When I was a Junior in college, my dad decided to start a real estate internship and brought on 10 college students for a summer of real estate investing madness. Each intern rotated between work in the field (property management, maintenance and construction) and work in the office (marketing to sellers, analyzing deals, etc.). My dad also brought in professionals such as real estate agents and attorneys every Friday to speak to the group. At the end of the internship, he brought on a few to work full time.
One memory in particular sticks out to me. We were looking at a house in town called Elmira just outside of Eugene, OR, and he decided to bring the entire crew along. My dad and 10 interns showed up to look at and evaluate this house as the seller sat back and waited to hear my dad’s response (while, of course, commenting on the oddity of the 10 of us interns being there).
The seller wanted $240,000. After looking over the property, my dad offered him $200,000. And thus began the negotiation. I sat there witnessing this display of hyper-awkwardness, as 10 interns watched my dad and this seller go back and forth.
The seller came down to $225,000. My dad countered at $210,000. The seller said maybe $220,000, but my dad held firm at $210,000, and the seller eventually met him there.
As you may have guessed, my father is basically the master of awkwardness. And I mean that in a good, albeit uncomfortable, way. You know those moments after something somewhat crazy has been requested when you tense up, scrunch your neck and grab your left shoulder with your right hand while looking down? Yeah, I’ve had to bear more than a few of those when I’ve been with him on a negotiation.
He must have been born without the self-consciousness gene because he has the ability to ask for just about anything. And that can be awkward. And that can also win you some great deals.
One time, my dad and a seller were $10,000 apart on a deal. However, earlier in the conversation the seller had mentioned that her son needed a new cellphone. As fate happened, my dad had just bought a cellphone (that was originally supposed to go to me by the way). He wasn’t willing to go any higher on the price so he just threw out something utterly ridiculous:
“What if I added this cellphone I have? Could you come down another $10,000?”
Now, I was luckily not there for the monumentally awkward pause that must have followed this almost absurd offer. Ten thousand dollars for a cell phone. But then again, the deal was dead if he didn’t throw something else out there. So why not?
And she agreed.
A friend of mine offered $7,250 for a house (admittedly in very bad shape) in a neighborhood where the houses were going for over $100,000. He got it (and later flipped it for $49,000). Another friend of mine offered $11,000 for a five-plex in relatively decent condition in an OK neighborhood. He got it as well.
Sometimes, all you have to do is ask.
Learning How Far to Push
On one larger deal, my dad arranged a meeting with the seller after already having met with him three times before. And we just happened to have no idea what to talk to him about since our previous offer had been rejected and we couldn’t go any higher on price. It seemed destined to become one of those conversations where both of you quietly sit across from each other desperate to find something to talk about. Then someone finally says something, gets a one sentence response and the room goes back to a distressingly silent standoff.
But it didn’t happen. Instead, we found a creative solution to make the deal happen.
Yes, of course you can go too far with this. Michael Scott is not who you should be trying to emulate. But negotiations can be bastions of uncomfortable awkwardness. It’s important to learn to appreciate and even enjoy these situations. The worst thing a seller can do is say no. Indeed, the worst thing anyone can do is say no.
Practice Makes Perfect
Now, most of us are not so lucky as to be born without the self-consciousness gene. But practice makes perfect, or at least better. I, for one, have not come close to mastering this. But I have improved and believe there are two critical steps to do so:
The first is to simply ask for what you want and stick to it. Make sure to have a strike price going in and don’t deviate from it. Don’t think of getting a property under contract as “winning.” Only getting a good deal under contract should be considered a victory.
But there’s another side to asking for what you want. In many cases, the asking price is just nowhere near good enough for you. Try not to just pass on these deals, but instead go ahead and make an offer. If you’re afraid you might offend the seller or damage a relationship, just say, “I’m sorry, this isn’t the type of deal I’m looking for. The most I can offer is X.” But it’s probably better to just say, “I can give you X for the property” (with X being really, really low).
The second point is just repetition. Everything is hard at first, but it gets easier with practice. If you’re just starting out, understand that this is a process, and you don’t need to be perfect right away. You just need to do it. As time goes on, rejection will become less and less relevant.
As rejection becomes less relevant, awkwardness becomes easier to handle. And as awkwardness becomes easier to handle, making low offers (when necessary) becomes much easier. Real estate is a numbers game. The more such offers you make, the more and better deals you will get.