041 | The Art of the Deal: Negotiation Secrets to Create Massive Value

0:00:02 – Patrick
Welcome back to the Vital Strategies Podcast. I’m your host, patrick Lonergan, and in today’s episode we’re diving into the art of negotiation. I love negotiating deals. We’ve developed a framework for how to negotiate. Over two decades of negotiating real estate and business transactions, we’ll break down how to craft powerful offers, ask the right questions and use subtle strategies to secure the best deals. Stay to the end, where I share tips on how to apply these techniques to get better outcomes in any negotiation. I don’t know of a more powerful tool to create tremendous equity in such a short amount of time than utilizing these techniques. These negotiation strategies are going to work best when getting face-to-face with a seller of a business or property that you’re looking to buy. Generally, we do this by seeking off-market opportunities, so there isn’t a broker in the way of me sitting down with the seller and working out a deal directly. These concepts are also designed to negotiate owner-financed opportunities. The reason we like that is there’s less risk in an owner-financed deal versus working with a bank. They can also be harder to, but much more lucrative when you put one together. These strategies will also work if you’re getting traditional financing, but I’d be working much harder to get a low price as a trade offer, showing up with a cash offer.

Let’s dive into the art of negotiating everything from your next house. I’m excited about today’s topic. We are going to talk about how to negotiate great deals. We’ve got a framework that we’ve used. We’ve bought over $100 million worth of real estate, we’ve negotiated business deals and the framework that we’ve developed is one of the most powerful things you can use. I don’t know where else in the business world you can create hundreds of thousands of dollars in equity in short order just using some of the strategies in the framework that we’ve developed. I’m excited to get into this today. Get your pencil out, pen paper, take some notes. This is going to be a great podcast that will make you tons of money in the future.

We talk about this as our what we’ll call the offer system. There’s really four main parts to it and I’m going to walk through those parts high level, and then we’re going to get into the details here. The first two parts are pretty straightforward. The first is just building rapport. People like doing business with people that they like, so we should find opportunities to just ask questions about news, weather, sports type stuff and then find common ground and really build some relationship before you dig into the nitty gritty of the financial details of the deal that you’re working on. That’s the first step is just build rapport, make a friend be personable, that’s good.

And then the next thing we want to build into this discussion is what I’ll call agreement, and this can happen in lots of different places in the negotiation. You can do it up front, you can do it in the middle, but it really goes like this the agreement is look, I’m not okay with a. Maybe I have to find a way to meet your needs. I’m excited about this opportunity, but I also have to make a profit. And if I can’t make a profit, I’m going to tell you yes or no upfront. I’m not going to give you sort of this maybe I’ll get back to you thing where we sort of don’t know where we stand and I just ask for the same courtesy in return. Is that okay? And then you get them to say yes, because nobody doesn’t say yes to that. They’re like, yeah, sure, that sounds totally reasonable. And what that does is allows you to later on come back and sort of hold people accountable to that. Well, I have to think about it thing, because really, what people are saying when they have to think about it is no. So we’ll talk through that. We think about this. Our process so far is we’re building rapport.

Then, when it comes time to really start working on, I’ll call the negotiation piece. What we’re going to do is spend a lot of time working on motivation before we ever get to any of the financial data, and oftentimes people will skip this. They will jump straight to the finance numbers and they miss out on a fantastic opportunity. Because if you work on people’s motivation first, the numbers will get much, much better. Here’s what this looks like.

There’s really four steps to working on the motivation piece. First, they need to feel the pain that this deal in front of them is causing them. If it’s a piece of real estate, if they don’t have some motivation for why they’re selling it, it’s going to be really, really hard to put together a good deal. Same thing if it’s a business If they don’t have some motivation to get out of this business again, they’re going to be a very reluctant seller. You want to play the role of the reluctant buyer, but they’re going to be a reluctant seller. It’s hard to put together a really good deal if you’re working with a reluctant seller. First is we have to have them feel the pain of staying in the deal that they currently are in, and then we need to find out what the seller’s real needs are. We need to find out what they need out of this transaction to move forward with their lives. Then the third step of the motivation piece is eliminating their other options. Have them explain to you why all of their other options are no good. Then the fourth piece is begin to formulate solutions that you can offer the seller. The first step have them feel the pain that the deal is causing them. Second, find out what their real needs are. Third, eliminate their options. And fourth, really start to formulate solutions, and we’ll talk about how we do that in greater detail.

