Negotiation—whether in real estate or life in general—is all about creating agreement. But often times, when we share our ideas with another person (like the Seller of a piece of real estate), they don’t accept our ideas, and we fail to get agreement. But there’s one idea that a Seller will ALWAYS accept: the one they came up with! In this episode, Jeff discusses the power of helping others come to the conclusions you want them to, so that you can reach more agreement in your Seller negotiations.
It doesn’t matter if it’s you or me, or a seller or your spouse or your neighbor. There’s one type of idea that all human beings like the most, it’s just human nature, totally universal, one type of idea that people like the most. And when we understand this idea, and we really keep it in our conscious thought, and we really try to put it to work, then we can make great things happen, much more significant negotiations happen, and lots of other good stuff. So in this episode, we’re going to talk about that. So let’s keep the themes on we’re gonna jump right into this Welcome to racking up rentals, a show about how regular people, those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting We Buy Houses signs are just looking for, quote, motivated sellers to make lowball offers to. You see, we are people oriented deal makers, we sit down directly with sellers to work out Win Win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from a thoughtful real estate entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you, join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio. Thank you for joining me for another episode of racking up rentals. This is Episode 116. So that means a magic formula for the show notes would be thoughtful ar e comm slash e 116. Please do us a big favor by hitting the subscribe button in your podcast app. It helps us reach more people who are looking for this show just like you found. And we appreciate that very much onward with today’s episode. And I want to start by just telling you a quick story. Now this story is probably Gosh, at least 10 years old. And in my previous life as an entrepreneur before I was a full time real estate entrepreneur and was just a part timer at that time, I owned a marketing agency. And I had met a guy who was seasoned in his particular area of marketing, and we hit it off. And we agreed that he was going to over the course of several months, kind of join our team as an actual co owner of the business. So he would start working there. And then we kind of ramp our way into that. Well, it was getting pretty close to the end of that six months or so when we were going to have to sort of consummate that. And I was regretting my decision to be honest with you. And he and I were on a road trip to meet a client a few hours away. And I was feeling upset about my decision. And it was on my sleeve I’m not particularly good at nor do I try to like hide, you know, my emotion so he could tell something was wrong. And he actually said in the car is like Jeff, when you get quiet, I get concerned like what’s what’s going on. And I knew in that moment, I was gonna have to somehow have this conversation with him. And I didn’t know exactly how it was going to work. Fortunately, my instincts kicked in. And also fortunately, at that exact time, I had been taking a class from the Dale Carnegie Institute. So Dale Carnegie is the classic author who wrote How to Win Friends and Influence People and a few other things. But that’s sort of his seminal work. And some of the lessons I had been learning in that class started to kick in naturally. And so my conversation with him was something along these lines, I started to say, you know, I’m I’m just feeling concerned that you are not going to have the freedom and flexibility you want. In this role, I can see these great ambitions for entrepreneurial stuff and directions you want to go and Strategic Services you want to provide to our clients. And I see though that like this this role, it might you might be doing things that are a little more menial kind of below your pay grade. And I’m just concerned for you that this thing that we’ve been working towards is going to hold you back. So let me just pause right there. So without being really prescriptive in the whole thing. I was able to improvise in that moment and I did what this episode is about. I started planting a seed that allowed him to come to the conclusion. I wanted him to come to and and over the course of the next hour or so having this conversation. He ultimately started saying things to me at the end of the drive like You know, now that we’re talking about, I’m really I’m concerned that maybe I shouldn’t be joining the team full time, maybe I just need to go out and start my own company. And of course, I was thinking to myself, Oh my gosh, oh my gosh, this is exactly what I wanted him to think. But I didn’t want to come right out and say that I wanted this to look like it was his idea to him. And so he said, Yeah, you know, I just, I think I’m gonna have to leave and go start my own business. And I said, well, man, I hate to see that happen. But I can understand what you’re saying. And, you know, I’ll respect whatever decision you make. And sure enough, he left our company and when started his own business, and that taught me such an important lesson in real life that I had been learning in this Dale Carnegie class, which is simply this. The idea that people like the most is the one that they