J. Scott > Quotes

“Non-Round Numbers Are Better at Anchoring Choosing a round number will send the message—especially to experienced negotiators—that you have no specific rationale for that price. And, if you have no rationale for a price, it’s reasonable to assume that you aren’t committed to that price. For example, if a house is listed at $250,000, and you offer $200,000, a smart seller will realize that it’s unlikely that $200,000 number has any specific meaning to you, and that you’re likely just fishing to see if the seller will budge on their price. On the other hand, if you were to offer, $204,200 on that same house, the seller will assume there was thought put into that offer, and will likely believe that the number has some specific meaning. You could reinforce this belief by communicating additional information to the seller when making the offer. For example, before offering $204,200, you might say to the seller: Investor: “I’m glad I met you today… this is actually perfect timing. I just left a closing this morning where I sold a previous property, and I have some cash available to make another purchase.” You haven’t said that the amount of cash you have available is $204,200, but given that your offer is so specific, the seller will likely assume a connection. The seller is now anchored to your $204,200 number, subconsciously thinking that this number is important to your side of the negotiation, perhaps even a requirement for you. Later in the negotiation, you can reinforce this anchor by saying something to the effect of: Investor: “I only have a specific amount of cash available to invest right now. I may be able to increase my offer a little bit, but not much.” Without saying it, you have reinforced the belief that $204,200 is the specific amount you have available to purchase the property, though you’re willing to reluctantly try to find a few more nickels under the sofa cushion.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“The key to getting detailed information from the other party is to avoid asking “yes” or “no” questions. Instead, ask open-ended questions that require back-and-forth discussion.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Investor: “I asked that question in the hopes that I would be able to offer cash and a quick close. Unfortunately, since our discussion, I’ve entered discussions with two other sellers as well, and while I still hope to be able to pay cash, I take my promises seriously, and I don’t want to overcommit to you.” This not only sends the message that it was just a misunderstanding (you didn’t lie about anything), but it also allows you to send two subtle messages: Should the two of you not reach an agreement, you have other alternatives—and the fact that you are serious about your commitments. Assuming the seller is willing to answer your question, you now have another important data point that you can use to evaluate about where the seller’s MAO might be.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“While great negotiators can sometimes turn situations where there is a gap between buyer and seller MAOs, in many cases, the price gap is impossible to overcome and the likelihood of a deal is small. For that reason, we typically like to take one of two approaches to these types of negotiations: Go in with a very low offer (typically at or below your target price) in hopes of shocking the seller into realizing that his property is worth much less than he had thought. If he doesn’t walk away and is still willing to negotiate, there is a chance that he is more highly motivated than you had anticipated, and he may reduce his MAO.
If we wanted to go this route for the example above, we’d likely pick an opening price bid somewhere in the $140,000 to $150,000 range.
Communicate to the seller that you don’t want to insult him with a low price and that you don’t plan to make an offer. The seller will either thank you for your honesty (in which case there was no deal to be made), or the seller will ask you what your price would have been. If the seller is interested in what you would have offered, that’s an indication that he may be more motivated than we suspected, and again, may be willing to move off his MAO.
