01:01) I’m Amanda Perkins.
Bill: (01:02) I'm Bill Syrios.
Andrew: (01:03) And I'm Andrew Syrios.
Bill: (01:05) Hello everyone. It's good to have you today. Please check us out on thegoodstewards.com. Download our free eBook. Check us out on social media. Subscribe, tell your friends about us. And we're getting in right now to an interesting topic is negotiation. Now, the reason I think it's a critical topic is because every single day we are negotiating. And I think we just have to assign ourselves to the fact that life is negotiation. I mean, just think about your kids, your spouse, your friends, if you're going to go to this restaurant or that restaurant, if your kid's going to wear that pair of shoes or that pair of shoes this morning, or if they're going to wear no shoes like they want to…
Ryan: (01:52) If you're getting pulled over is it a ticket or a warning.
Bill: (01:54) Yeah. Life is negotiation, and the better you are at negotiating, the better you will be at life. That's the bottom line. Now really defining negotiation it's simply making an agreement coming to a consensus of some kind with another party or other parties. And often that means making concessions, doing compromises. There are all kinds of things involved. One person's kind of empower, another person might feel weaker. They're saving face, there's leveraging, there's ego involved. There are all kinds of, but it's all about relationships. And it's all about coming into an agreement. Life is negotiation.
(02:37) Now we're going to get a little more specific here, and that is negotiating with a seller of real estate, because that's what we do as real estate investors. But as we hone our basic toolbox of negotiating skills, we will get much better at this over time. Now, I just want to kind of throw this question out to begin with. I want you who are listening to this to think about this and in our panel here to address it as well. What makes for a good negotiator? What's the difference between somebody who doesn't have very good negotiating skills and somebody who does?
Ryan: (03:16) I would say two of the biggest things I've noticed are the ability to have a conversation with some light confrontation in it, like having somebody hit you with, “You're out of your mind, how did you come to that number?” And have you not, like, “Well, okay, you're right. Have a nice day”. Being able to explain your point when there's a little bit of confrontation. And then I would say the second piece is always trying to get one step further than you did on the last deal. So, if your last deal, you made them an offer, they told you no, you justified your point and then left it. Well, maybe on the next one, you justify your point and then re-asked to get the deal done or ask them where they would need to be. I think those are the two biggest things I've seen people struggle with is they either like initial rejection and shut down, or they'll like, they don't quite have the gumption to like, I'm going to ask a second time. So, those are…
Amanda: (04:20) Or really just not having the courage to ask for what you want in the first place. You're there to make a deal, and this is really with anything, you're there to get what you want out of it. You've built your rapport. You're having this conversation. It's okay to ask for what you want in a respectful way. And if it's met with, like what Ryan was saying, if somebody tells you “You're out of your mind” or whatever, to not just cower away, because it was okay for you to ask for what you wanted. And that starts a conversation.
Andrew: (04:56) There's dealing with rejection. Dealing with rejection is definitely something you're going to have to learn to deal with. In the same vein, if you're asking for what you want, you're going to get rejected sometimes.
Ryan: (05:05) You need to get a lot more “No’s” than “Yeses”.
Andrew: (05:08) If you're only getting yeses, you've got a problem.
Ryan: (05:05) You are paying too much.
Bill: (05:13) There's a song from my youth. A line and it says, that's the seventies by the way, “There ain't no good guys. There ain't no bad guys. There's just you and me and we just disagree”. So, it's not personal. It's just business. It's just coming to an agreement. You've got to separate personalness from this negotiation situation. And that's so easy to get yourself personally offended or personally involved, no matter which, whether you're the buyer or the seller, you've got to step back and not put yourself into it personally.
Andrew: (05:54) On the same token, there's the other side of that, that it's a lot of things that are a balancing act and negotiation has that element to. Not getting overly attached to the deal. Like, it's not this beautiful house, it's just an asset. And not getting…
Ryan: (06:08) Four walls and a roof.
Andrew: (06:10) Yeah. Even if you've had many, many conversations with this person going past your strike price, your highest price that you decided, because you so far down the line, because you're so attached to it, is not the way to go. We always need to be willing to walk away. The person most willing to walk away is usually the one who'll get the better end into the deal.