come up with, when it’s their idea. they own it, when it’s their idea, they protect it, they defend it, and they advocate for it. But it has to be their idea. So the whole game kind of becomes saying, How can we get the idea that we want them to have to feel like they’ve come to that on their own conclusions of their own volition. And now it’s their idea. Now, let me just pause here and just say, Before we continue, I know that there may be people listening cynics who would say, Well, I think the word for that Jeff is manipulation, are you being manipulative, and I would say that these are tools, and tools can be used for good or for evil. Now, if you were to use these tools to railroad people into coming to conclusions that were not really in their best interest, but just were in our best interests, that would be the wrong thing to do. But this is the reality of day to day life living in our society is that we have to be creating agreement with people all the time. And that’s really what negotiation is. And whether we’re talking about, you know, buying a piece of real estate, we’re talking about the solving a problem with, you know, returning a can of beans to the grocery store, or we’re talking about, you know, what we should have for dinner with our spouse, it’s all negotiation, we have to create agreement. And this is one of the most powerful tools that we can have for creating agreements. So My take is that it’s manipulation. And it’s bad if you’re using it against people to harm them, and they don’t know it, versus when you are actually using it for everybody’s best interest. But you’re using it with a tremendous level of relational savvy to get accomplished what you want, and that you still know is a positive for everybody. So let me just translate this into real estate, right, in the case of real estate, negotiations with sellers are basically often what we want to do is simply to help the seller come to their own conclusions. But that conclusion is the one that we want to come to. And this could happen multiple times in any negotiation, right can happen about multiple different little subtopics. Within the whole, you know, conversation over time, it could be lots of different things. So in order to do this, though, in order to help somebody else, whether it’s a seller or anybody else, come to their own conclusion, what we have to do is we have to be asking questions, because thoughtful questions are like breadcrumbs. If I ask you a series of thoughtful questions, it’s like I put a bunch of pavers in front of you and said, here’s some stepping stones, please walk in the direction that I want you to walk and you will end up at the destination I want you to end up at. So in order to ask questions. And that means we have to be listening, we have to be aware of our seller, we have to be picking up on their clues and then asking them natural follow up questions that lead their thought process, like a series of breadcrumbs in the direction we want them to go. So how is this different than what most buyers do? Well, I’d say it’s about 180 degrees from what most Real Estate Buyers do. Most Real Estate Buyers just kind of come charging into a conversation, blabbing about what they want, and talking. So talking is different than asking questions, right? So they’re talking at the seller, they’re talking at the seller about what they want, what they think is reasonable, what they think is fair, they come in very, very focused on what they want, and how they can get it. But here is the amazing and magical part of this. You can often get what it is you want, not by telling the other party what it is you want, but instead by leading them to come to this conclusion, and this set of ideas themselves. Let me give you a quick simple example from one of our clients. In the deals program, this client is negotiating to purchase a triplex. And of course the client has got a due diligence contingency for inspections and they’re conducting their inspections. And they discover that according to the local records, this triplex is actually not a triplex, it’s actually a duplex. There is a third unit there physically, but it was not permitted, it was not allowed. And it’s non conforming, you might say, to the zoning and what’s really supposed to be there. And so what that means is that starts to create problems. For things like lending, it can even create problems for things like insurance, because an insurance company is not usually excited about insuring, you know, for three units when it’s really showing B two there. But this really started to cause a problem with this client’s purchase financing, they were going to be getting a loan from an outside party, and this party says, whoo, well, we understand that it’s a triplex technically, but it’s really only duplex. So we’re going to have to value this as if it were a duplex. And then our, you know, LTV thresholds are 80%. LTV or whatever will now be applied to the value of a duplex, not the value of a triplex, which is really screwing up the whole financing picture and would mean, of course, that this client would have to bring a lot more money down in order to buy this property. And it really just screws up the whole thing. And then they would have to be worried that Gosh, if in the worst case scenario event that there were a fire or something in this building were destroyed, they’d only be able to build back and even have the money from the insurance for two units instead of three. So it caused a