Episode 11- Negotiation

(upbeat music) Tom Panos, John McGraw, million dollar agent, back here again, John, how are you? - Good to meet you. I love the way you say that. It's got a beautiful ring to it. - I've always been told if you start strong, you'll finish trust. That's one of my banking idea for the next 15 minutes. - Good. Hope our listeners, I know where you are at the moment. Potentially you're driving along, but hopefully we're gonna give you a bit of information that's gonna help the next interaction you have with a buyer or seller or potential vendor negotiation. John, I love this term. I heard you say it four, five years ago at one of our real estate gyms where you said care, but don't care too much. - Care, but not that much, right? - Care, but not that much. What's happening? - Well, I'll just turn the background to it. The best book I ever read on the go-sciential is by a guy called Herb Cohen and funnily enough, one day he was in town. So I went and met him. He was doing a talk and I took him aside and I just told him that I'd read his book and I loved it. I said, "What is the one piece of information you can give me?" And I'm going back 25 years here. And he said, "John, care, but not that much." And I got it 'cause I read the book. But that was his one pearl of wisdom. And again, out of context, a lot of stuff we do, you and I explain it because what's important for us, Tom and for all our listeners is everything must be done in a context of integrity and positive intention. So that, care, but not that much doesn't mean to be arrogant. But it means in the negotiation, you give away your power if you're too needy. So if you're desperate for a deal or desperate for the offer to be accepted or desperate for the listing and people pick up on that, you've actually given away your power. So what you really need to do is, I think you use the word to touch yourself a little bit from it and you need to be less needy. And kind of look, you know, this would be great if it comes together. I was just talking to some of the other day, a real conversation and I just said, and this is the position we're in, we're looking at doing a deal together, which is good. And I said, the nice thing is, neither of us needs to do this deal. So I suspect that's a great thing for both of us because unless it's a win-win, it won't be sustainable and neither of us will do the deal. And that's actually a real scenario that I'm involved in at the moment. And that's how every negotiation we need to get to that point where, you know, the offer you've made, Tom, with respect of 800,000, it's not gonna tempt the vendor. Vendors at 850 firm. I think these are the reasons that 850 is a really great price. If this home at 850 doesn't suit you, I'm very happy to keep looking for another home for you at around 800,000. But this is not one that you're gonna secure for 800 and I don't want to mislead you. So why don't you just give me a call when you're ready, no hurry. And if you want to match the 850, we'll do business which would be great. So, and I just did that many role play. So people could hear the tonality. And then rather than saying, I look, I really think this is worth a bit more than 800 and, you know, you should pay more. And you get that almost needy energy. And people pick up and they say, no, no, 800's all I'm going for. Whereas when the people, when I say to them, you know, if not, we'll find your another home for 800 over the next few weeks. There's no problem. If this doesn't work for you at 850, I understand and respect that. And I'll just find you another one. And then they say, well, you mean another one. I want that. I say, my job is to tell you what you have to do to own the home, not to bid and potentially offend the vendor, you want to own it. Your family loves it, been looking for three months. I'm telling you that at 850, you'll own it. And at 850, I personally think it's fair market value. And here's why. - John, I must share a story with you that actually shows a very similar detachment. Sometime ago I was doing an auction. The reserve was one one. The owner actually was prepared to take a million. And they'd set a reserve of one one. But the medium was what they wanted to get. It got to 950. And the buyer stopped. The agent went over to the buyer. He basically gave him a verbal barrage of 150 reasons why he should buy this property, right? At the end of it, he was huffing and puffing. And you could tell he was, you know, the term you use need him. He was coming across desperate and need him. And the buyer just looked at him and said, no. I'm the highest. I went over to the agent. I said, listen, just relax, you know, relax he goes. It's OK for you, he goes, you're getting your $400, $500 auctioneers, get your money, you don't care. He goes, you know, I'd be working on this for four weeks. As I got up to pick up the board, I just went over to the buyers. And I said, guys, you know, all the best with it. That's it. We're out of here. I picked up the board, John. I put it in the car. And as I was about to drive off, close the door, the buyer waived to me. And I just waived back. And I thought, what's going on here? They called me over. They said, oh, what happens now? I said, well, I said that's it. They said, where are you going? I said, I'm going to my next auction. And they said, but we want to buy the property. And I said, yeah, well, you know, that's the number. It's got to be $1 million. And they said, so what you're saying, they won't even take $9.60. I said, no. They won't even take $9.70. I said, no. They said, so you're saying we're here. They won't even take $9.80. And in a matter of 30 seconds, John, by