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ASTON INCORPORATED
Episode 16- Mastering the Art of Negotiation: Real Estate Deals and Relationship Dynamics with Chris Voss
Ever wondered what it takes to transform a tense negotiation into a triumphant agreement? Our latest episode features Chris Voss, former FBI negotiator and acclaimed author of "Never Split the Difference," who joins Wayne and me in an eye-opening discussion on mastering this essential skill. We delve into the real-world applications of negotiation, from sealing the deal in high-stakes real estate to ensuring harmony in our personal lives, all while maintaining integrity and steering clear of manipulation.
As the conversation unfolds, we peel back the layers of negotiation within business and real estate, unearthing the delicate balance between winning and losing. I open up about some hard-earned lessons from failed negotiations and the importance of equal contribution in partnerships. We also tackle why I choose to take the lead during real estate discussions, even with an agent by my side, and how active listening can be your secret weapon in aligning with a seller's aspirations to achieve outcomes that benefit all.
The episode wraps up with a deep dive into the nuances of negotiating value, where we recount tales from our arsenal of experiences. We discuss the finesse required to walk away from overpriced deals, the leverage in the flexibility of terms, and the untapped potential of building lasting business relationships through 'negotiating with love.' The insights shared by Chris, Wayne, and myself are not just theoretical musings but proven tactics that have shaped our professional journeys and can profoundly influence yours.
Welcome back, guys. It's Wayne Aston here, with Aston Incorporated. I'm your host, and in studio with me today is Dallin Aston, my co-host. How you feeling today? My man Feeling amazing Good good. Today we're thinking we probably ought to get into the big, wide world of negotiations.
Speaker 2:Oh yeah.
Speaker 1:Since we're talking real estate and we're talking businesses and relationships and negotiations is one of those big topics that tends to blend into everything that we talk about in one way shape or form. The more I have contemplated this dropping this episode, the more ideas have come to mind different books, different actual negotiations that are going on right now or negotiations that have gone on as we've bought and sold properties, negotiated partnerships and business splits and rev share and like all of it, do you want to drop some knee jerk kind of ideas to kick things off for us?
Speaker 2:Sure, yeah. Well, the first thing that comes to my brain is and I'm sure this is kind of where this is you're going to touch on this, but never split the difference. I know we've both read that. Oh yeah, that's probably where this is coming from, but Chris Voss. Yeah, man, I'll tell you that book Negotiation gold there. You know, our most recent episode, we talked about how. What book was it we were talking about?
Speaker 1:Obstacles yeah.
Speaker 2:Obstacles of the way we said that changed our life. But, man, this one changed my life. I'm telling you, if we're going to be dropping book names in here, you ought to give it a read if you haven't read it, because this one was super powerful and I actually read this one as I was setting up my first, the deal.
Speaker 1:My first deal yeah. First investment property acquisition yeah.
Speaker 2:Yeah, I read that book during while that was happening and it ended up going really nicely and in no way shape or form, in my opinion, is being a successful negotiator. It's not manipulating or taking advantage of the other party, it's being strategic with how you approach the negotiation, Absolutely. I mean there are tactics that can make it really good and we'll talk about that. But man, that book is powerful. I just to kind of elaborate on that. I think of one scene, if you will, from the book where he goes in the car dealership with 30 grand and he's going to buy his new truck, the red, that red orange.
Speaker 1:I think it was a Toyota Tacoma or something. I can't remember what it was, but yeah, he goes in there and it was what?
Speaker 2:it was like 40 grand or something like that. Yeah, he was like hey, I've got 30 bucks, 30 grand cash. Yeah, I'll buy it right now. And they're like what? They go back Let me talk to the manager goes back, comes out and is like you're in luck, I can do 36 and he says and I hate car negotiations, man, that is the worst walking to a car dealership.
Speaker 2:Well, and it's funny because you have that perspective of man I hate the car dealerships, that you know that pressure, the negotiation, all that stuff. But he says, well, how do you expect me to do that?
Speaker 1:That's one of the key. That's one of the key tactics. How am I supposed to do?
