Prepare Like a Pro Athlete for Real Estate Negotiations

Have you ever listened to professional football announcers like John Madden? They're always talking about players they admire having great "skill sets," the ones that help them win games for their teams. Well, as a real estate investor, you have to bring a great "skill set" to the negotiation table in order to win your game.

Below are some basic negotiating skills that you need to acquire or sharpen in order to complete great deals.

Skill 1: Know Your Stuff! By this, I mean that you should know everything possible about the property, the market, the buyer/seller, etc. before you ever sit down to negotiate. Professional sports teams employ scouts to find out as much as possible to determine the strengths and weaknesses of the competition. In other words, they're looking for complete information in order to operate from a position of strength. You don't have the luxury of hiring scouts, but you can become a scout yourself. So, prepare yourself by researching deals carefully and thoroughly before you ever enter into negotiations. All of that research will help you build Skill 2 below.

Skill 2: Bring Facts to the Negotiating Process. Buyer, sellers, realtors—they can all get very creative with asking and selling prices, rehab costs, etc. After all, that's their job—to get the best price possible. Of course, these figures are often inflated and have absolutely nothing to do with the actual real estate market prices. To bring a dose of reality to the negotiations, have the latest market information handy. Then, when an unreasonable offer is made, simply put that information on the table and politely but firmly let the other parties know that their offer is unreasonable given current market conditions. This act lets everyone know that you're a professional and it's time to get down to the real business of negotiation, instead of wasting time on frivolous offers.

Skill 3: Determine Seller/Buyer Motivations. Often, it's very easy to determine the motivations of buyers and sellers. Sellers may have a hard time making payments and need to get out from under the mortgage. Buyers may be looking for the lowest price possible. In some cases, motivations are more complex. But whatever the motivations are, it's to your advantage to find out what they are before negotiations so you operate from a position of strength. After all, you're in the business of meeting customer needs in a reasonable way. If you know those needs ahead of time and work hard to satisfy them (in a profitable manner), then you can create the classic "win-win" situation, and everyone walks away from the negotiation table happy.

Skill 4: Develop Patience and Objectivity. Your heart should never rule your head in negotiations! So, no matter how attractive a deal may appear at first glance, don't rush headlong into it. Keep a cool head and analyze the offer as objectively as possible. It should make good financial sense. Rely on the research you've already done and use it as a measure of the quality of the deal. If you rely on cold facts instead of a hot head, you'll have many successful transactions.

Skill 5: Think Long-Term, Not Short Term. Earlier, I mentioned that you should work to create the classic "win-win" situation. I want to re-emphasize that point here. Why? Because happy buyers, sellers and realtors come back for more deals! It's as simple as that. Also, they spread the good word about you, and that brings in more customers.

In the truest sense, it's an investment in your future. So, work to establish your reputation as a fair and honest negotiator. It's not only the right thing to do, but it pays off in great personal and financial dividends. At all costs, avoid unreasonable hardball tactics that create enemies. If you adopt this approach, your real estate career will either be short or not as profitable as you want it to be because few people will want to work with you.

Key Points:

- Research every deal thoroughly before you enter into negotiations.

- Negotiate real estate investment deals with your head, not your heart.