basically just telling people the truth, detached, not coming across desperate. In fact, looking like I'm in a hurry to get out of there, these people increased their own offer to $9.85 versus an agent begging them to pay. I think buyers can smell desperation a mile away. Can't they? Exactly, Tom, I say this to my team all the time. The negotiation is really about money. It's often about ego. And both sides want to be satisfied. They've got the best deal they can. Vendor says a million, but a million, one, or whatever is the number. But at the end of the day, if they are absolutely satisfied that the best offer has been extricated from the market, they will normally say yes. So it's your job to help them feel comfortable that you've extracted the best offer from the market. And again, with the buyer-- I mean, as you said, the buyer, look, they're not going to take $9.60. They're saying no to $9.70. At $9.80, they're going to keep owning the home. And that all of a sudden takes away their feeling they could have got better. So I think you're right. You handle that beautifully. It's clear, clean, without attachment. And that kind of attracts people to want to do that business. So it shouldn't-- it's certainly not arrogant. It's not blase. It's just not needy. So you've got to find that fine line. It's like a lot of things in life that I think success comes down to. You've got to find that fine line in the middle. If you go too much on the-- I don't care that much side, you'll sound like you're arrogant and you literally could care less, which is not what you want to hear. But if you're too desperate, it goes the other way. But somewhere in the middle, you're saying, look, I want to sell you this home. I think it's a fine home. I think at asking price, it's great value. If you want to pay that, that's great. If not, there's no problem in the world. I'm happy to find you're something else at a lower budget. But I'm just letting you know at anything under a million, this is not selling. And the way, the agent, John, responds to that first offer at a buyer, talking about a private treaty situation, or we're not talking about an option, but where you're handling an offer. The way an agent handles that first offer is pretty critical, isn't it, because it defines what's going to happen next. In many ways, I see sometimes an agent, they get an offer, and they give hope to that buyer. There's a chance. In many ways, they're educating and prefraining that buyer, hanging there. There is a chance we might get it. And that's not usually a good strategy, sir. Not all in a savvy negotiator on the other side of the table will pick up on that, and they will stand very firm. So if they say, Tom, I'd like you to offer 800. Often I'll say, could you tell me why you're offering 800? Well, I'd like you to offer 800. I understand that, but the asking price is 900, and at 900, you'll own it at 800, you won't. So why are we offering 800? Well, I'd like to start there. Well, he's my concern that if we start there, that's going to send the wrong signal to the client. We won't even get on the negotiation table. I've told him, and I grew it, and I think 900's fair market. I think we should be at 900. You want to secure the home, don't you? And again, it's a respectful conversation, but it's unearthing. And at least, it's letting them know that they're not going to snap a bargain out of this home. And some of them, to be fair, some of them will say, look, at 801, I can't afford anymore. So I'm happy for you to tell me they won't take 800, and you and I can look for another home. But in which case, then we look for another home. Well, you'd take the offer to the vendor, but it doesn't sound too hopeful at that point. But you're right, if you say, OK 800, all right, let me call you back and where you're going to be tonight. So your initial response to that offer says a lot to the buyer. And then they'll say to their partner or over there's buying with, hey, great, the agent's taking the offer, and they sounded enthusiastic. So all of a sudden, their expectation is they're in the game. Versed the way I handled it before, it's like, I've got to tell you, Tom, at 800, we're not even going to get on the negotiation table, let alone not going to own it. And the reality is, I've got six or seven people wanting to see this home over the next few days. Assuming that is the reality, never fabricate this stuff. And I don't want to ring you tomorrow and tell you that we exchanged a contract at 930 AM at 900. And then you spend the next six months regretting it. I'd rather just say to you now, I think we need to go in at full price and secure the home for you. So it's very important, I'm glad you started with this, because the initial response is critical. Your reaction, your body language. So body language is negotiation, isn't it, John? I mean-- Big part of it. Yeah, big part of it, your tonality. I mean, in Herb Cohen's book, I think he talks about flinching. when someone says 800 you sort of you pull back and 800 and then their response often will be well look I've got more I'm gonna pay more but I've got to start the ball rolling so I guess you know his concept of flinching you know which is quite a dramatic one but it is exactly what you and I've just said in the verbal sense it's a physical response to suggest to someone that that's way low that offer so you're in a sense if you're like using the word again conditioning them to have to pay more and want to pay more John you've employed thousands of agents over the years all over the place come and go and you see a lot of agents and I see agents what's your view isn't negotiation something that people are