The Fatal Flaw in “Winning” Deals
Years ago, I spent several months backpacking around Guatemala. As my Spanish improved, I enjoyed going to markets to bargain for Mayan souvenirs or fresh fruit. My goal was to pay the same price as a local.
I was having fun playing this little game until my new Australian friend witnessed me in action, bargaining for a beautiful hammock. As I was walking away because the vendor wouldn’t lower her price a little more, my friend said, “You realize that you are getting all worked up over what is about 10 cents. At home, you would pay 50 times that much for a hammock like that, so this is a great deal.”
I suddenly felt a bit silly. But it helped me learn an important lesson that I try to remember when doing real estate deals.
As soon as your negotiation becomes about winning, it becomes emotional… and good judgment goes out the window. If you’re not rational, you are much more likely to enter a bad deal for the wrong reasons. And you’re quite likely to miss out on a good one.
I was trying to win by “buying at the same price as a local,” just like many people negotiating real estate deals try to win by selling at the absolute highest price or buying at the absolute lowest price.
Instead, figure out what would be a good deal for you before you enter the negotiation. If, for example, a house is listed for $325,000, anything under $300,000 might work for you. So if you can negotiate the price of that house down to, say, $295,000, consider it done. Don’t feel that you have to try to force the seller to take just a little bit less. Leave the emotion, specifically the desire to be a “big winner” in every deal, out of it.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.]
Good to remember that emotion is not a friend when negotiating. Thanks for the reminder.