Why It’s Usually Better to Listen Than Speak When Negotiating Real Estate Deals

by | BiggerPockets.com

You have almost certainly heard before that we should spend more time listening and less time speaking. Whereas the natural urge in most conversations (particularly arguments) is to want to speak your mind, listening is a far more valuable skill. While most people are trying to figure out how best to respond while “listening,” a far more effective approach is what’s called “active listening.” Listening carefully can help us learn and challenge deeply held assumptions while simultaneously gaining us credence with the other person. Indeed, the only real way to convince someone of something is to make sure that person feels like they are being taken seriously. And you won’t convince anyone you’re taking them seriously by simply thinking of the best way to respond to whatever they say.

As Mindtools.com points out, “…research suggests that we only remember between 25 percent and 50 percent of what we hear.” Have you ever felt like someone simply twisted your words or completely missed your point? Well, this is probably why. And you are probably just as guilty of it as they are.

Related: Investors: Use “How,” NOT “Why,” If You Truly Want to Succeed at Negotiating

On the other hand, as Mindtools.com points out, active listening is a skill to be learned:

“The way to improve your listening skills is to practice ‘active listening.’ This is where you make a conscious effort to hear not only the words that another person is saying but, more importantly, the complete message being communicated.

“In order to do this you must pay attention to the other person very carefully.

“You cannot allow yourself to become distracted by whatever else may be going on around you, or by forming counter arguments while the other person is still speaking. Nor can you allow yourself to get bored, and lose focus on what the other person is saying.”

Even the little things, like remembering someone’s name after you meet them, can make a huge difference. This seemingly trivial point merited an entire chapter in Dale Carnegie’s classic How to Win Friends & Influence People. He recommended repeating the name out loud after you hear it and then several times to yourself after you meet them. Writing the name down as well as some fact or characteristic to remember the person by isn’t a bad idea either. Indeed, I can guarantee that very few people will feel truly listened to if you cannot even remember their name.

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What They Say is More Important Than What You Say

In negotiations, this is particularly important and was brought home to me while reading Robert Greene’s The 48 Laws of Power. The book is completely and totally amoral and makes no pretense about applying any sort of ethical framework to its arguments. Instead, it is nothing more than a pragmatic guide to understanding how to gain power and how power is attained. Indeed, I might be a bit nervous if I found any of my staff reading the book, as I would if I found out they were a huge fan of Nietzsche and were always going on about the “will to power” or something of that sort. As with money, though, these tools exist whether you use them or not. There are certainly very important moral questions as well, but those come into play with regard to how you use these so-called “laws of power.”

The fourth of Greene’s 48 laws is “always say less than necessary.” He illustrates this with an example from Czarist Russia of how this was done wrong:

“By saying less than necessary you create the appearance of meaning and power. Also, the less you say, the less  risk you run of saying something foolish, even dangerous. In 1825 a new czar, Nicholas I, ascended the throne of Russia. A rebellion immediately broke out, led by liberals demanding the country modernize?that its industries and civil structures catch up with the rest of Europe. Brutally crushing this rebellion (the Decembrist Uprising), Nicholas I sentenced one of its leaders, Kondraty Ryleyev to death. On the day of the execution Ryleyev stood on the gallows, the noose around his neck. The trapdoor opened-but as Ryleyev dangled, the rope broke, dashing him to the ground. At the time, events like this were considered signs of providence or heavenly will, and a man saved from execution this way was usually pardoned. As Ryleyev got to his feet, bruised and dirtied but believing his neck had been saved, he called to the crowd, ‘You see, in Russia they don’t know how to to do anything properly, not even how to make rope!’

“A messenger immediately went to the Winter Palace with news of the failed hanging. Vexed by this disappointing turnabout, Nicholas I nevertheless began to sign the pardon. But then: ‘Did Ryleyv say anything after the miracle?’ the czar asked the messenger. ‘Sire,’ the messenger replied, ‘he said that in Russia they don’t even know how to make rope.’

“‘In that case,’ said the czar, ‘let us prove the contrary,’ and he tore up the pardon. The next day Ryleyev was hanged again. This time the rope did not break” (Greene 35).

Moral of the story: Sometimes it’s best to keep your mouth shut.

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Related: 11 Items You Can Negotiate in a Real Estate Deal

Real Estate Negotiations

There are two major components to negotiating for a real estate deal that make it wise to talk less rather than more. The first is the nice stuff noted by MindTools.com. Namely, by actively listening, you build trust and rapport with the seller (or whoever else you are negotiating with). The other is the more amoral stuff noted by Greene. The more you talk, the more likely you are to give something away that weakens your hand and the less likely the other side will.

One time, we were talking with a potential investor about a large deal we were looking at. We thought the likelihood of getting the property even with this investor on board was rather low, so without even thinking about it, we didn’t go into any long sales pitch or talk too much. Instead, we let him talk and gained a lot of credibility by actively listening. And had we talked too much—say, letting on that we weren’t sure we’d get the property even with his investment—he might have just walked.

In another instance, we were negotiating to buy a property and the seller just loved to talk and talk. The conversation went for close to two hours before we actually got down to business. But in this time, we learned valuable information—for example, that he had a previous buyer fall out and was more concerned about our ability to close than getting top dollar. Knowing this, we were able to highlight our financial ability to close in our pitch and come in a bit lower than we might have otherwise.

Knowing the rules of negotiation, power, and the like aren’t immoral in themselves. They exist whether we want them to or not. The danger is that you exploit these rules in order to exploit others. But if you engage in exploitative behavior, it will almost certainly come back to bite you—and often even ruin you. Indeed, one of Greene’s rules is to guard your reputation with your life. Even if you don’t care about morality at all (and you definitely should), you should still care about guarding your reputation, which can take a lifetime to build, but only a few minutes to ruin.

That being said, learning how to negotiate better is by no means unethical. And in this case, the only key point is that when it comes to talking in a negotiation, less is usually more.

Have you found that less talk leads to better results?

Weigh in below.

About Author

Andrew Syrios

Andrew Syrios is a real estate investor in Kansas City and a partner in Stewardship Properties along with his brother and father. Their company owns just over 500 units in four states.

5 Comments

  1. Dave Rav

    The vast majority of people are poor listeners. And I’m not even talking about real estate. I’m talking, in general.

    People love to hear themselves talk. Also, some love to 1-up you. If you say “this” they say “well MY…” and go on to brag about THEIR thing.

    So, yes if you take them time to shut up and let the person talk, they may just divulge some great info. That info will eventually lead to you “winning” in the negotiation. And the other party is just happy because someone listened to them flap their jaws

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