Here’s how I like to start off this whole discussion, and even if I’ve sort of cold called somebody, we’re building rapport. When we get there, one of the questions I like to ask is what were you hoping I could do for you here today? And you just be quiet. You just listen to where they’re going to start, because they’re going to be like, hey, I need to get out of this thing. They’re going to start revealing some of the pain points through this and we’re going to ask a lot of why? Questions. Well, help me understand why that’s important to you, and one thing that I just did there is you may have noticed how my tone changed I want to be the reluctant buyer that is, I’ll say, kind of dumb. You know, dumb gets paid. Smart gets the ego boost. I’m okay giving away the ego boost to the seller and I’ll take the money and I’ll take a little hit to the ego. We want to be a little bit confused when we’re talking through some of these things. Be a little slow. Have them explain things to us Like that’s not problematic at all in this discussion. Now, there’s going to be times where we’re going to want to show the fact that we’ve got some authority and credibility, but it’s not during this motivation step. Here’s a good example of how to formulate some of these questions.

And when we think about a negotiation, what happens is we often see two people pushing against each other in the negotiation. The thing that I want to think about as the buyer is I want to let the seller push me into a spot that I want to be in and I’m going to use language. It’s called negative phrasing and here’s an example of that. The good thing is it’s not a problem that blank, and you want to make sure that you look a little unsure. So the good thing is is it’s not a problem that it takes, and you want to make sure that you look a little unsure. So the good thing is is it’s not a problem that it takes another six months to sell your business. They’re going to come back and go. No, that’s absolutely a problem. I am tired of running this thing. I need to get out of it. The market’s turning down. My wife is over it. She wants to move to the beach. We got to get out of here and it’s like, oh well, help me understand that. I guess, what about selling it sooner than six months allows you to do that, and they really start to help you unpack all of their motivation for why they would want to get out of this deal.

I just used a business example, so I’m going to use a real estate example. If somebody owns a rental property I’m there looking at it I would say something along the lines of the good thing is is it’s not a problem if you keep it as a rental? I’m sure you’ll enjoy working with the tenants. I used to send out letters to landlords evicting tenants so I knew they weren’t enjoying working with the tenants and the seller would say something like I hate dealing with the tenants, they don’t pay me, they trash the place, I do not want to keep this as a rental. And now you would think at that point it’s clear why they don’t want to keep this deal. But if you’re really going to be expert level, you have to sort of keep going with this. So I would follow up confused. I guess I’m sure it won’t be a problem if the realtor takes another six or nine months to sell the property and they’re like no, I can’t wait that long, I need to sell my house in the next 30, 60 days.

I like to just keep asking those follow-up questions, a little bit confused, why it matters if they list it with a realtor, and this gets to eliminating some of the options that I was talking about. In a business scenario we can do something along the lines of, I guess have you thought about listing it with a broker? Yeah, no, I’ve been listing it with a broker and it’s taken six months and they don’t have any serious buyers. Have you thought about trying to sell it yourself, reaching out to other business owners in your area and they’re like no, I don’t have the time or energy to do that. I like to just ask some of those questions and then really follow up with confusion and make them explain to me why those options won’t work. If we think about somebody selling some property, they can rent it, they can sell it, they can find a management company. But I have them tell me all of the reasons why they don’t want to do those things.

The goal is to have me standing here as the only option left in this example, and I really like to understand the seller’s timeframe. I want it to be as compressed as possible, because time pressure makes them be a very motivated seller and I wanna be a reluctant buyer and it can give me an opportunity to put a great deal together. Here’s how we get to some of the timeline opportunities. We need to know the seller’s timeframe, so what we do is we go really long with that. So when are you looking to have this deal closed? Next six or 12 months, maybe longer? When would you ideally like to have it handled? And they’ll usually come back to say something like no, it has to be this month or the next 30 days. I’m moving to X, y, z and I need to get this deal done. I need to get it handled before I move on to that. So that’s sort of some key language. You go really long and let them tell you why it needs to get shorter Again.