Speaker 2:that. Well, how am I supposed to do that? And I have 30? Grand and the guy's like okay, give me two seconds, he comes back. And he comes back, and he's, and he, he comes back. He's like, okay, we can do 34. And he's like I don't know, like I can just go down the street and I'm sure they'll give me one. And he's like, oh, wait, wait, wait. And he goes back and comes back and he gives him a note the same thing.
Speaker 1:Yeah, written on paper with a smile.
Speaker 2:He slides him a note and he opens it and says you win 32. And he's like this is amazing. Thank you so much this is like my dream car. I love this, but I don't, I can't do it. He gets them down eight grand or whatever the number was. And he's like I still can't, I can't. I love this.
Speaker 1:Thank you so much, but I'll just go down the street and he's like no, the guy runs back and gives it to him for 30.
Speaker 2:How crazy is that he walks away with what he wanted. Like that that is the power of what we're talking about with this book. I mean, that is insane. That's obviously an extreme example.
Speaker 1:Oh yeah but, and it takes some brass knuckle like nerve man to to sit and do that Because it's so uncomfortable.
Speaker 2:When I read that I was just laughing. I was like is this real? Did this actually happen?
Speaker 1:That's hilarious.
Speaker 1:And I've tested that with car, because you know we we've traded some cars in the last few years and I've read that book a few times and I've tested that in the dealership. And there's some dealerships like especially the used car dealerships, because I don't like to buy a brand new car, I like to buy one that's only got a, you know, 15 to 30,000 miles, lightly used, nearly new. But you know I don't like to take that big hit of the brand new thing. Right, okay, and we're talking about daily drivers, guys, not Lamborghinis.
Speaker 2:So yeah, I'm just talking about getting a good value.
Speaker 1:So, so the used car dealerships? Man, they're ruthless but, there are some car dealerships now and they've been more open about this in recent conversations, like in the last year, about how they're changing their tactics. They're getting away from this high pressure sales tactic because it's so commonly like disregarded, like it's so commonly like hated by everyone. Right, they just you don't even want to walk on the lot because they're hunting you on the stocking you out on that lot.
Speaker 2:You can't even look at a car without them stalking you.
Speaker 1:So the one of the one of the first things I'd have everyone consider Is that and this actually goes back to one of the recent episodes the perspective determines action, and when we're in a negotiation with someone in any of these categories, we've got to consider the circumstances and what their mind state is.
Speaker 1:So you know, if someone's amygdala is firing off and they're triggered and they're angry or scared or something like that, the likelihood we're going to speak to them logically and have a logical outcome is super low. You just you have to know that if they're triggered and the amygdala is firing, then it's not a rational conversation, it's a different situation, and so can we, can we focus on the negotiation and avoiding them being triggered? That's one major consideration. But then the other consideration is is keeping in mind that it's not always about driving the best bargain, Like it's not about cutting someone's throat in a negotiation and getting squeezing every drop of blood out of the turnip. That, to me, is archaic and it's not loving and it's not the way things typically need to be. I mean, it's not my favorite way of doing it. There are power negotiators that are good at that, but that's not how I negotiate.
Speaker 2:That's all I'm saying. It makes me think of and I'd be curious to get your thoughts on this, but in Never Split the Difference he talks about how, in a hostage negotiation, he's getting these guys to make to feel comfortable with prison.
Speaker 1:Yes, yes.
Speaker 2:And they come out and they're like, oh my gosh, this is the path, and it's like you're going to prison.
Speaker 1:That's right. How do you?
Speaker 2:you know, he's negotiated them into a scenario where prison feels like the best option for them. That's insane.
Speaker 1:So that's so. Let's talk about that one, because that's maybe the most extreme and super relevant piece of the whole negotiation thing If it's on the one side of the spectrum. If we're talking about hostage negotiation, why did Chris Voss name the book Never Split the Difference? Well, because if there's six people that are hostages, it's a failing negotiation. If, yeah, let's just meet in the middle here and you keep six and we'll take six or three and three. Three die and we get three back. That's a total failure.
Speaker 1:So in a hostage negotiation, the only way to win that negotiation is with all of the hostages being released. So it's a very black and white outcome and in business and in real estate and in relationships, I've never experienced anything with that black and white. Where it has to go that way, there always feels like there can be some give and take. And I'm not advocating that let's meet in the middle by any means here, because I think if I identify myself on the spectrum, I definitely fall closer to Chris Voss. I've never split the difference on the spectrum. I fall closer to that extreme on the spectrum but I'm not.
