We buy ugly houses. We buy pretty houses. We buy mediocre houses. Frankly, I do not care how sexy a house is. The nuts and bolts of a real estate deal are not that complicated– buy low and sell high. The execution of this adage is a bit more difficult because to buy low, one must have a cooperative foil. William Ury identifies five obstacles to cooperative negotiation that should be overcome (or broken through) for effective negotiation in his classic book “Getting Past No.” Here are a few gems he penned for you to be aware of which can help you to buy low.
1. Your Reaction: Your emotional reaction to the thoughts, feelings, and actions expressed by the other side
2. Their Emotion: The emotional disposition of the other side, which can be driven by fear, anger, and zero-sum thinking
3. Their Position: The other side’s expression of and insistence upon what they want to get from the negotiation (not why they want it)
4. Their Dissatisfaction: The other side’s view of your options for agreement, which may cause them to lose face
5. Their Power: The other side perspective on the power they possess in the negotiation, which may affect their willingness to act cooperatively
The five ideas of Breakthrough Negotiation, which allow the negotiator to overcome the aforementioned obstacles include:
1. Don’t react, go to the balcony. By “going to the balcony,” you distance your emotional reaction from your negotiation engagement and avoid the common reactions of “striking back, giving in, or breaking off.”
2. Don’t argue, step aside. This involves trying to understand the problem or opportunity being negotiated from the other side’s perspective.
3. Don’t reject, reframe. Ury’s third suggestion involves reframing the other side’s tactics and communication from positional to interested-focused. A concerted and sustained effort to reframe the foil’s view point from adversarial to collaborative will assist the negotiation.
4. Don’t push, build a golden bridge. The best way to deal with a negotiator reluctant to accept a proposal that is not their own is to involve them in the process of crafting a proposal they can accept. Spend time trying to understand their perspective and reasoning of the issues, and ensure you have considered their basic needs for recognition, identity, and security.
5. Don’t escalate, educate. Educate the other side to see that agreement is in their best interest.
Applying these principles in real estate negotiation is invaluable and can help you save thousands of dollars in each transaction which over time mounts. If you can get someone to agree to sell you their home in your efforts to buy houses at a discount your ability to negotiate is key.