If the seller asks you what your offer would have been, we typically will present the offer exactly as we did in the first example above, but indicate that we might have a bit of flexibility in that price.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“For example, when you’re nearing a deal and you’re looking to get one last concession without giving anything else in return, try saying something like this: Investor: “I have a feeling I’m going to regret accepting this deal— I’ve never been a good negotiator and you clearly do this a lot. Perhaps I should ask you to throw some free negotiating lessons in the deal! Okay, just so I don’t feel like you completely took advantage of me, how about if [insert your request here] and we’ve got a deal…” You’d be surprised how often that final request is accepted without protest, simply because your compliment was taken as fair compensation for that final concession you requested.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“When it comes to building rapport in a new relationship or reigniting it in an existing relationship, there’s nothing that beats face-to-face contact. While many people these days prefer communicating through email and text, face-to-face interaction forces the parties to engage on a much more personal level.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“If you want to be a great negotiator, don’t focus on negotiating—focus on solving problems!”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Determine Motivating Factors Other than Price In addition to determining motivation and trying to get as much information as possible from the seller, you’ll also want to use this discussion to determine if there are motivating factors other than price, or other requirements the seller has. For example, you might ask: Investor: “Assuming we can agree to a price, is there anything else you want or need out of this deal?” This gives seller the opportunity to give you more information about her situation—information that could be used to help formulate an offer and then later be able to better negotiate that offer. For example, the seller might respond in a half-joking manner with: Seller: “Price is the most important thing… But, if you know anyone who can haul all of our furniture to Nebraska for us, that would help too!”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“People are more receptive to others who are confident. Simply acting confident (even if you don’t feel confident) will make you a much better negotiator. Why you do you think self-help gurus are so charismatic? A very big part of it is their self-confidence.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Offer Low—But Not Too Low It’s often said, “If you’re not embarrassed by your first offer, you offered too much.” While we don’t completely agree with this sentiment, we understand the point—a lower first offer is going to give you a better chance of eventually hitting your target point. But, just how low should you go? The general principle behind the opening bid in any negotiation is that it should be low enough that you have plenty of room to come up to your target, but not so low that the other party rejects your offer out-of-hand and refuses to continue the negotiation.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Leverage Their Ego On the flip side of keeping your ego in check, there are times when you’ll be dealing with someone who seems to care more about their ego than about getting the most out of the deal. When you’re in that situation, use it to your advantage.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“To reject an offer or counteroffer, sometimes it’s easiest to simply say that you’d lose money by accepting the deal: “I appreciate that counteroffer, but if I were to pay $150,000 for this property, I’d end up losing money—I’m not going to make it long in this business if I do deals that lose me money.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“This is an important tactic at other points in the negotiation as well. When the other party throws out an offer you can’t accept, say nothing. When the other party asks for a concession you don’t want to provide, say nothing. Even when the other party offers a concession to you, but you think you can get more, keep your mouth shut. In our society, most people get very uncomfortable with prolonged silence. Especially when someone else has initiated the discussion and we are now expected to answer. By maintaining your silence, one of two things is likely to happen: The other party will get uncomfortable with the silence, and will break it themselves; or The other party will interpret our silence as anger or disappointment, and will work to rectify the negative reaction.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“When offering on a property where you don’t think you’ll have competition and where you plan to pay cash, make your offer with financing anyway. This way, when you need a concession to provide to the seller later, you can offer up a cash purchase instead. This was your original intent, but now, you will likely get something in return for it.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“By focusing on the agreeable issues, the other party will get the sense that progress is being made—that an agreement is on the horizon—and they will be more inclined to continue moving forward with the discussions. For example, you might write down a counteroffer and say to a seller: Investor: “Okay, it sounds like we both agree on the major points— we’re going to pay for the property in cash, we’ll close on your preferred date of February 16, and my partner will need to see the property and sign off on the deal. Now, all we need to do is come together on price. I know you said that you couldn’t do $87,500—what if I can increase my offer to $90,000, and we include a five-day inspection period for me to bring in my contractors to take a look at the property? Will that work for you?” In this case, even if the parties were far apart in price, we’re sending the message to the seller that we’re actually pretty close to a deal. In fact, I like to reiterate all the things we agree upon every time I make a counteroffer.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Finally, it’s much easier for someone to say “no” over email, text, and even a phone call. And a good negotiator never wants to give the other party an easy opportunity to say “no.