A lot of people don’t realize it, but when you negotiate to purchase real estate, like it or not, you’re actually being a salesperson. What?! How can that be? Salespeople are pushy, slimy people with their own interests at heart, aren’t they?
It seems many people have a real aversion to ‘sales’, maybe from a bad experience with a pushy used car salesperson or an aggressive telemarketer. I had the same aversion for years, but as an investor, I had to get over it. And despite my new thinking about sales, I still work to push past my own natural tendency, which is to be a bit introverted (unlike many professional sales people who are extroverted).
Everyone Is Born A Salesperson
The fact is, everybody is a born salesperson. Just look at children… they are CONSTANTLY trying to sell their parents on:
- Staying up late
- Having one more cookie
- Having a friend over
- Staying up ‘just 5 more minutes’
- And more
Somewhere between childhood and adulthood, people get a bad mental picture about sales and that side of them shuts down… or so they think. Let me ask you this…
- Have you ever had a job interview? If so, you were selling yourself.
- Have you ever dated anyone? If so, you had to sell yourself to get a ‘yes’
- Did you ever propose to someone? Same as for dating
The only difference between selling yourself and what most people consider ‘selling’ is the exchange of money. But it’s really not that big of a leap if you think about it.
- Did you ever ask your parents for money, maybe in exchange for extra chores?
- Have you ever borrowed money from someone?
- Have you ever asked a friend to buy you a drink?
In all these cases, you had to sell yourself to receive the money or something that money could buy.
Sales Skills In Real Estate
If you’re going to invest in real estate, you have to learn to make offers and negotiate. That is exactly what salespeople do, and when the other person has objections (really questions in disguise), your job is to answer those questions as clearly as possible, and convince them to accept.
- Did you place an offer on property and receive a counter offer? If so, you’re negotiating and you’re selling your offer
- Have you ever tried to raise private money? (e.g. RRSP funds or joint venture capital) If so, you have to sell your offer and convince the other person that your deal is a good one.
- Have you ever called your bank to get a lower rate on your mortgage renewal? If so, you are negotiating again
- Have you ever asked for a discount on your legal fees, property management fees, accounting fees and others? If so, you’re negotiating and selling
Sales and negotiating go hand-in-hand with real estate investing, whether you decide to work directly with home sellers or through realtors. That’s because it’s a ‘people’ business and any time you’re dealing with people, you’ll have to sell yourself and negotiate. It’s just the way the world works.
One Simple Question
Years ago, I learned a great question to ask sellers that is worth a lot of money if used correctly. It’s a very low-key sales approach, but one that is VERY effective. The first time I used it, the seller dropped his priced by $10,000 – just because I asked one simple question.
Memorize this question and the next time you’re talking to a seller, watch how quickly you can make money just by opening your mouth. Here it is…
What’s the lowest price you could take?
Simple, isn’t it? But you’d be surprised how effective it can be, especially if the seller is motivated. The real key to this question is to ask it and then close your mouth, even if the silence is uncomfortable. You’ll find the seller will eventually say something, just to fill the void – and they’ll usually drop the price.
You can try this with a realtor, but keep in mind they are legally obligated to have the seller’s best interests in mind, which means a high sale price. However, I have asked it before and sometimes the realtor will give you their opinion on what they think the seller will take… they’re not supposed to, but occasionally they do.
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Get Out Of Your Comfort Zone
There are many other sales and negotiating techniques that can make you a lot of money in real estate, but they all require talking to people. If that sounds scary to you, you could invest in REITs or something similar, where you can just deal with your computer and avoid people altogether.
But I recommend that maybe you should consider trying to push yourself out of your comfort zone…
- Go to an investor club meeting
- Take an investor out to lunch to learn from them
- Talk to realtors and ask them about their listings
- Call a FSBO (for sale by owner) and ask them about their house (and try asking that question above – you’ll be surprised what you hear)
If you do these things, I promise you that you’ll learn more about yourself than any book could teach you, you’ll have fun talking with people, and maybe you’ll actually begin to enjoy sales and negotiating. But the best part is, you’ll discover that these new-found skills will allow you to get what you want on your next real estate deal, and you’ll make more money at the same time.