Speaker 1:I've lost so many negotiations because I haven't been aware and I just haven't known how to deal with this, and so I've gotten the short end of the stick more than not Okay. So again, the School of Hard Knox has spent my teacher over 27 years and losing lots of negotiations. Some of the worst failures have come down to having partnerships with people who are takers and not producers, who come in and negotiate this big split and I say, yeah, we're getting along really great right now, let's be partners. And then six months a year in they just sit on their ass all day long, or on their farm or wherever they are, and they do nothing. And so now resentment builds up and all kinds of problems come from that. So like, let's bring it back into the hostage, negotiation and the mindset. So one of my prevailing, one of my guiding philosophies in negotiation is I'm literally trying to get a win-win. That doesn't mean we're meeting in the middle, but I want all parties in a negotiation to feel like they're winning.
Speaker 1:And to your point. When Chris Voss brings up the terrorist who's comfortable going to prison, well, he's feeling like he's winning because he's not getting shot to death, because that's one of the options, and he's not being tortured, and there's probably a handful of other possibilities in all of this. But negotiating a guy in a hostage situation who's filled with anxiety and fear, totally triggered the whole time, to be able to talk them down to that, means you're giving concessions. You're making concessions. So, as we're making concessions in here with the intent to get what we want and also give terrorists what he wants, which is life, because freedom's now not on the table, we've got to have them feel comfortable with us. We have to establish a relationship of trust. There's some authenticity in that, and Chris Voss talks a lot about integrity and the negotiation.
Speaker 1:If he's negotiating terms with someone, with a terrorist, and they're making promises about doing something they better do, I mean they are committed to making those things happen.
Speaker 1:And if they don't, they acknowledge how badly that negotiation can turn, and quickly. So when you're dealing with life and death negotiations and like with the hostages, you can't afford to not be an integrity. You could get everyone killed. If you say, yeah, we're gonna have a helicopter waiting here and there'll be no one out there and we'll have your money and you make all those big commitments and then you don't do that, boom, everybody dies, and the FBI in many instances. Chris in the book talks about FBI failing in their negotiations, where everybody dies. So the FBI and law enforcement officials have also learned through the School of Hard Knocks what works, what doesn't work, and their negotiation tactics have changed dramatically over the years.
Speaker 1:And I like that, because I like that integrity gets to be one of the pillars of a successful negotiation, because I like to perform, I like to show someone what I can do. Talk's cheap, but if I can show you here's what we're doing and then I do it, it makes the person I'm negotiating with see that we're not just talking. They can see that we have the power to execute something. We have the authority to make those commitments in the first place, cause we've just come through. And so these are some ideas I'm just throwing out there for consideration.
Speaker 1:Okay, so let's talk about real estate negotiations here specifically, cause I think, if a lot of our listeners are probably thinking about going out and maybe trying to duplicate what you're doing by an Airbnb, the first step is you're gonna get on, you're gonna get on realtorcom, you're gonna get online, you're gonna find a property in an area you like and then you're going to engage a seller whether they're selling for sale by owner, you're gonna engage their real estate agent. Right, and you might have a real estate agent to be negotiating for you. But a lot of the time, even if I have an agent representing me, I like to head the negotiation. I'm not comfortable with the real estate agent negotiating in my behalf because Most of the time, they're just not trained in any of the tactics or the mentality and they certainly almost never understand my, my ideal outcomes. So understanding the ideal outcomes means that I can. I can give and take on the fly in the negotiation.
Speaker 1:This is why I'm preferring you know, spearheading my own negotiation. So, guys, in real estate you always have two categories you have price and you have terms. Rarely do we get both. If we get both were we're fortunate right, it's a really good day to to make an offer and get the price you want and the terms you want.
Speaker 2:Okay, okay, yeah following this yeah.
Speaker 1:Let's go back to you. Know you negotiating? You know two condos and Moab Did. Were you able to get price and terms of what you on your offer?