Here’s some key points. Really like to move on the motivation, find the pain points and if we can spend as much time as possible there having them explain, you show up with some confusion. I guess I don’t understand why that would be a problem if you didn’t sell it for the next six or 12 months and just have them explain those things to you. That just works out really well. So motivation first. Then we start working through, try to problem solve with them. Why don’t you list it with a broker? Why don’t you sell it yourself? Why don’t you find somebody else to run the company or manage the rental property? And they’re going to tell you all the reasons why those don’t work and you’re going to again be a little confused and have them explain to you in detail why all of those options won’t work. Then, finally, we’re going to get to the timeline and ask so ideally, when would you like to have this handled Six months, nine months Longer. What are your thoughts on when you’d like to see this handled? And they’ll come back to you with their real timeline on why they would like to get it done sooner versus later.

One thing I’d like to also talk about the reluctant buyer, especially when you’re coming to close, if there’s paperwork on the table, there’s opportunity to sign the deal. There’s two chairs, there’s the reluctant chair and there’s the eager chair. You want to be the first person to jump into the reluctant chair. You want to start what if-ing the other person to death. It gets them excited about closing this deal before you get cold feet and back out. An example of that would be hey, I noticed that the roof looks a little old. Is that going to start leaking on me in the middle of the next rainstorm? How long it’s been since that’s been replaced? And then they will be like, yeah, no, no, no, it’s fine and they’ll be in a hurry to sign the deal.

It’s always interesting to see that Same thing with financials. Like, hey, I noticed this thing on the financials. It seems like your expenses were going up year over year and revenue wasn’t. Is that going to be a problem. You can just find opportunities. It might be insurance that’s like, hey, this insurance cost seems to be escalating. Is that going to be a problem? Has there been a bunch of claims that we’re unaware of that we need to be looking into? And I’m like no, no, no, it’s fine and they’re going to be excited to sign the deal.

We want to hop into the reluctant buyer mode as quickly as we can. When we get into that phase, when we’re getting ready to sign the deal, we want to work on big ideas and work our way down to the specifics. It’s just a fantastic way to just keep moving the deal towards a close. And don’t forget dumb gets paid. Let them take all of the ego. You can take all of the money. Through rapport. We build in the agreement where we’re going to make it a win-win scenario, where we’re going to meet their needs and we need to make a profit, and then we move on to motivation. So now, after motivation, we’re going to get all of the financial details. After they’ve made it very clear that they are ready to sell the property or ready to sell the business, we’re going to start working through the financial detail.

I don’t like proposing numbers. There’s a saying whoever names the number first loses. We like to let the seller name the number. To start, here’s a few books that I think are fantastic for negotiation. First is Never Split the Deal by Chris Voss. Getting to yes is a classic negotiation book. And then I think one everybody should read and understand is Influence, the Psychology of Persuasion. Again, that’s Influence, the Psychology of Persuasion by Dr Robert Cialdini. Those are all great books that will give you tips and tricks on how to negotiate great deals. The more you can become a student of these things, the better. Now let’s get the financial details. Let’s work through how we’re going to negotiate some of these.

When we’re talking about the purchase price, I like to use a series of questions. There’s three R’s that I think work beautifully. So I’m going to start off and just ask what were you asking for the business? What were you asking for the property? That’s sort of the first question. This is where the three R’s start to come in. The first R is realistic what did you realistically expect to get? I ask them first what were you asking for the business? And then my second question is what did you realistically expect to get? Because there’s always like the list price and then there’s the realistic price. You’ll be shocked at how that number comes down just automatically. Next is, after they give me the realistic number, I apply a range to it. That’s the next R is range. Let’s say they were asking for 5 million for the business. They thought they would get four and a half. I would say something along the lines of and I’d be nodding my head, all of my nonverbal would be in the affirmative so you realistically did expect to get between four and four and a half million dollars.

Now, if they don’t argue against that 4 million, oftentimes what we see happen is they’ll say something to the effect of I could never take four. 4.2 is absolutely as low as I could go. It’s like 4.2. So I’m anchoring that number in. I just went from $5 million asking. I asked realistically, we went down to four and a half and now I applied the range and we’re at 4.2. So the last R, if we’re talking about real estate, is going to be the real estate agent, or if it’s a business, we’re going to substitute the broker in there. For the B, the R will turn into a B, but let’s use our $4.2 million number.

