PB-178 More Handy Negotiating Tips - Property Inc

[ Podcast Transcription ]

I’m Peter von McNess and he is Chris Lang and welcome to another of these regular property briefings.

And a warm welcome to you Chris. Well it’s good to be back here with you. In earlier podcasts you’ve helped our listeners prepare for a negotiation and I was thinking today that you might give them a few tips on what to do during the actual negotiation itself. Well, we probably don’t have quite enough time to go into this in a lot of depth.

So let me perhaps give you six or seven tips along the way as we explore this. And the first one would be, you need to treat negotiating as a process. Most people wrongly feel That it’s an event, something that needs to be completed in one sitting. But the reality is, the more you can get the other party to invest, whether it’s time or money, into the negotiation, The more likely the deal is to stick and the more likely you are to get concessions towards the end of the deal because they just want to wrap it up.

So I find that fast resolution seldom means a good deal because someone will then think about it and say, I was rushed into that deal, let’s start and renegotiate again. So it’s not an event, it’s a process. And if it takes two or three sessions, so long as you’re heading in the right direction, that’s fine.

What about when the other side starts objecting? Well, objections are interesting. Most people fear objections. And, as far as I’m concerned, you always welcome them, because in most cases, all you’re really saying is, you haven’t yet given me enough information or details to make the decision that you’re asking me to make.

Now, You’ll find it will be hard to conclude a deal, a deal that sticks, if in fact you’re not getting any objections. Because sometimes people just want to feel that they have had their six penneth worth, and a lot of the objections are quite spurious and easily addressed. And as I said, most of it is just because they don’t have Everything at their fingertips to make that decision or reach that conclusion that you want them to.

So don’t fear objections, welcome them. So how can we make your proposal seem more appealing? That’s an interesting question. You see, during a negotiation, if one or the other party feels they’re going to miss out, All of a sudden, the proposition becomes more appealing. There’s that fear of missing out.

And so, sometimes you’ve got to create the power of competition. In other words, you create the illusion of having alternatives to what’s being offered, whether it’s another property or a better source of finance or something. And all of a sudden, as soon as they realize that they don’t have the you to negotiate with by, uh, by themselves, that you do have alternatives.

Suddenly, your proposition will unexpectedly appear to be a lot more attractive. It’s just human nature. Because having, as I said, you’ve got to invest some time, if it’s money in it, um, if it looks as though it’s going to fall apart, it’s not your fault, it’s their fault because they haven’t moved quick enough or reached the decision you need and you’re just going to walk away from the deal.

As I said, suddenly, your side of what you’re offering suddenly becomes much more appealing. And when you get stuck. What’s the best approach? Well, when you get into a sticky situation, you do what’s called float trial balloon. In other words, you simply say, if I were to do such and such, would you be prepared to do this?

Now, what you’re effectively doing is… Holding out the prospect that you will move on the, in your position, if they will. So, you’re trying to get a conditional commitment from them before you actually have to make a decision. And, as I said, it’s like. Us saying to a lawyer, you create a hypothetical situation, so you take yourself out of it so that they’re, they’re not necessarily giving advice on your situation, it’s quite separate so there’s no legal liability on their part from giving the, the wrong advice.

So the trial balloons offers you the opportunity to appear to be progressing things but without actually committing until you get a commitment from them. Tell me, do most negotiations follow the similar format? Well, I don’t know about following a similar format, but you’ve got to remember time is your friend.

We started out by discussing that at the outset. And, as I said, keep in mind that 80 percent of your, or the concessions you’ll get from the other side, will occur in the last 20 percent of… the negotiation. So one of the important things you have to try and uncover is the other side’s deadline. So in other words, when you’re a fair distance from that deadline, they’re not motivated to make any concessions.

But as the deadline approaches, and that might be, and you find out from the selling agent that they’ve got to refinance, and it has to be sorted out within the next four to six weeks. And the closer you push them to that deadline, the more they realize they have to make concessions to get the deal across the line.

So yeah, in that respect, they do follow a format. There’s no one script for every negotiation. You know, I’ve always wondered, when you present the other side with the formal contract, do you then set about explaining it to them? Well, the short answer is no. What you need to focus on is the commercial terms.

of the deal. And if they want to study, in inverted commas, the legal documentation, let them go ahead and do that. You’re not obligated to explain it to them. If you’re on the buying side and I’m given a contract, I’ll simply say, well, I’ll have to send that to my client solicitor. I don’t even get involved.

In doing that, and that’s more just to buy time. If you’re on the selling side, and particularly when you have a, say an auction, and I remember on the sales side, you ask people questions to which they know the answer. What is your correct full name and address? We’ve agreed the price, and you write the price in.

You do it all by hand. Settlement, we’ve agreed that’s 60 days. As I said, you focus on the commercial terms. You’ll be surprised of the power of the printed word. If the contract is already typed out and printed, most people, unless they’re a lawyer, will look at it and not even see it. They’re simply justifying.

The, their position before picking up the pen and signing, but the important thing is that they’re able to check the agreed commercial terms, price, settlement, deposit, et cetera. So as far as they’re concerned, they’re comfortable because what they thought they’d agreed to is there. And in most cases could well be written in by hand, but if not, is there in black and white and they can verify that those commercial terms are true and correct.

And as I said, you’ll find very few people will challenge a printed document. And what about the old adage, beware of the fine print? Yeah, you’re right. Most people have actually been informed never to sign anything before taking it to their solicitor. However, the funny thing is, they’ll move straight ahead if you simply ask them to confirm, or okay, or would you like to approve this?

Because effectively, in their mind, you’re not asking them to sign. It’s just simply an agreement that what we’ve negotiated. Is reflected in the documentation. So, I learned very early on in my career, you never ask anyone to sign anything. Because that just raises a red flag in their mind. So as I said, you just ask them to confirm.

Would you mind okaying this? Would you like to approve that, and then we can get everything underway. Any final words of advice? Well, perhaps one bonus tip, and that is whenever you ask a closing question, in other words, a question the answer to which will commit the other party. Just pause. Say absolutely nothing until they respond.

And yes, it may seem like an eternity, but when the other side speaks, at last, invariably you’ll find they will end up committing themselves. To what it is that you ask. As I said, it’s a discipline, you’ll get used to it, it’s difficult at first, but as soon as you ask that type of question, you just shut up and say absolutely nothing.

You know, I really enjoyed that and I found it very helpful. Well, this is not something that comes naturally to most people. You see, negotiating is very much a learned skill, but it’s something that with a little practice you can soon start performing like a pro. And if you’d like, I could include a link to my Negotiating Masterclass below this podcast if any of our listeners would like to progress things from here.

Yes, I think that would be helpful.