Speaker 2:Man, yeah, I mean, we weed. That was a. That was a crazy deal, and the more that I talk with you about it, the more I talk with Annie about it's like that was an anomaly. Yeah, that the more I realize how you know, unique that situation was, first and foremost, I got the price I wanted because they weren't even built yet. Yeah, and there's a big advantage to get the price, because they they knew that they were not going to get the price.
Speaker 1:They knew they couldn't deliver it today and you write it today, so there's a concession.
Speaker 2:It would have been totally different if they were built turnkey already.
Speaker 1:Totally right, and so you're willing to come in and take some building exposure. That's extra risk. You're right right and extra time. So I guess to your point.
Speaker 2:It wasn't, I guess, perfect, because I would have loved to just buy him and then turnkey him right there, yeah, so I had to wait eight, nine months for them to be finished being built. So that's part of the term part of the terms. Yeah, yeah. So I guess, if we really think about this in this conversation, they weren't I'm like it wasn't amazing terms because of that building, but it was still like Flash forward the eight months. Oh, it was great.
Speaker 1:Yeah, right, well, you were the plan you were looking at it and you win to the deal with the awareness that this is going to be a Construction process right part of the plan, right? It's part of the terms that they need a certain amount of time. Yeah, so inside of time, guys, or, excuse me, inside of the terms, part of this equation time is always one and time can be broken into multiple pieces of a real estate negotiation.
Speaker 1:There's multiple deadlines in an offer. So if you make an offer, like you did, you're gonna have a due diligence deadline. How fast can you Understand the property and the cash flow and the market?
Speaker 2:Yeah well enough to close on it that you have to find all of those things out during due diligence, and that was another interesting thing. I guess, as we as we talk about this, it makes me understand what you're asking a little bit better. You know, cuz mine we put in the non-refundable or we put in the earnest money. It went non-refundable two months later, yeah, but we still had six months until the property was finished.
Speaker 1:Yeah. So in that first two months before the due, before your earnest money went hard, non-refundable, you were able to get your head around the certainty you were able to find certainty that you were going to close as much as possible.
Speaker 2:Yeah, not absolute right now.
Speaker 1:I remember that the financing was not certain at that point.
Speaker 2:No, in fact, my scenario was Incredibly unique. But I mean, as you said a couple times throughout the show, it's like, as a developer, I feel like in this world as well, nothing ever goes exactly according to plan. Yeah, and I experienced that.
Speaker 1:Yeah, okay in this construction space it's.
Speaker 2:it's a oh man, it's an exaggerated situation.
Speaker 1:Right well, and yeah, it's a good environment.
Speaker 2:Where the earnest money is now non-refundable. It's like well, now I have to like, yeah, I have to close or lose the earnest, or lose the earnest.
Speaker 1:Yeah, you got. Yeah, you got real exposure.
Speaker 2:I don't want to lose your money. Yeah so what do I have to do to make it close? And you know you have lenders pull out and you have, anyway, it's, it's. There's a lot that goes into it. Yeah so I guess to your point, then you know when you're gonna, when you're negotiating, there is the price, I got the great price, yeah, but then that term of that timing, with that non-refundable earnest money, with all those things, it was like oh boy.
Speaker 1:Oh boy, right, I'd have you consider to that. Your negotiation process ended when you accepted the contract and they accepted the contract. Yeah, when you reach that accord, that's when the go, the negotiation is over, and then the contract dictates what those terms are that you negotiated so the negotiation window happens in the Hell.
Speaker 1:I'm in negotiations right now that have been going on for six months over business structure and capitalization Structure. Some negotiations like on on land or a property, like that could take a week. Yeah, you know, if it look, if someone's look, if someone is has a property listed on the multiple listing service, you already know they want to sell, so that's already agreed. So now you can. You can approach that with an understanding that they are open to selling. I'm knocking on doors Talking to farmers who I don't know if they want to sell.
Speaker 1:They've owned land for a hundred years in the family whoa and I'm approaching them cold, trying to just build a relationship and help them understand what I'm doing and understand what they want. And it's a totally different conversation because we're not talking about can I buy your land today. I'm trying to understand their long-term goals. If they've held land for a hundred years in a trust with family and they're a second or third generation landholder, the motivation behind selling anything could be different for everyone. Again, perspective determines behavior. So it's critical in my experience, to really have ears to hear. Being a good negotiator means you have great listening skills.