So if a real estate agent came with a buyer that was qualified, ready to go to close this thing at 4.2, and you had to pay the 6% commission, you’d probably tell them no, wouldn’t you? And again, I’m using that negative phrasing language to let them push me to the direction I want to go. I want them to say no, I wouldn’t tell them to go away. Absolutely, I’d take that offer. So it’s like, okay, now I’m going to work really slow on this math just to make sure that hopefully they can help me along in the process. Okay, so 6% of 4.2 million, 6% of a million, is 60,000 times four is and again, I’m gonna let those pauses sit in there. It’s totally okay to let pauses sit in, especially when I’m asking questions about price. Let them jump in and talk. So, okay, 60,000 times four, it’s 240,000.

So you really did expect to get about $4 million take home after everything’s said and done. And again they might push against that, they might say there’s no way I could really do 4.1. Now what you’ve done is in a very soft way. You’ve worked on the price that you’re willing to pay, or what they’re willing to accept, in a way that isn’t showing up with the baseball bat where you’re just hitting them over the head saying here’s my offer of 3 million and they’re like I can’t take 3 million and it’s like fine, 3.1. And it’s a soft way to move the price down. And you can see in this example that we negotiated down 20% off the purchase price, which is pretty solid. So now we’ve sort of worked our way down on the price side of things.

Now we’re going to start asking some questions about some of the financial details. So what do you owe against the business? What do you owe against the business? What do you owe on the property and, roughly, what’s your payment on that? Is that like a 30-year fixed or 10-year balloon? Five-year balloon? What kind of term do you have? Is it adjustable rate? So the goal with all of those things is to start to understand the terms that the seller currently has so you can start to structure a deal that would work really well to get them what they need and you can still make a profit.

I generally like to get a piece of paper, be able to write some of these things down so we can have a record and sort of work through some of these pieces. Once I know all of those pieces, I like to start off by moving to the fourth step with what’s called a trial balloon. The trial balloon is a beautiful piece of negotiating strategy, and what a trial balloon allows us to do is test the waters. The way we’re going to phrase this is in a way that is going to allow us to let the balloon go, and if the seller grabs the balloon, they’ve committed themselves, but we haven’t committed ourselves to anything. And if they hate the idea, it’s okay, you’ll see how this works. So here’s a great example of how to use a trial balloon.

I don’t even know if I can do this. Okay, so I’m qualifying it with. I don’t even know if I can do this. My partner might kill me, but what if I were to? So that’s where the trial balloon happens.

I don’t know if I can do this, but what if I were to? So that’s where the trial balloon happens. I don’t know if I can do this, but what if I were able to cover your payments and cash you out sometime down the road? That’s something we should even talk about, or? You probably hate that idea. Again, we’re using some negative phrasing there and the opportunity is for them to come back and go. No, I hate that idea. That sounds terrible. And you’re like, yeah, that’s what I thought. But if they don’t hate that idea, they’re like well, help me understand how that would work. And really I just go back and rephrase what I said Well, we would just cover your payments and then cash you out sometime down the road. Help me understand what about. That would even work for you. And they might say something to the effect of like well, hey, you know that timeframe I was talking about that would allow us to get, could move on to whatever thing we have next that they were motivated to move to.

So here’s another powerful price that I think is really good. This is where that agreement comes in, and they’re like I just need you to write me a check for the full amount. And here’s how we handle that. If I were to hand you a cashier’s check for full price, you’d probably take it, wouldn’t you? You just wait and they go yeah, of course. And then you say, obviously, as an investor, I can’t do that. It has to work for me too. I have to be able to make a profit and meet your needs.