Bill: (06:31) And that's why homeowners often don't get a good deal is because they fall in love with something and they're communicating, they're falling in love with the seller, if they're directly involved or with a real estate agent, and that agent's going to communicate that to the other agent.
Ryan: (06:48) My clients really want this house.
Bill: (06:54) And if you're buying a house for yourself, you should think of yourself as an investor, not as a homeowner, but as a person who can still walk away from this dream house that you and your spouse just found.
Amanda: (07:06) And wrote the letter to the owners to tell them how much he loved the house and why they should get the contract.
Bill: (07:11) Which is a tremendous negotiating thing. I've seen on a number of occasions those work. That you say, I love.... Sending a specialized lover letter. I've seen people get a $20,000 or $30,000 discount because they were willing to take that extra step. And what that tells me is that the seller wasn't all about price. They might of been selling their family home or something. They were very attached to and they saw this buyer who was in love with it, but couldn't pay as much as some of their other offers, but because they like the buyers so much, they're willing to sell at a discount. That's a pretty cool situation.
Ryan: (07:48) I do want to just re-highlight Amanda's phrase there of having the courage to ask for what you want. My gosh, the world would be such an easier place if people were just honest and had the confidence to say, “Hey, this is what I want” or “This is what I need”. So, I would say if you take anything from this episode, print that off, tack it to your wall. On the note about being okay with walking away, that's actually one of my favorite negotiating tactics. In my experience, when you make a seller an offer and they hit you with a “Let me think about it”, in their mind, they have their house in your money. Some people are pretty reasonable and they come around within a day or two and okay, we've got a deal or we don't have a deal, I need you to come up.
(08:34) But occasionally you run into one of these super fund sellers that like, we've got a guy we'd been talking to since November of last year, who was like, well, I need a fourth payoff statement from my bank before I make a decision. Like it hasn't changed since the last one by maybe more than $300 - $400. Like what's really going on here? And what he's got right now is the luxury of he still has his house. And he also has this cash offer from Ryan. So, one of the things we'll do is just rip the plug out. Hey, we've wasted enough time on this. We're going to purchase a different property, have a nice day. All the sudden he's got his house that he didn't really want in the first place and no other options. So, we've had several deals that have gone from kind of this back and forth, wishy washy to like, “Whoa, wait, wait, wait. Let's do something here”.
(09:29) So being afraid or not being afraid to say, “Hey, I'm really going to go a different direction. I wish you the best of luck” and just ending it there. I know a lot of guys that are like, “But if anything changes, please keep me in mind”. And it's like, you're not really walking away. You're still telling them, “Hey, this is an option”. But we've had pretty good luck if a negotiation is dragging and just saying, “Hey, we're done”. And then let them come pursue you.
Bill: (09:52) I call that “The Tijuana Principle” because in my youth, I used to go to Tijuana. I'm talking about the 70s again.
Ryan: (09:59) You and my dad.
Bill: (10:02) And you wouldn't make your deal until you walked out of the store. Right? That's on the way out. And my wife, Theresa, blesses her heart. She thought we were just screwing people over by being so hard-nosed about negotiation. But you knew that you hadn't come anywhere near to the real price that the seller was willing to give something up with until you walked out of the store. And at that point they were following you and continuing to negotiate. That's a good place to be in.
Ryan: (10:30) My dad's nickname is Tijuana Dan and kind of probably I have to call you Tijuana Bill from here on out.
Bill: (10:35) Waste it away.
Amanda: (10:37) Biohazard Bill.
Bill: (10:40) I've been called a lot of things, but let's move on.
Ryan: Perks of being a good negotiator.
Bill: (10:48) What is the key to finding out what is motivating a seller in particular? How do we find out that? And let me just give a little introduction to this. Five days ago, Greg, a partner of mine in Texas, and I were talking to a consultant who we were actually negotiating with, and it's on a kind of a complicated multifamily deal that we're putting together. And this consultant is critical to the process. And the consultant had been very hard nosed and it was first time we'd ever used them, but we absolutely had to have him involved in this process. And he wanted an astounding amount of money to be involved. Part of it was guaranteed $120,000 guaranteed over a year at $10,000 a month. And I just said, there's no way I can do that. And yet I really, we both really wanted this guy involved in this. We had to have him involved in this project. It had issues of affordability and so forth. It makes it different than the average purchase.