Speaker 1:That might be one of the biggest points of what does it?
Speaker 1:take to be a great negotiator. Well, I know what I want, but the more I can listen and absorb what the seller wants and needs. Sometimes needs is a real thing. Like, for example, if I'm trying to buy that condo that you're talking about in Moab, but they have underlying debt and there's a maturity date on the debt in three months, well, that will drive what they need. It'll say that they have to close in 90 days before the maturity date and they, you know, I mean, that's an example.
Speaker 2:They're more motivated.
Speaker 1:They're more motivated, or if it's paid off and there's no debt. You don't have that same pressure, totally different terms. So when we talk about terms, you have the pricing, you have your due diligence deadlines, you have your closing timeframes, you have a financing deadline. All of these things we want to pre-consider before we enter a negotiation. We want to know what we can do before we enter the negotiation, and so a lot of time I'll model the whole deal Like I'll spreadsheet the deal and understand what the potential of the deal could be to buy this land or buy that condo or buy this business.
Speaker 1:We have one business that we're in the process of evaluation on buying a business and it's an eight million dollar roughly deal here. And you know how do we, how do we value these assets and value this, and that's a whole different process. And so time, a lot of the time, time for me is more valuable than the price. In fact, to give you, to give you a real time example I have I have a land negotiation happening right now on several hundred acres, and so I recently purchased land in the area for X dollars per acre and it's a good price per acre. I purchased that land and then I'm looking at this other land that's close by and so I had made an offer for the same price per acre and the landowner balked at it and was like, no, no, we need, we need a lot more than that. I mean it's like 10 times more worth.
Speaker 1:And I'm like, well, really, why is it worth 10 times more? Well, because we can develop this, you know, on our own and do this. So all of a sudden they're a developer. So what that tells me in this negotiation is they have a better sense of future, future value that doesn't necessarily present today value. So then I gently kind of push back and I say well, today it's only worth X, because in order to get me through the development phases of you talking about the value you want, we'd have to rezone it, we'd have to annex it into the city, we'd have to get the entitlements complete. Each of those layers have extra cost and exposure to me. And if I check those boxes off, or you check them off before I buy it, well then it's worth more. But today, it's not worth that.
Speaker 1:So there's an education process that happens with a land negotiation for a developer and, at the same time, finding an arrangement that makes them feel like we're all winning. Okay, I want, I really want everyone that I'm negotiating with to be excited about it. If they're selling to me, I want them to feel like they're getting a great deal. If they're feeling like I'm screwing them, that's not what I want to do. That's different for a lot of negotiations or people. We talk about the money and the relationships people. I'd rather have relationships and I can figure out how to structure things over time with the right terms to help someone get more of what they want to need, and so I'm very strategic about that. In a business negotiation, there's a lot of factors like like who's going to guarantee the loans, who's got the track record, who's going to bring the capital, who's going to be the operator, who's going to bring the potential contracts for all of the materials and procurement, like who has the relationship. So there's all these categories and when we're negotiating in a big partnership structured situation, all of these moving parts are at play. So it's really the relationships is, again the most important thing to me in a negotiation.
Speaker 1:Now, if we go back to our extreme side of the spectrum, one major point of power in a negotiation is you've got to be willing to walk.
Speaker 1:Okay, getting emotionally attached to that Toyota, that orange Toyota, you have to have the Toyota. If you can't walk out of the dealership and forget about it, you're going to lose the negotiation. Okay. But if you can really be logical and detach your emotions from it and I'm talking about any negotiation here where we're buying land or buying a condo or buying a car we're doing a business I have to be so secure about myself and what I can do with or without this thing that I'm negotiating for.
Speaker 1:And so the mentality behind that is it'll be awesome if I can get this, but if I can't, it's not going to kill my operation, it's not going to kill my whole outlook for the year, right. So I like to have backups, I like to have multiple possibilities, which is why I negotiate multiple parcels of land anywhere. Anywhere I'm at, I'm talking to different landowners and I'm trying to hedge myself so I don't have to be pinned into that one landowner who wants to exploit me, because they might be only money driven. They really don't give a flying fuck about me and my goals. They just want that money.