What if I were to fill in the blank? This is where the trial balloon comes in again. We can create a creative solution. What if I were to pay you X number of dollars upfront, take over your payments and cash you out sometime down the road? Is that anything we should even talk about? And if they say, yeah, no, we should talk about it. Now we need to follow up with a great question that says what about that would even work for you? Because what’s happening is they’re cementing in their mind why this idea you just proposed is a good idea and they’re communicating out loud as to why it would work for you. And then, after they say that, what I do is I repeat back to them so what you’re telling me you’d like me to do is cover your payments for we’ll figure out how long, but then cash you out sometime down the road. Is that right? And they’re like, yes, that’s what I want you to do. And I just keep reaffirming, asking them what you want me to do is and I’m using some of this language to really work on the psychological aspect of this whole engagement Okay, here’s another really powerful set of language that can help on the timeframe.

So I love owner finance deals, whether it’s a business, whether it’s real estate, I want the owner to finance as much of the thing as possible. If I don’t have to go to a bank, that is wonderful and it gives me tons of flexibility on how I structure the deal. So I’ve already said what if I were to make you payments for a period of time and cash you out sometime down the road? And they’ve agreed to that and that sounds good. Now their follow-up question is going to be well, how long were you thinking before I get cashed out? And I think this language is just fantastic, typically super powerful because it creates social proof.

Typically, we go a medium term. Medium is again putting a label to something that says there’s longer terms and there’s shorter terms, but typically we go a medium term of six to eight years. Sometimes sellers want us to go longer. Would you want to go for a medium term or do you want us to go longer than that? And every time I’ve skipped this piece of the discussion, the seller shortens the timeframe to like 12 months, where, when I put this piece in now, I let them negotiate back to like five years. They can feel good about that win and they might say something of the longest I could go is five years.

This is where a pause can be great, like if you just sit there and don’t say anything, they might just start negotiating against themselves. Well, I don’t know, maybe I could do six. My wife would kill me. Seven’s absolutely the longest I could go. That’s one way. Another is to be surprised Like wow, really, you could only go five years. Then again just shut up and see what they say. I like to go back and sort of reconfirm hmm, I don’t even know if I can do that. What about me? Covering your payments for the next five or six years would even work for you. And you see how I built the range back in there.

I like to stretch that out and see what they’re willing to accept. And then they just start telling me all the reasons why this would work, all the reasons why this would work. And then what we do is we just keep negotiating the rest of the major points. So we’ve got price, we’ve got term, we’ve got payment, and if they shoot down any of your trial balloons, that’s okay. You just send up another one until you get all the points that you were looking to negotiate done. At the end, we wrap up and we say something to the effect of so what you want me to do is make you a payment of X number of dollars a month and then cash you out of your equity down the road. Can you tell me again why that is even a fit for you? And again, they’re just cementing one more time as to why that is good.

I typically like to have a piece of paper out. I’m writing all of this down and I’m like so what you’re telling me is you want me to, and I just put the key term so I cover your payment, cash you out sometime down the road. I’m trying to give them as little down payment as possible. I’m never bringing up down payment. They might bring it up, but again, I’m a reluctant buyer. I’m talking about all of the opportunities we’re looking at. We’ve eliminated all of their options. I’m like gosh, if I were to give you $100,000 down on this deal, we might be able to buy two or three other deals with the same amount of money. So I don’t even know if we can do that. So the reluctant buyer piece is really good. And just a side note, my wife hates that I use these things on her when we’re talking about things like where we’re going for dinner. I’ll say things like you’re probably going to hate this idea. But what if we were to fill in the blanks? She’s like I don’t need your trial balloons. I’m like okay. So that’s really the framework that we’re looking at when we’re negotiating the deal.

And to finish up our discussion on negotiation, I just want to go through some common objections that you might hear. One of the first ones is what is your program? How do you do this? It’s a subtle objection, but really trying to get you to give them an offer Like what can you pay me? I like to take it away for a second and say I guess I don’t have a program. My program is to meet with property owners and figure out what they’re trying to do. And if I can make a conservative profit when I buy the property or buy the business, then that’s what I’m trying to do. Do I need a fancy program to buy your business or buy your property? And they they’re going to be like no, no, no. And what you’re telling them is you’re going to listen to their needs, you’re going to find out what they need and you’re going to figure out if you can meet those. And again, this might be a good spot to introduce this agreement that you’re coming up with Like, hey, the only way I can do this is if I can buy this and make a profit and meet your needs. If I can’t do that, it’s going to be a no from my end, and if I can do that, it’d be a yes, and I just ask for the same courtesy in return. Does that sound fair? And they’re going to say, yeah, that sounds great.