(11:58) So anyway, we were able through emails and talking to finally come to the conclusion that we can do this deal together where we were at was paying per hour. Like $200 per hour, no guarantee, that's kind of our position. We just want an hourly price, because we don't want to have to… How about if this thing isn't successful? Anyway, we finally came to an agreement where we pay $5,000 a month and we had a month, a 30-day notice that we could both back out about, which was a very good deal for us and I think a reasonable deal for him. Now, what was interesting about this was that I asked him, please tell me why this guaranteed payment was so important to you and why you have to have this.
(12:42) And he said, “Well, your guys' position of an hourly amount. I just hate to work by the hour”. And Greg and I just had a big sigh of relief. And we said, oh, really? We hate to even contemplate working by the hour as well. I'm sorry. That makes total sense. And it was kind of like the dam broke with that one question. Why do you need to have a guaranteed payment? And so, I think that is an introduction into is you never know what you don't know about where a seller is coming from or where the party on the other side of the negotiation is coming from. Unless you start asking really important questions to get into their world and their perspective, and to see things from their point of view. That is so critical in a negotiation.
Ryan: (13:33) I think as investors, a lot of the time we just assume it's price. Everything is price. Everything's about the money. In my experience a lot of the times it's actually more about the freedom or the flexibility of like they want out fast because they feel like the house is sucking every spare dollar they have or the apartments sucking everything they have. Or it could be that they like the flexibility of being able to go shopping was effectively your check for their house in their back pocket. Bill and I are doing a deal out in Eugene as a single family that we gave them several months to get out. So, we're under contract, deals locked up. There is a date they have to be out by, but it's not 14 days or 30 days. I think the key in my experience with all the direct to seller deals I've done is building enough rapport that they'll talk to you like a human being.
(14:23) Because a lot of times they kind of have their guard up. For any Star Trek fans like Shields Red Alert, right? Of like this guy's going to come in and just try to get something for nothing. I've dealt with this type before. And you've really got to meet them where they're at and then just get into open ended questions - Where are you planning on going? Why are you selling the house now?
Amanda: (14:47) Right. And like in the instance, that's that Eugene deal. Their retirement is in the summer, but they already know where they went to move to. They already have their next house, but they don't want to have their house on the market to a retail buyer for the next six months. And then lots of retail buyers want to close immediately and deal with the rent backs. So, this determining that we could be that buyer, but we were going to have to wait six months and we're happy to do it and we're going to get a discount for doing it. That was what they wanted out of the deal.
Ryan: (15:21) And it took a decent bit of back and forth. It wasn't like, “Well, what do you want? - Well, we're retiring. - So, okay. We'll take your offer”. I mean, it's a lot of like cat and mouse. And the other thing I would caution, I just did kind of like a troubleshooting call with one of the guys in my mastermind. He had 250 leads and hadn't gotten a deal yet. And I was like, man, even a blind squirrel is going to get a nut. Right. So, we started going through it and the problem was he was actually budgeting in too much profit for himself on deals and then spiking up his number when they said no. So, if his offer was $100,000 and they'd say, no. He'd be like, okay, well, what about $117,000? I was like, “Well, if I'm that seller, you just jumped up 17%. I'm like, what happens if I say no again? Or, well, why didn't you offer me that the first time?” So, make sure that you…
(16:14) There's a great book called “Never Split The Difference”. That's basically, we really try not to meet in the middle. If I had to visualize what typical negotiations look like, I come up $1,000 or $2,000 for every $10,000 - $20,000 - $30,000, the sellers coming down. I've got a wholesale deal we just listed that the seller initially had it listed on the MLS for $380,000. It wasn't selling, they took it off. They initially wanted $300,000 and we were at like $250,000. Long story short, we got it for $259,000. We didn't come up nearly as much as they came down. So, I would make sure as you're talking to sellers A like, your increases in price, if you do go up and I highly recommend not throwing your highest and best out the gate, but I also wouldn't do huge dramatic swings. Or then it's like, oh, this guy low balled me and now I'm getting his real offer.
