What Not to Do When Negotiating – Part 2

Last month we discussed four of the major mistakes I made when I was learning to be a real estate investor setting at sellers kitchen tables trying to structure profitable deals to better provide for my family and the dumb things I did that cost me thousands and thousands of dollars over the years. This month I am sharing with you more of the things I did when I didn’t know what I was doing when negotiating. If you will learn from my mistakes it should take years off of your learning curve and help put thousands of dollars in your pocket every year.

5. Sounding Like and Expert – this is a mistake I see all too many beginning investors make. Many years after I started buying houses, my mentor, Jimmy Napier told me to always be at or just below the sellers intelligent level if you want to be successful negotiating with them. Until I learned what Jimmy told me I would say the things I would hear from a seminar speaker that the sellers didn’t understand. This was not good. I found out that when you sound too smart many sellers get uneasy because they start to think that you could be getting ready to take advantage of them in some way. Never sound too smart when talking to the sellers.

6. Being a Name Dropper – all too often when a person doesn’t have confidence in themselves and their abilities they will tell the sellers about some well known person they know trying to build credibility just because they know someone. This doesn’t work in most cases. I recommend if you plan to be a name dropper, only drop the name of your minister, your banker or anyone of prominence in your community. I personally never mention my attorney’s name because once I did and the sellers immediately asked me if I made it a habit of suing people. I told them, of course I don’t but I guess they were paranoid and were afraid to sell me their house fearing I might try to sue them sometime in the future for something. Maybe they had a bad situation with someone previously. In that instance naming my attorney was a deal breaker.

7. Being Too Aggressive – once I started to learn more about how to creatively structure deals and I bought several houses by putting together deals that were real money makers my confidence shot through the roof. When I would sit down with sellers I would quickly start to try to put the deal together without spending any time letting the sellers get to know me. I became too impatient. I knew what I wanted to do and I knew the deal I was offering the sellers was a good deal for them, so why would the sellers push back and many times I would lose the deal? Over time I learned that when you push too hard, too quickly the sellers get confused and need time to think about what you are offering. Most sellers need time to digest what you are offering them to be sure it is what they need or want.

   Several years ago I went to talk to some sellers from Chicago who flew to Florida to discuss selling me two houses they had in my area. In that particular case I was smart enough to spend nearly 5 hours talking to the old man who was in his mid-eighties about everything under the sun before we ever mentioned the houses I was there to buy. I needed to take the time to let the sellers get a chance to know me and believe that I have a stable life, a nice family, I pay my bills and I would pay them every month for their properties. You see I wanted the sellers to give me seller financing terms where I would pay them every month for the properties I was trying to buy. I have learned from experience don’t be too aggressive or push too hard if you want to structure a good deal.

Next month I have more and different things I have done to sabotage my wealth creation I don’t want you to have to experience.

Happy Investing

Larry