The next is the attorney objection. I am not opposed to having people have their attorney look at the paperwork. They should absolutely do that. You should do the same thing. But one thing that can happen is it can kill your deal. If they’re like I need to go talk to my attorney first and I’m like first thing I want to do is validate the seller’s choice in having their attorney check things out. Like absolutely, I totally understand that and I think that makes a ton of sense. I also need to do my due diligence and check on the property values, or due diligence on the financials, to make sure that I’ve got a clear picture of everything going on and that all just is diligent. But here’s what your attorney is going to say they’re going to be really upset that you’re allowing me to cover your payments over a period of time, or allowing me to make you payments over a period of time and cashing you out sometime down the road If you want to spend five, 600 bucks. They’re probably going to freak out and throw the paperwork across the room and be like hey, you can’t do this deal, I’ll just save you the money and we can just cancel it right now. But what we could do is we could just put some language in there that says hey, you can cancel this deal in the next two weeks. If you review with your attorney and they say don’t like the deal, is that okay? If we just put some language like that in there and they’ll be like, yeah, no, that sounds good. So you’ve already planted in their mind that their attorney’s not going to be throwing the paperwork, like that’s not going to happen, but any reaction less than that is going to be like oh, this is what he said would happen. You sort of want to preface that on the front end and just make sure that you’re given the ability to go review, but it’s not going to kill the deal.

The next thing is like seller wants a large down payment. Again, I want to invest the least amount of money possible because it just limits my risk and makes the upside tremendous. So there’s a couple of different ways to handle that. I like to use some of the same strategies that we’ve been looking at before. I like to let them name the number first. So how much do you reasonably expect to get for a down payment? They might say something like oh, I like 10% down. I don’t like percentages because they’re generally pretty big numbers. So here’s some language you can use. I understand you need to get a healthy chunk of money up front to make sure you feel secure in the deal. But if I were to give you $200,000, 10% down on this, I might be able to go buy three or four other businesses or four or five other properties with those same dollars.

Again, I want you to feel secure in the deal, but I need to be fair to you and also fair to myself. I mean, what do you realistically expect to get for down payment? Then I’m going to use the same strategy I did on this price. They’re going to come back with a different number. I’m going to apply a range to it. Let’s say they say $10,000. So you realistically did expect to get $5,000 or $10,000 down. They might say no, I couldn’t do five, eight’s, as low as I could go. Okay. So really, seven to 8,000, we’re really testing the lower limits of that range just to see where they’re at.

It’s again another opportunity to work on making the financial aspect of the deal work for you and the seller have a lot of confidence. So some common objections is the attorney and a large upfront payment. Then there’s obviously what kind of program do you have? We don’t have a program outside of just meeting with owners and figuring out if we can meet their needs and make a conservative profit. Again, I like that language conservative profit. I need to make a profit. I’m not trying to make a killing, that’s a conservative profit. I need to make a profit. I’m not trying to make a killing, that’s a conservative profit.

And now, in an ideal scenario, I would love to have the document right there with me. Have them sign an LOI, have them sign a purchase agreement. It’s going to have some opportunities for me to get out of the deal, but they’re committing themselves mentally to it and even if I don’t love the way the deal is structured upfront, I like them checking off that this property is sold and it can give me some flexibility to come back and renegotiate later if I find things that just don’t work for the deal. So I like to try to get commitment from the seller so they are mentally checking it off in their mind that this deal is done and ideally we’re signing something that outlines that I will have my computer with a DocuSign ready to go if I need to and we can just ship that out and get it signed sort of there on the spot.

And again, I’m building in contingencies. That’s another thing. I don’t love having 15 contingencies in a deal. You just need one good contingency. Here’s maybe the best contingency on the planet. If I give somebody consideration, consideration’s a dollar figure that makes the contract like binding. I can pull out a dollar, a 20, a hundred and be like hey, don’t spend all this in one spot. Then in my agreement it can say if I default, you can keep all the money that I’ve given you as liquidated damages. They get to keep my $20 bill. Or I can have a due diligence period or I can have an inspection contingency or something along those lines. Financing I don’t need a ton of contingencies baked in, I just need one really good one. So that’s the negotiation framework. Here’s a quick review of everything we’ve got going on Build rapport.