(17:11) So what we typically use is more the angle of “Let me see if I can get my repair costs down at all”. I'm not going to be able to come up to your number, but if I could come up a little bit, do you think we could come to terms? If I could, would you? It’s a big thing we do. If I could get this number close to $260,000, would you sell me this house? Right? Kind of getting some kind of pre-committal out of them. But just be cautious that you're A) Not coming with your highest and best out of the gate, just cause you hate negotiation. Right? I'll pay $115,000 and they're like, no. And you like follow with, hey, do you want to do $115,000? That doesn't really give you much room. But also make sure that you don't start so low. Like, don't get me wrong. I love getting good deals. We've gotten some really good deals. But if you swing your offer up by 20% in my opinion, your credibility is shot and you also kind of look like a dirtbag, but that's just…
Amanda: (18:12) And then also make sure you're not the one making the first and the second offer. Don't negotiate with yourself. So, I mean, that's a really key point. I mean, you can't throw out your offer and then throw out the next offer without…
Ryan: (18:25) Well what if I did more.
Amanda: (18:26) Exactly. So, make sure that you're not… It's like, okay, well what really forces it? Because we've been in this position where they wouldn't counter. They just wanted another counter from us. And it was… And that was our spot out. Well, we don't know where you're at, so we're going to need, we need to know where you're at so that we can see where we're at. I don't want to be negotiating against myself. That's not going to end well.
Ryan: (18:54) You could even be that honest. Like I'm not going to bid against myself, give me a number and I'll see what we can do. But yeah, that's huge.
Bill: (19:05) And honesty goes a long way. Genuineness really goes a long way. You really want to be comfortable in your own skin and negotiation. People negotiate different ways because there's different personalities out there. But don't get into a salesy negotiation, slick kind of mindset, just be yourself with great negotiation or rapport building skills. Andrew you talk a lot about anchoring, which I think is a really important concept here. Do you want to mention anything about that?
Andrew: (19:33) Yeah. Anchoring is just a psychological concept. Basically, people will gravitate towards a number that's thrown out there. So, if you say something like this rehab will cost $2,000 and then some third party asks, well, what do you think… Another person, what do you think this rehab will cost? It's much more likely there'll be near $2,000 then if the person who was saying that well, yeah, this rehab is going to cost $100,000. Studies have shown that like if somebody, with those types of things, the person, no matter what, even if it's obvious this rehab is probably like a $10,000, $20,000 one. This is obviously, it's like $30,000 and says that. So many first here’s $100,000, they'll probably come in more like $40,000 or $50,000. If somebody first hears the $2000, they'll probably come in more like $10,000 even though they know that $2000 is too low, but they're still called an anchor to that original number.
Ryan: (20:26) They're trying to meet the expectation.
Andrew: (20:28) So in some cases, if the person is really hesitant to give out a number, like their price, what they want, I mean it's more complicated. You got to go see the property or at least get pictures of it. If you get pictures of it that could be helpful. Plus, maybe do a quick little analysis. If you throw out a number, you've set the anchor. Like, oh, well, I mean maybe around this number. That might be so ridiculous though they're not interested. But it also sometimes makes sense to throw out the first number, but this can work in all sorts of ways. Like just showing a property. Oh, I love the kitchen, this property before you into the house. Like, this is a great kitchen. It's just an awful kitchen, that's probably not something to say. You'll just seem like you're absurd. But if it's a decent kitchen, people will think, oh, this is really great kitchen.
Ryan: (21:10) Look at those basic Home Depot cabinets.
Andrew: (21:13) So, there's all sorts of different ways. You can use that concept to drop either a numerical anchor or a qualitative anchor into these conversations. And especially if the seller is not interested in giving their offer right away. But it's very good with regards to rehab numbers or what needs to be rehabbed or things like that as well.