problem. So this client came to me and said, here’s the problem. And right away very, very, very much to their credit, I was so happy to hear this. They said so I think Jeff, this is an opportunity to pivot this conversation towards seller financing. And I said, Yeah, absolutely. This is a great little lever to move in that direction. And then they said, so how do I start having that conversation? I said, Well, you know what I think we should hold back. I think instead of going to them with the solution of seller financing, which they kind of know is what you wanted all along. And eventually you agree to something else. But instead of going to them and saying, Hey, we have found these problems that are screwing up financing. I think we need to go to seller financing. Instead of doing that, what if we were to take a strategy that helped them come to that conclusion? Instead, right? Because if we go to them and say, well, we found these problems, that means we’re gonna better talk about seller financing, again, it almost looks premeditated, it almost looks scripted, like you were looking for problems that you could present back to them to strong arm them back in the direction of what you wanted. So I said, Let’s, let’s take a different tact. Instead of going back to this seller, and in this case, there was an agent. So instead of going back to the seller and their agent and saying we’ve encountered a problem, and we have a solution, let’s just go back and say we’ve encountered a problem, and let’s drop some breadcrumbs that lead them to the conclusion themselves. That may be seller financing. Makes sense, right? So this client goes back to the sellers agent, and says, gosh, so we’ve discovered this challenge. And we really love this property, we still really want to move forward, but it’s causing some some problems. We’ve got this outside lender now. You know, there’s an appraisal, the appraisal isn’t coming in, right? Because we’re only really appraising it as if it were two units instead of three. It’s messed up the loan and how we really like it, we want to move forward, but it just doesn’t look like we can. And I know you want to get your price. And we’re frankly, we’re even happy to still to pay your price. But it’s looking like the lending is going to prevent that from happening. So you state this problem and not the solution. And let them kind of quickly and easily come to the conclusion that well. Wouldn’t it be nice if we could still get our price, the buyer wants to pair price. But what we have to do is avoid the need for an appraisal, avoid the need for a bank. So one plus one equals two, right? That means maybe we should be the ones providing the loan. So the seller comes back and says Well, I’ve got an idea. Why don’t we just provide the loan you can give us your down payment and then you can make payments to us over time. And the client immediately texted me and says oh my gosh, oh my gosh. You know it’s working and now they’re in the middle of negotiating the seller financing terms of this PR Yes, and this loan, but it was because they let the seller come to their own conclusion that this was the best way for the seller to get what the seller wanted, which is to sell this property at the price. They want to sell it. Now, if they had just come charging in and said, Well, you know, this is what we want is here’s the rational reasons why should work, the seller would not have that same level of ownership over the idea. And they may have actually even actively resisted the idea because it wasn’t theirs. So this is my takeaway for you today. And I acknowledge, this isn’t something you just listen to a single podcast go, oh, I’ve got it, and then go out and start doing it perfectly. This takes practice. So I actually would encourage you to find ways in your normal, everyday life. To practice this. You know, next time you’re talking to anybody really about anything, you’ve got an idea that you want somebody else to accept, maybe it’s a spouse, a friend, someone you’re going to take a trip with somebody around the office, whatever, just stop and actually just maybe even if you’re like me and get out a notepad and say, What are my quick three talking points, what are the things I can say that will actually lead them to their own thought process to come up with the conclusion that we want them to come up with because at the end of the day, the idea that any human being likes the most is the one that they came up with, and they will feel a sense of ownership around. That is it for today’s episode of racking up rental so again, show notes are at thoughtful ar e comm slash e 116. Please do as a big favor by hitting that subscribe button in your podcast app and take a second to rate and review the show. I see all of those personally and I so am grateful for those. Did you know that we have a Facebook group for us trees thoughtful real estate entrepreneurs as well? We do it’s called rental portfolio wealth builders and we would love to have you join us over there just go to group dot thoughtful ar e COMM And you’ll be redirected right there. If you liked this episode, please take a screenshot of it and post it to Instagram. tag us we’re at thoughtful real estate. I’ll see in the next episode. Until then, this is Jeff from the thoughtful real estate entrepreneur signing off. Thanks for listening to racking up rentals where we build long term wealth by being a win win deal makers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.