People like doing business with people. They like Make a friend, be personable. Second, you need to build in there the agreement somewhere that says look, I’m going to do everything in my power to meet your needs, but I also need to make a profit. I’m going to give you a yes or no at the end of today and I just ask for the same courtesy in return. Is that fair? They’re gonna go yep, that sounds good.

Then we work on the motivation. The step should probably take you somewhere between 30 and 60 minutes. You should spend a lot of time there. That’s where the deal’s going to come together is on the motivation side. When they’ve expressed to you why this is a problem, you’ve helped them eliminate all of their other options, like selling it with a broker, selling it on their own, finding somebody else to take over and manage the business or the property. They’re going to say, no, none of these things work. I have to sell this thing. Then you start working on timeframe and you generally go pretty long on the timeframe and let them bring it back to you. Then we start working on the financial numbers. We don’t move to the financial numbers until we get the motivation step done.

Then we’re going to start with price. We’re not going to beat them up, we’re going to use the three R’s realistically range. And then the realtor if it’s a real estate deal, broker, if it’s a business transaction. And through this whole process we want to be very kinesthetic in our mannerisms, we want to be a little slow, we want to have them help us along. There’s going to be times where we’re going to use our authority talk about the number of transactions we’ve done, how. Going to be times where we’re going to use our authority, talk about the number of transactions we’ve done, how good our current business is going, that type of thing. But it’s okay to slow down and be a little slow in some of these pieces. And then we’re going to work through payment Never want to give them upfront payment if I don’t have to and term and the way we’re going to manage the term is typically we go a medium term and we stretch that out as far as we can. And then we let them negotiate back.

And here’s something powerful to think about too in a negotiation, there always needs to be some friction. Even if you’re getting a great deal, you need to be pushing against the seller and they have to feel like they’re winning in some of these things. If they feel like you’re just giving in on things like, yeah, six to eight years eight years sounds fine you know like there needs to be some friction. Now you’re creating some friction on the price side, for sure, but you definitely want to find some opportunities to make sure that you’re pushing against some of the things they’re wanting and letting them sort of have some of those things that are maybe less important to you and you lean in harder on some of the things that are important, like great payment terms over a long period of time. And then ways I like to get the deal done is it’s amazing what happens if they don’t sign the deal.

Mentally, they leave and they convince themselves all of the reasons why it was a good idea not to sign right then and there. And even if you get commitment from them that your attorney is going to draft the documents and get it sent over, or you can put together just a quick LOI on your computer with a Word document or iPad or something along those lines, those things are all legitimate and work well, and it just outlines here’s what we’ve agreed to and there’s something powerful about the seller committing to that. When they commit to it after they leave, they’re convincing themselves all of the reasons why that was a great idea. Versus, if they don’t commit, then they’re convincing themselves all the reason why it was a great idea not to commit. So we like to get commitment to the deal before we leave. It just has a ton of value. That’s the framework for negotiating great deals. We’ve gone through this a number of times with clients.

I love to be involved in negotiations. It’s kind of fun to coach some clients along the way on some of these things. The more you do it, the better you get. So you should take every opportunity whether it’s negotiating upgrade at a hotel, vehicles you’re trying to purchase, whatever like find opportunities to work on some of these things. Again, I mentioned the flinch in the past, but when somebody comes back, if you flinch like wow really, and you just shut up, that’s amazing how people will start negotiating against themselves. These are awfully powerful tools. Please use them for the good. You can use some of these influence things for the negative and take advantage of people, but really I encourage you to put together win-win deals so you can continue to grow your business, create tremendous wealth so you can live a great life. I don’t know any better way to create a ton of equity than having some tremendous negotiating skills. It can create hundreds of thousands of dollars in an hour. It might be the highest leverage. Use of time on the planet is great negotiation skills. Some key resources to check out Never Split the Difference by Chris Voss, getting the yes and Influence. The Psychology or Persuasion by Robert Cialdini are great books for how to negotiate fantastic opportunities.

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