Ryan: (21:31) So, typically what we'll do when we meet with a seller, we'll look for what we call an “as is comp”. It's a property that's sold somewhere in the near vicinity, ideally, same street, a couple houses down, street or two over that we can point to as this property needed a decent amount of work and sold for insert number well below retail, right? It was a foreclosure. Maybe it was a rental that they sell tenant occupied. But the home around the corner from you just sold for $75,000. So then when they asked for $200,000, we can like, whoa. The house around the corner just went for $75,000 and was the same layout, same square footage, same size. Maybe yours is a little bit nicer. Maybe yours needs more work, but I can only pay what the market allows. Right? I can't overpay.
(22:21) So we're going to pay fair market value, again, pushing towards that as this comp based off of the condition your house is in. So, if your house is in better shape, we may be at more. Fits in worst shape, chances are we're going to be below. But we can both agree that house around the corner just sold for $75,000, right? And we will even print off that comp, right? So, then they're anchored at the fact of “Oh, crap. The neighbors just went for $75,000”. They're asking price of $125,000 now. They're like, “Hmm, maybe that is a little bit high”.
(22:52) So that's one of the ways we use it in the direct to seller piece of just setting the expectation of distressed assets like your property in this part of town are typically trading for this number. Now we're not saying your house is worth X. We're just saying, “Hey, this is a factual piece of data that we want you to be aware of before we even step inside the home”. So, it can be a good thing to do. Sometimes it's like sucker punching them where they're like, “Oh my gosh, I thought this was worth a million dollars”. But it's better to get that out of the way in the beginning.
Bill: (23:26) Another critical anchor is when you understand how much rehab costs. Every single seller, nearly underplays, under values, under assumes what actual rehab costs. I could do that on a weekend. I could do all that painting. And then that upgrading, that plumbing on a weekend. I could do that and it would probably cost me $5,000 when you know you're looking at $50,000. So, I think dropping numbers once in a while without denigrating the property. I do not like going around denigrating the property. I think that is a recipe for…
Ryan: (24:03) Especially if they're owner occupied. Be careful with the neighborhood too. Because even if it's like a horrible part of town, they may have grown up there. Those may be there like…
Bill: (24:13) But dropping an anchor, like I know given my experience and what this is going to take, it's going to take $50,000 to rehab this property. And just in passing, you mentioned that number, that anchors, the fact that you know that the rehab is going to be much more expensive than the numbers they're giving out.
(24:31) They might even gasp at that point. But at least there's no confrontation is just saying, well, from my perspective the after-repair value that I'm going to have to bring this property up to is going to take X number of dollars to do.
Ryan: (24:45) What we do with repairs as we say, in order to get it into the level of condition, I need it to be in with my contractors, it's going to cost me $50,000. The problem, if you say, “Hey, it needs $50,000”, they'll go get another bid. And then that guy comes in at $40,000. You're a scumbag, right? So, we throw it out there as “Our guys, our crew”. One thing we've done lately that has actually been pretty helpful. If we mentioned something like, oh, it needs a new roof. Okay. That's going to be $5,000.
(25:13) And they come back with like, “Oh, no. It's like $1,200”. If you whip out your phone and just google “Roof in city”, you'll get like an Angie's list or something like that with quotes, that'll show you the typical home or the typical roof in that zip code is like $12,000 to $15,000. It's retail pricing. So that's a good way for us to like what you're saying, it's $1,500. I can do it for $5,000. My guys are good. But like, I mean, they're saying right here in your neighborhood, it's $10,000 to $15,000. You may have a buddy that you can pay in Michelob Ultra who'll do it for $1,200 bucks. He's not going to get me that deal. It’s one of the good ways we kind of get through any of the rehab objections.
Amanda: (25:55) Well, and that can sort of move us into the next thing. The reason why they haven't ever done that work is because it's a lot of work and they're maybe not going to get to it. And so that's…
Ryan: (26:06) Or they don’t have the money.
Amanda: (26:07) Well, they don't have the money. So, it's sort of figuring out like, okay, what do you want out of this? And to get you out of this, how can we make it work for both of us? You don't have those guys to do that work and you can't do it for this. And we do. And we're kind of getting there. But kind of talking it through so that you both come out of it with what you want.
