”Power is a lot like real estate. It’s all about location, location, location. The closer you are to the source, the higher your property value.” -Frank Underwood
If you’ve been watching the hit series on Netflix, House of Cards, then the title of this post gives you a clear indication of the caliber of a negotiator I’m talking about. Negotiating is a major lynch pin associated with success in locking up your next real estate investment.
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6 Rules for Negotiating Your Next Real Estate Deal Like Frank Underwood:
1. Focus on the first 5 minutes
According to a study by The Journal of Applied Sciences, the first 5 minutes of a negotiation can predict the outcome. In this first 5 minutes, people decide what direction they will take in the negotiation. Get right into why you think working together is a good idea and how their work/ business/ idea is a good one. Yes, people like praise but they love it when they feel someone understands them. A feeling of connection makes your value skyrocket.
2. Appear according to your story
If you are marketing yourself to distressed homeowners as a professional real estate investor then act the part. Dress the story as I like to call it. Frank Underwood is always looking sharp, as looking sharp gives you an advantage from the get go.
3. State Your Value
Homeowners have the ability to work with numerous investors so you must be explicit in the value you offer to them. It’s your job to make sure that the seller knows what they will actually be getting when working with you. Frank Underwood shows his offer/deal value by painting the picture of the other party’s new reality after they agree on the deal. How they will appear amongst their peers and how it will make them look. He makes sure he focuses on benefits rather than features.
4. State Your Price
You must come from a position of strength when you convey your offer price to a seller. When quoting your price be cautious of how you deliver it.
How NOT to do it:
I can offer you $100,000 for your house given the issues. This is because we want to close quickly. How does that sound?
So why is this unfavorable? Firstly, “we would have to” sounds like you are doing something that is painful for them when in fact you are giving them a value-laden offer. Ending with “how does that sound?” puts you in a position of weakness. Why would you need to ask for the client’s permission to give them amazing value at an incredible price?
How to do it better:
Given all the issues we discussed, my offer is $100,000. That should give you enough money to help solve all your issues. I am excited to close on your house. Once a contract is signed we can work together to solve the issues quickly.
Come from a position of strength and deliver your offer as a win-win solution for both sides.
5. Revel in the Silence
After you state your price, DON’T SPEAK FURTHER. Don’t begin a ramble off justifications as this makes you look needy and unsure of yourself. Allow the seller to think and ask questions. This keeps you in a powerful position. If there is a gap of silence, don’t feel the need to fill it with any kind of chatter. Keep calm, and revel in the silence.
6. Create a sense of Urgency
Frank always makes the other party feel like his offer is a once-in-a-life time opportunity and if not acted upon quickly, their moment of glory will be gone. Missed opportunities are painful; Frank knows this and uses it to his advantage when negotiating.
If there is no pressure to close the deal, there is no reason for the seller to take action soon. Make sure you are honest with them and let them know, as shown in the example of stating your price, the deal is time-sensitive and it may not be available if they don’t act quickly.
Always have a negotiation plan and use these six rules to negotiate and win at the real estate game.