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“The stronger the seller’s motivation, the less likely you are to insult them with a low offer. The more motivated they are, the lower your initial offer should be.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Pictures: If you can look at the pictures in a listing and determine that the property is in bad condition, other buyers can too, and they are more likely to avoid setting up a showing or making an offer on that property.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Want people to like you more? There’s plenty of research indicating that frequently using someone’s name during face-to-face communication can go a long way toward making that happen.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“While the payoff price of the property shouldn’t necessarily drive your opening offer, you should realize that in most cases, the payoff price of the house will be the seller’s worst-case MAO (this is what they need to get from the sale). In many cases, their MAO will be higher than the payoff (they want to walk away with additional cash from the sale), but rarely will it be lower.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Keep Building Rapport Throughout One final thought on building rapport and trust: This isn’t something that you should only focus on at the beginning of the negotiations. Good negotiators will take every opportunity to continue to build the relationship, every step of the way, until the deal is completed. You never know when you might run into a snag just before a deal closes, and a small relationship-building gesture or discussion you had the previous day just might convince the other party to stick it out.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“personal relationships are great leverage toward getting a deal done and getting the concessions you need. Use them to your advantage.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“For example, let’s say a seller tells you that she needs to walk away with $50,000 in cash at closing. You ask her if she’d consider walking away with less, and she responds with: Seller: “Well, uh, I’d really like to walk with $50,000. I kinda need that amount and I’d be reluctant to walk with much less than that.” The important words and phrases here are, “really like,” “kinda need,” “reluctant to” and “much less.” Each of those words weaken the main message that she must walk away with $50,000. While she’s not admitting to being willing to take less, her choice of words makes it very obvious that she would be willing to take less.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“And if a listing has no pictures whatsoever, or no interior pictures, that’s an even better indication that the property is in such bad condition that the seller or agent believes the pictures would discourage most buyers from setting up a showing. Any retail property that is in distressed condition is going to get less buyer interest,”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“For example, you might start the discussion with the simple question: Investor: “Why are you looking to sell your house?”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“In fact, great negotiators will”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“All negotiations, no matter how large or small, are built on a common “currency.” This negotiation currency is known as concessions. To illustrate this, imagine a negotiation as a big pot filled with things that both parties want, sitting between them on the table. The concessions are all the shiny, glittering things inside that pot. In many cases, the most important concession is money (price), but good negotiators realize that the pot is actually filled with many other things as well, depending on the specific nature of the negotiations. As a negotiation progresses, either party may take things out of the pot and give them to the other party (“making a concession”). A party may also put things back in the pot that had previously been taken out. Great negotiators will continually find new things to add to the pot as the negotiation progresses. When both parties agree on how all the stuff in the pot is distributed, a deal has been reached. A skilled negotiator realizes that the more concessions they can add to the pot throughout the negotiation, the more likely it is that both parties will feel like they got a lot out of the negotiation.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“As any truly formidable real estate investor will tell you, success doesn’t come from knowing how to negotiate—it comes from knowing how to solve problems. Your best deals won’t come from exerting leverage over the other party or from charming a buyer or seller with your charisma. Your best deals will come from solving the problems that are motivating the other party to want to enter into the transaction in the first place.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“While this line of questioning is a great way to get information about the condition of the property before you see it, that’s not the main goal. The main goal is to determine how realistic the seller is with respect to her property’s condition and the amount of work and money required to bring it up to full value. For”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Me: “Okay, so we agree, you guys stay in the house until the school year ends. This is going to make it hard for us to make a profit on this deal, as the house needs a good bit of work, and we wouldn’t be able to get it renovated and back on the market until after the selling season. But, that’s now our problem—it’s a risk we’re just going to have to take. How much cash are you guys looking to get out of the sale?” Notice a couple things from my follow-up comment: I reinforced both the fact that I had given a concession and that it was a big sacrifice for us; I subtly mentioned that the house needed a good bit of work, planting the idea in their head that their house may not be worth what they expected; Immediately after bragging about my sacrifice and lowering their expectation for what their house would be worth, I ask them to throw out a price (now is a first opportunity for them to reciprocate, potentially asking for less than they otherwise would have). Long story short, always take the opportunity to point out the value of your concessions to the other party.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property