Bill: (26:33) Well, and I think Amanda kind of hit the nail on the head. How can we get out of this on what we both want? And Stephen Covey of course, has the famous phrase “Coming to a win-win solution”. Now there's a lose-win. There's a win-lose. There's a win-win, and there's win or no deal. So, there's actually four different places you could end up. I mean, you want to avoid the first two of win-lose or lose-win. That's not what you're looking for. But your win might be all about price. It might be that's what it has to be, or it might be…
Ryan: (27:10) As an investor it should be.
Bill: (27:12) Or it might also possibly be terms. So, you might be able to win a little bit more on terms, lose a little bit more on price. It depends on the deal for sure. If seller financing is involved, for instance, maybe terms are important to you enough, or if you can do a subject two deal. In other words, you're taking over the mortgage from the homeowner or the owner, and you're keeping them on title… You're going on title, but you're keeping them on the mortgage. That's a pretty, for most owners, that's a pretty dicey situation. But if you build the appropriate rapport, if they can tell that you'll do what you say you'll do, and that's winning on terms sometimes. So, whatever your win is, you want them to also have a win. And the key thing there is “What is their win?” I mean, instead of just thinking, “What is my win?” the whole time, “What is their win?” here that's going to get you to the place.
Ryan: (28:12) Ultimately what you need out of it.
Bill: (28:13) Yeah, yeah.
Ryan: (28:14) Is the flexibility? Is it a particular dollar amount? And sometimes they're not going to get exactly what they want, but they get a good deal. We'll run into situations where it's like, “Well, I only owe $40,000 but I have $80,000 in dumb debt that I'm trying to tack onto this. So, my mortgage is $120,000”. And we have to explain like, “Look, no. Your mortgage is $40,000. Our offer wipes out 60% of what you owe, which is way better than owning 100% of it”. Right? So, I real quick, Bill, I love that you pointed out the win-lose. I think there's a misconception among people who are getting into real estate of like, “Why would anybody sell anything for less than what it's worth?” And if I'm winning, somebody else has to be losing.
(28:59) And that's simply not the case. It's not always price. So, I think that's huge to point out that even though we're building large portfolios, even though we're making money, the people we come into contact with these are win-wins. A friend of mine has the analogy of the grocery store model. If I see a seller whose house, I bought in the bread aisle, do I have to kind of like, oh, okay, like slip out the back or can I walk up and ask how the kids are doing? And I think that's an important distinction of, it's not just about price. It's truly what do they need out of it.
Bill: (29:35) I'd be interested in our group here, what do you feel is your growing edge about negotiation? And what's your weakness when it comes to negotiation? What do you struggle with the most?
Ryan: (29:48) For me, I'd say it's probably a confrontation. Growing up, “No” meant “No”. It wasn't like, well, try me again five minutes later. Like my parents weren't… You didn't go back and like, well, can they please come over? It was like, no, now they can't come over for a week. Right? So, for me, it's been growing out of that kind of like being okay with that tension of, I put out what they wanted. Like what Amanda mentioned, having the courage to ask for what you want. They didn't agree with it, but I'm going to rebuild value in my position and put the ball back into their court of, “Well, what could you do?” instead of just kind of letting it die there. So, for me, I'm constantly in every aspect always just trying to go one step further. And just constant improvement is how I look at my entire business. But in negotiations in particular, okay, last time I gave up here or I gave in here, or I actually came up more than I wanted to. This time I'm going to hold to my numbers a little bit better. And I tell the folks I work with I treat it like a game. Like, if you got two back and forth, go for three the next time, right? Even if there's no way on Earth, this is going to be a deal. If you just get a little bit better at negotiating, that'll pay dividends.
Bill: (31:13) Seven “No’s” are halfway to a “Yes”. How about you Andrew or Amanda? Where do you feel…?
Andrew: (31:19) I mean, I would say mine is probably the same - Making offers that are substantially lower than what they want or what they've said has always been a bit of a challenge. And I think that's… I don't think that's an uncommon problem. There's that saying that, if you're not embarrassed by your first offer, you offered too much. I mean, obviously that's not always true. But there's definitely some truth to it. And I think that's one of those things that can be a challenge for me.