born with is it something that they can learn is it people got a predisposition to it everything in sales can be learned and there's probably some people that have a slightly better natural bent towards it but anyone in sales can learn negotiation and the stuff hopefully on our podcast these are kind of like mini lessons on how you can do things so if you take on board what we're saying around negotiation care but not that much shift your energy so you're in you're in that discussion so a light globe goes up says okay I'm in a negotiation now my initial response is going to be important my energy around not being too needy and being detached is going to be really important having it showing a preparedness to walk away from the deal actually attracts people towards the deal my desperation to have to do the deal pushes people back and make some stand on their price more so I think that's really critical a couple of little tips Tom I think there are you know I've said before about negotiation being as much about ego and saving face and believing you've got the best deal more than money occasionally money is a factor because you haven't got any more of it but at the end of the day most people got a bit more so how do you extract that out so giving people little winds so I'll often say to avenge or Tom I know these people haven't sold their home yet and I know you haven't found one yet the contract says six weeks what if I stood firm on price for you because I want to maximize your price but I offer them the opportunity to have a 12 week settlement could you make that work for you and then you might say John that doesn't worry us in the slightest in fact we'd probably prefer that so at least that's a small trade off or a win I can give the buyer yeah I can say look I've got some good news on price as I expected their price is firm and I think it should be I've recommended to them that I think it's worth every cent of their asking price however knowing you hadn't sold I have been able to get them to agree to an extended settlement so we're able to do that I mean I've seen negotiations one or last over dishwasher is being included yeah or not being included that's not a that's not a sensible logical reason to lose a deal that's an ego save face area so I think you've you've got the opportunity to do small trade-offs that give people a sensible having a win but protecting the price of the same token yeah well look as you're talking I'm actually thinking about my own personal behavior over the years in buying or selling items or services and I want to feel like I've had a win and I'm pretty certain that the other person on the other side many times has felt that they've had a win and I think that's what they mean by win with that actually both people have left thinking it's been good for me yeah yeah I think that's critical and especially if it's an ongoing relationship on negotiation you know you need both parties to feel that they've walked away being treated fairly and having got a fair deal and you've got to balance that with the fact that you're acting for a vendor or you need to maximize price so you know you need to tread that line but I think a buyer can maximize their offer and still feel they've been treated well and they've bought it at a fair price that's a matter of you making sure that your communication makes them understand where the value lies within this property yeah okay so we've been talking about negotiation and I think that 15 minutes does not do justice to actually a topic which is something that agents are doing all the time every minute of the day I mean that's really if you think about the job it isn't negotiation isn't it almost every every day you're negotiating I mean you know outside of work you're negotiating with your kids you're negotiating with your spouse it's around you know this is important stuff and don't try too many of these strategies on your spouse but you know the concept the the concept is somewhat similar that you know you do you need to have people feel like that one and that'll often move them forwards and sometimes a little inclusion in a real estate metaphor a little inclusion a little bit of extra settlement a little bit of end-of-finance all these sort of things are a pretty important okay so as we finish up you one of the things that's becoming very clear if you're a real estate agent you've got to understand you're not a messenger you're actually adding value you're not just transporting information from one person to another and just dumping it I mean you're influential you've got to be influencing it influencing that's a that's that's that's a great word to describe what a negotiator does he's influencing he's having an effect on an outcome by the way that he presents it and you're right on most most agents that I see that are not skilled negotiators and nothing more than messengers they're taking an offer from one to the other and then a counter off and the counter offer and your mates will just put the two together and swap email addresses and they'll find the deal anyway it's a matter of what energy and strategy and positioning can you bring to the deal as a master salesperson that helps the deal shift forward and maximizes the outcome to the vendor yeah John because it's such a sophisticated and deep subject I think we could branch out and have a number of podcasts throughout the year on negotiating with vendors negotiating with buyers negotiating at an auction I think there are so many strands over the weeks that we could do this year on negotiation so we'll be touching back on this subject again guys and girls thank you so much and we'll see you next week. Thanks Tom.