Knowledge is power. This is one of the most important concepts in negotiating, as shown by the fact that this phrase was originally coined centuries ago by Sir Francis Bacon. For example, your client wants to buy this house, and the price seems good. If you knew that the seller had just received a notice from the mortgage lender beginning the foreclosure process, would that affect your offer? Isn’t that an easy question? Intuitively, you know knowledge is power.
Internet Equals Information
We are in the Internet age. This means you have a golden opportunity to find out as much about the property and the person as you can before you start negotiating. Google is a great tool, but so are MySpace, Facebook, LinkedIn, Twitter, ActiveRain, Diggit, BlogSpot, Friendster, Bebo, VillageMaker, Word Press and other social media. Find out if anyone involved in your negotiations has a blog, as you can get a feel for what is important to them by reading their entries.
If you are dealing with younger people, look at YouTube to see if they have any videos. I had an offer on a property in California, and I wanted to know more about the buyer, so I Googled his name. When I found out that preservation of open space was important to him, I emphasized how the house he was interested in purchasing was surrounded by a nature preserve that is bigger than Central Park in New York. This greatly improved the quality of this buyer’s offers.
To learn about the property look to similar Internet sources and public records. In most states, the tax records will tell you when the property was purchased and for what amount. If you know your way around, you can look up the loans on the property; the covenants, conditions, and restrictions; as well as possible liens. Use every bit of information you can to help your proposal succeed.
You need to get the formal disclosures to find out what is revealed about the property. But, there is an even better substitute for the required disclosure: just chat. I work in Raleigh, North Carolina and outside of Los Angeles, California. The stereotype is that Southern women like to talk. Most of them do. You will be surprised how much Southern men also like to talk. In fact, real estate agents everywhere tend to be chatty. So, call the real estate agent for the seller or buyer, and talk.
Start with something personal about the real estate agent or yourself, just to be cordial. Then, once you are telling each other friendly stories, go on to the property and the client. If you are good at this exchange, you can give the other party only what you want them to know and they will feel like they have inside information. If you are not, you will find that everything you said “can and will be used against you,” unless you have a collaborative negotiation where both sides are sharing information that is useful in putting a deal together.
You Need to Know the Real Estate
Not only do you have to know about the property, you have to know the real estate market, in detail. Not just the market in general, but the portion of the market that the property is in. For example, in Cary, North Carolina, if you have a property under $200,000, it is a raging seller’s market. If the property is in Wake Forest, North Carolina and over $500,000 it is a raging buyers market. So, the offers you make in the affordable part of Cary are dramatically different than the offers you make in the luxury part of Wake Forest.
You have to know what the media has been saying about the market, because it affects the beliefs of the people involved in the sale. The media only has time to give a sound bite of information, so they condense an idea into one phrase. For 2008, the phrase is “buyer’s market” and the lead story is foreclosures, so they apply it to the entire United States.
That notion makes about as much sense as one weather report for the whole nation e.g. giving the average or median weather for the entire United States. What would you think of a weather reporter who took the feed from the national NBC station and said “the weather today, February 6, across the entire country is 42 degrees, partly cloudy, with a three mile an hour breeze from the south east?” If you averaged all the data, that is what you would get. That report would be stupid for Palos Verdes, California, where the temperature was 73, sunny and calm, and equally dumb for Raleigh, North Carolina, where it is 34, raining with a ten mile an hour wind from the south.
All weather is extremely local, reported with high definition radar that can distinguish individual road intersections. All real estate is extremely local, but reported in short sound bites averaged for the entire nation. Yet, buyers, sellers, and their well meaning friends try to apply what they have learned from the news media, which has to have a major entertainment component to their report. Do not fault the media, they provide information and entertainment. If you are a real estate agent, you need to know the image that the media has presented so that you can be more of a guide to your clients than the media and their well meaning friends.
You Need to Know the People
You have to know the personality type of the people involved. There are dozens of psychological treatises that have divided people up into different personality types. Chose one and learn it, as it will help you predict the way the people involved in the negotiations will behave. If I have a reluctant CPA for a buyer, I make offers dramatically different than if I have a gregarious politician.
You need to know the motivation of the people involved. Sellers facing imminent financial ruin are different from sellers retiring at their convenience. Buyers who have to get out of Extended Stay America with their four children and three dogs are different from buyers who might think about moving to your city, or several others, some day in the future.
You need to know the ability of the other agent involved in the sale. An agent working on a first sale needs to be treated differently than a twenty year veteran. The kind of discussions and offers that you can have with the one are dramatically different than what you can have with the other.
How Do You Improve Your Power?
Margaret Thatcher explained the perception of power perfectly when she said “Power is like being a lady . . . if you have to tell people you are, you aren’t.” In real estate negotiating, the perception of knowledge and ability creates the image of power. To develop that power, click here to join the Real Estate Negotiating Institute where you can learn much more about being powerful in real estate negotiating. My book Create A Great Deal, The Art of Real Estate Negotiating will discuss how to prepare for negotiations and what kind of knowledge to gather when it is published in the Spring. If you would like to pre-order it, click here . Just knowing what is in the book will make you more powerful.