098: How to Negotiate a Real Estate Deal with J and Carol Scott

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J Scott is the first two-time guest on my podcast. In this episode, J and his wife Carol talk with me about the new book we just wrote on negotiating real estate: The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property. Today, we talk about the book, why J and Carol are so knowledgeable about negotiating (through experience and previous careers), and we cover many tips and advice on negotiating. Negotiating in real estate is critical if you want to get a great deal. Investors tell me all the time they would love to flip houses, but there are no deals in their area. I am in Colorado, which has seen one of the hottest real estate markets in the country over the last five years. I currently have 16 flips in progress, and I flipped almost 20 houses last year alone. Because I know how to negotiate, I was able to buy most of those flips from the MLS. And because they too know how to negotiate, J and Carol have done more than 200 real estate deals in hot markets where there are supposedly no deals. Our book tells you exactly how to negotiate to get those deals.

You can get a free chapter from the book here: http://www.negotiatingbook.com/investfourmore/

How do our backgrounds help J, Carol, and me negotiate better?

J Scott worked in the corporate world before he became a full-time real estate investor. Much of his work centered around corporate takeovers, mergers, and acquisitions. He also negotiated both licensing and selling tech-industry patents. I think J has more experience negotiating big deals than just about anyone I know. Carol worked in the corporate world as well but was involved in public relations, branding, marketing, and relationships. Carol can look at the people side of negotiating and determine how to get the other side on her side. I have no formal negotiation training myself, but I have been negotiating in the real estate world as an agent and investor for over 15 years. Having sold well over 1,000 houses as an agent and flipped over 120 houses myself, I have learned a few things.

Together I think we bring unique perspectives that can be combined to negotiate awesome deals on houses.

Why this book will help you negotiate everything better

This book is not all about getting a better deal on houses. We (well, mostly J) dive into the techniques used by good negotiators. There are some very simple things anyone can do to become a better negotiator. I learned a lot about the mindset of a solid negotiator from what J wrote in this book. And as Carol says in this interview, she negotiates everything! Here are some of the things a good negotiator will do:

  • Learn as much as they can about who they are negotiating with
  • Figure out if the person they are negotiating with is a people person or a number person
  • Find non-money-related motivating factors for the person they are working with
  • Bring as much information as they can about the deal on the first visit
  • Listen to the other person to see what they really want while not assuming they want the same thing as you

We go into many more details in the book, but these techniques can be used to negotiate anything. They can also be used to negotiate a much better deal when buying houses.

What is the best way to negotiate with a house seller?

When negotiating, a lot of people try to "win." They want to get the very best deal possible and make the other side give up as much as possible. After all the lower the price, the better deal you get, right? All three of us agree this is the wrong approach to use when negotiating real estate or almost anything. You do not want the other side to feel like they lost the negotiation; you want them to feel good. You want both sides to feel like winners, especially if you want to do a lot of deals. If, during the negotiation, you beat up the other side, you will almost certainly drive them away from doing business with you again. It could also make them talk bad about you to other people in the industry. If you are a real estate agent, they could even sue you or file a complaint.

If you make the other side feel good about the deal, they'll want to work with you again. When you are buying houses, you are often dealing with the same people over and over again. You negotiate with real estate agents, lenders, title companies, and sellers who own many properties. The more friends you make, the more deals you'll earn. I have real estate agents from other offices bringing me deals now because they love to work with me. I get the first shot at many wholesale deals because the wholesaler loves to work with me. You need to negotiate for the long-term in regard to your business, not just make a few hundred bucks on one deal.

What are the biggest mistakes we see people make when negotiating?

It is easy to make mistakes when you are just starting out—or even when you have been in the business for years. I still make mistakes, but I learn from every mistake I make. Here are some of the most common mistakes J, Carol, and I see:

  • Being unprepared: There is an old saying when negotiating. "Whoever has the most information wins." When you first meet a seller or you first make an offer, the more information you have, the better off you will be. Learn as much as you can about the seller, the house, the neighborhood, values, and anything else that could affect value.
  • Not building trust: When you deal with houses either on the MLS or via off-market deals, you must build trust. Many sellers just want someone to talk to. A simple call or email to a listing agent before you make an offer will make a huge difference in how the seller responds to your offer. When you talk to people, listen to them and what they say!
  • You cannot treat everyone the same: There are some people who want to talk for hours about their life, while others don't want to talk at all. Being a good negotiator involves treating people how they want to be treated. If someone wants to talk, listen to them. If someone does not want to talk, shut up.
How can you get a free chapter from the book?

You can find the Kindle version of the book and paperback version on Amazon here. If you want to read a free chapter, you can get one on the website we created for the book here: http://www.negotiatingbook.com/investfourmore/

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