How to Harness Your Fear of Real Estate Negotiations to Get the Deal Done

How to Harness Your Fear of Real Estate Negotiations to Get the Deal Done

3 min read
Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. Marcus has been named the “Equity King” for his impressive ability to find real estate opportunities with massive amounts of equity.

Experience
Marcus, a high school dropout, went from G.E.D. to M.B.A. Although his education has a major impact on his investment philosophy, the real impact came from his upbringing.

Marcus thrives on completing successful transactions. As a young kid, his parents and grandparents faced many challenges; as a result, it made him think of ways he could help. His mother and grandmother were avid investors—not in the market but in people. Marcus was a recipient of those investments. And his early years were hard work growing up on a farm.

Marcus was a strategist at an early age. To relieve the burden of his family buying him clothes when it was time to return to school, he decided to make a small investment that paid big dividends. Marcus decided to purchase a small piglet at the beginning of summer, feed it until it became fat, and then sell it to a local farmers’ auction before the school year started. This was one of his first transactions and the beginning of his adventure of finding equity in every opportunity.

Marcus’ hard work continues today: He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. Although wholesaling provides great money, he saw the opportunity to buy some of the deals he found and convert them into cash flowing rentals.

Marcus currently holds seven rentals, two of which are commercial units. He’s also done the unimaginable and purchased a school, which was converted to a daycare center. Again, he turns what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to increase his portfolio without any money out of pocket.

Marcus has been featured on numerous podcasts, such as the Louisville Gal Podcast, the Best Real Estate Investing Advice Ever podcast, FlippingJunkie, and many others. He’s currently a featured blogger for BiggerPockets, the largest community of real estate investors in the world.

Along with completing transactions and working to build his portfolio, he provides mentorship to aspiring investors. This is done through one-on-one interactions and through his successful YouTube channel and blog.

Marcus does utilize his M.B.A. for more than real estate. As a consultant for a successful non-profit institution south of Chicago, he uses his expertise in the development of human capital. His philanthropic efforts help existing stakeholders develop in their capacity to serve those in need of assistance.

Education
Marcus completed his M.B.A. in 2011 from Olivet Nazarene University.

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I have read, wrote, and discussed with many individuals the topic of wholesaling real estate. Many of the people that I talk with either have never heard of wholesaling real estate, they’ve heard of it but do not understand the usefulness of it, or they’ve heard about it and understand it, but have not taken action and facilitated a deal. Those of us who wholesale real estate all went through the dreaded psychology of the fear of failure, but what differentiates those of us who succeeded was we embraced the fear and did not let it cripple us.

Before I go any further, I want to inform you that I’m not here to write about how to identify and overcome your fears. There are many articles you can read about fear and plenty of YouTube videos to get you motivated to take action. I would like to help you understand where you should have fear and how to channel that fear to get deals done.

If you ask anyone just getting started, their greatest fear is talking with sellers. I know this to be true because it’s always the main topic of discussion when talking with a newbie. However, after you get comfortable talking with sellers, the real fear is making the offer. Yes, even as I think about it, I can feel my adrenaline rising. This is the rush, this is the point of no return, this is the point where you potentially have a deal — or your the seller thinks you’re a blood-sucking leech.

The reason why this is so difficult is because after all the rapport building techniques you’ve utilized — i.e. having similar interests and the same favorite sports team — now you have to present an embarrassing offer that can destroy everything you’ve built. This is not always the case. Negotiating the deal is where you honestly learn if you can be successful at this business.

negotiation-technique

The Art of Negotiating

Many people have the misperception that if “I” don’t get what “I” want, “I” lose. This is absolutely not the case and should not be the premise of the negotiation. Starting with “I” is when you lose. Always think of the needs of the seller, and reintroduce those needs back to the seller so they are on their mind. Never think of your needs first. Instead, remember you do have to make sure you negotiate a deal.

Personally, the negotiation is the time I gauge my personal growth. Every seller will have an objection (if not, you better jump for joy), and it’s up to you to understand what the seller is objecting to. Do not assume the objection is always price — because it’s not. You need to find out what the true objection is.

Negotiations begin in the initial conversation. You are listening for key indicators that you’ll be able to use in the future to help position yourself and the seller. Normally, if you give, you will get. Before making your offer, take a moment to embrace the fear of making the offer. At the same time, be confident you’ve done concise analysis on the property. Then make the offer with confidence.

Confidence is the key. A seller is able to gauge your confidence level and immediately object/reject your offer if you don’t communicate your position strongly.

I use the method of maximum allowable offer (MAO) and minimum justifiable price (MJP). This is simple — what’s the most you can pay for the property and it still be a deal? Which is your worst case scenario (MAO), and what’s the lowest amount you can pay (MJP) that is beneficial to you and still beneficial for the seller?

negotiations

Strategic Positioning

When presenting a low offer, you may add a higher earnest money deposit, or you can have a higher offer with no/low earnest money deposit. This is just an example, so utilize every aspect of the transaction as a piece to negotiate with. As in the game of chess, you may need to sacrifice a pawn to gain the queen. Still, the end goal is to have all parties satisfied with the terms of the agreement.

Many negotiators believe it’s all or nothing. This is the closed-minded theory of a terrible negotiator. You have to remember, the deal is not done at closing. The deal should never be done — because your goal is referrals. To truly gauge if you have done a great job with the transaction, you’ll want to know both parties are willing to speak highly of the other afterwards.

Conclusion

Remember, the fear of making your initial offer is something you should embrace. Those emotions at that moment are your benchmark. Every negotiation going forward should become easier to navigate. You should be able to position the negotiations in a way that you are the facilitator, and the sellers are following your recommendations.

Here are just a few things you need to know before negotiating:

  • Sellers personality type
  • Your personality type
  • Seller needs versus seller wants
  • Timeframes
  • How to handle objections

Can you think of any other things a wholesaler needs to know before tackling a negotiation? How did you overcome your fears of negotiation?

Leave your comments below!