Overview:
Closed April 2, 2020
This deal entailed an interesting negotiation. To begin with, the seller was really concerned with me. He didn’t know me and was not comfortable with me at the beginning. I overcame this by being a little vulnerable with him, telling him a little about my personal life, that I am in the military, etc. It took about 30 minutes talking to him to ease off his edge. This first 30 minutes was all rapport building, and is, in my opinion, the most important part when talking to a seller. They don’t know you or trust you at first, so you have to break that adversarial barrier between the two of you and earn their trust. In other words, you need to make them like you. There are a lot of strategies you can use to accomplish this, but my favorite is to just be myself. Joke around a little if it is a warranted, smile, listen intently to their concerns, talk to them like you know and trust them and like you care about what they have to say. In turn, I think in turn it is reciprocated back. Initially we talked about everything under the sun except for the house – which was an important part. This let him know I cared about him and his interests, no just getting the deal.
We finally got to speaking of terms. It was apparent that he was firm on his price. This was a 2000sqft house on 10 acres and had good value. But he had also mentioned that the house had more sentimental value to him now than financial value. All of he and his wife’s belongings were still in the house, left when they evacuated due to Hurricane Michael. They had family items and collectibles that meant a great deal to them. I saw this as an opportunity to capture the sentimental value for him while achieving the monetary value for me and the team I wholesaled the house with. I offered to gather up the belongings from the house that he identified to me, put them in my truck, and transport them to my team’s warehouse to store until he had the chance to pick them up (he lived out of state). This gesture allowed us to get the house for $30k less than he originally wanted for the house, because the exchange of value was enough to him. He also had others interested in the house, but they had missed what had mattered most to him. The result was that we got a good deal, they got their items that would have otherwise been trashed, and we closed the deal during covid when things seemed really uncertain.
The Numbers:
Purchase Price: $70k
Wholesale Price: $100k
My Wholesale Fee: $3,340 (I split with the other members)
Lessons Learned:
- Find other ways to capture value in a deal. What matters most to the other side is not always money. If you listen and ask the right questions you just might find what is referred to as the Black Swan, the key piece of information that changes the trajectory of a negotiation, and be able to leverage it to find an otherwise unseen solution that provides a win-win for both sides.
- The seller is not an adversary. They are not someone who you should be trying to squeeze every penny out of. Think of them as a partner working towards the same destination, both of you just have different ways of getting there. Let them know you will be with them along the journey and be there to help.
- Sharing deal profits can be a good thing. This deal originally fell out of contract because a buyer backed out in March as covid-19 first kicked off. But because my wholesale group networks, talks and collaborates with other wholesale groups and people in the industry, they found another wholesale group who brought a buyer from their buyer’s list and we were able to still get the deal done and make a healthy profit on the deal.