Amanda: (31:48) I think it goes back to not taking it too personally. I can get really wrapped up into the personal story of somebody and then feel really bad for them and overpay or give away too much. Now I can sometimes be completely the opposite as well, but I think it really depends on if it hits a little too close to home and maybe I'm not the best person to be doing it at that point.
Bill: (32:18) Yeah. It reminds me of, I think we lost $50,000 on a flip because I got too involved in the story of a guy going to prison.
Amanda: (32:25) I think it was $80,000 but I don’t…
Bill: (32:28) Well, our own guys did a lot of the work. So, I'm going to say that it was less.
Amanda: (32:34) And including the holding costs. But whatever makes you want to sleep at night. Anyway…
Bill: (32:40) Boy, can you edit that out?
Ryan: (32:44) One thing that I love and also simultaneously hate about Amanda, she doesn't let you tell yourself stories. She's like, oh no, we're doing great. - You're not. – Oh, okay.
Bill: (32:54) Yeah. Well, anyway, one thing that I think I just pulled out of something that Ryan said it was the… What factor? I'm not sure what principle you call this, but it's when somebody says something and you respond with “Ah”. In other words, you've basically indicated with a very nonverbal, pretty much a nonverbal, maybe a gas, a subtle gas, just…
Ryan: (33:21) You're out of your dang mind.
Bill: (33:25) It's not a bad thing to use that. Because it does communicate…
Ryan: (33:29) Interesting is one of my favorites.
Bill: (33:30) Okay.
Ryan: (33:32) Like, “oh, interesting.” Because that's like, they're like “What's interesting?”
Bill: (33:35) Yeah. Or just, “Hmm”.
Ryan: (33:36) You can get a roof done for $1,200. Or do you think this is a great part of the town?
Bill: (33:45) We've obviously not crossed every t and dotted every i on negotiating. But I think we've hit many of the skills that are important. And in general, the skill of empathy, I guess, is what's critical is to get into somebody else's head, somebody else’s life situation, somebody else's perspective and see it from their point of view.
Ryan: (34:11) Bill, wasn't that number 34 on your…?
Bill: (34:13) Yeah. Yeah. My Clifton StrengthsFinders. There's 34 strengths and empathy happens to be my last one. It's all sad for my wife by the way. I mean,
Ryan: (34:23) I mean mine's pretty similar. So, I can't talk too much. But I think it's choosing to try to put yourself in the other person's shoes of really, what do they need out of this and what can be the best path forward. If you're like Bill and I, and like, my wife, we can be watching TV and if someone starts to cry, she'll just start to cry. And she's like, I just feel their pain. Like it's not even real, they're an actor or actress, right? But for me, like it's okay, if I was in their position, what is the best way for them forward? And a lot of the times that these folks who end up with distressed houses, the best way forward is just to get out of that situation. And I think that's where as an investor, we can really kind of be like, I don't know, a light to our communities is by getting people out of situations that they probably got themselves into because they didn't say what they wanted or what they needed like Amanda mentioned. I buy a lot of houses from people who bought the house for a family member or for a kid who ended up being a bum and not helping with the bills. And now we've got a disabled vet on social security paying this guy's light bill, right?
(35:35) So I'm choosing to kind of step into their shoes, even you don't necessarily have to feel how they're feeling, which I think is probably where Bill and I fall, but we can look at where they're out, where they're at, what is the best way for them out.
Bill: (35:46) And Ryan from now on, I'm going to take you up on how you respond to your wife with romantic comedies and to say, “Honey, why are you crying? It's just an actor.” And shedding those tears. Boy, I love that.
Ryan: (35:59) Calm down works wonders.
Bill: (36:01) Does it? Don't sweat. Don't sweat it. It's a great, great response too. Yeah.
Ryan: (36:07) Amanda's like just getting red.
Bill: (36:11) Well, thanks for tuning into this episode. If you've liked what you've heard, remember to subscribe and share the podcast with other people, catch a copy of our eBook and look us up. Send us some questions, comments. We love to hear from you. So, it directs us in further episodes. Have a good day.