Speaker 1:And you know that's an interesting that brings up an interesting example of what happened in Moab. I forgot about this one, but we bought the first, so Sage Creek was an.
Speaker 1:It's currently an eight acre it's an eight acre site and we bought the first piece, which was only 2.3 acres. Okay, we got a good deal for that one. I mean, it was like it was like a couple hundred thousand dollars. And pretty soon everyone in town heard about what we might be doing and so we had neighbors approaching us. Pretty soon we we had one piece right next to us under contract and it was almost triple the price still not quite a million.
Speaker 1:Then we get the other neighbor on the other end of us and she was a real estate agent and she was maybe smarter than her own, smarter than her own good, and she, she tried to finagle a deal with us for a multi-million dollar price tag that was contingent on her appraiser giving us an appraisal. Okay, so, side note for everyone in negotiation, it doesn't matter what the seller says about the value, the seller's opinion of value, as it means nothing to me as a buyer. You have to disregard that. A buyer has to have their own value, their own understanding of value. It's only worth X to me because of what I know I can do with the property, and perspective determines behavior, and so the buyer and seller always have opposing, sometimes polar opposite, opinions about value Interesting.
Speaker 1:So whenever a seller is saying yeah, I'll have my appraiser do an appraisal and we'll give you the well you just throw that in the garbage shredder, because the seller's appraiser is gonna pad that number and they're gonna give you some trumped up inflated value. That's exactly what happened. Now I was negotiating multiple pieces at the same time, so when she attempted to do this, I said you know what that's like more than double of what I think it's worth and thanks. I appreciate your time. Cancel the contract, got my earnest money back and guess what? She's still sitting there with her house and nothing ever happened.
Speaker 1:In the meantime I went and bought the other piece the other side of the property. We got the three pieces and we built the resort. So she could have cashed out if she'd have been reasonable, but she overcommitted to her her kind of misguided understanding of value, and that's pretty common. So you have to be willing to walk and you can only walk if you've got backups. That's easy with a car because you could be negotiating 10 dealerships and you're gonna say oh, I'll go down the street, just like Chris Voss did.
Speaker 1:You've got a backup plan, right.
Speaker 2:Well see, then I would almost ask the question like, okay, what if hers was the only plot of land to do?
Speaker 1:it, yeah. So then I'd shift gears. Then I'd shift gears from price and say, okay, that price, I have to have the land. The price is non-negotiable. I think it's worth. She thinks it's worth twice as much. I'm gonna shift gears to terms now, and what I would have probably done with her if she would have been open to it is I probably said, hey, you know what, I'll give you your price, but we'll do a structured deal.
Speaker 2:I'll get you half now.
Speaker 1:we'll get you another half in 24 months, or another piece in a year and another piece in another year, and you'll let me, you'll work with me to get through the entitlement exposure, the zoning exposure and the development exposure of having my site approved because keep in mind at that point when I was negotiating, that the city hadn't approved my plan.
Speaker 2:So as a developer.
Speaker 1:I'm flying under certain presumptions that the city will approve my plan because it was already zoned out for what I needed and I understood clearly what the density and the requirements the city would have on me. So I was comfortable enough to negotiate and start buying land in parcels like that Interesting.
Speaker 1:But that's what I would have done. I would have just shifted to terms. Now I have a negotiation that's active right now. That is a very similar situation. It's a neighboring parcel. They think they can develop it just as well as I can. I say well, go ahead and have fun with it. But you might consider that cash in hand today, if I can work terms out with you, I could show you a way to put more in your pocket and you give me my terms. And what does that look like? That's exactly what I just laid out. For the Moab thing. It was okay, I'm gonna give you your price because you're today, you think it's worth more, and that is the situation. And when I talk about this piece down south, I bought the land per acre. On this, this one, I'm negotiating. They want three, four times per acre for it.
Speaker 1:But it's raw land.
Speaker 2:It's not worth that.
Speaker 1:Keep in mind, guys. When you establish value on something, it means what's someone willing to pay for it? So when I bought a 151 acres at X per acre, I just set the actual value of that raw land in that area.
Speaker 1:That is the value Now until I complete my zoning and my entitlement and my site plan, move it through all that exposure, then the value goes up, but that doesn't mean the neighboring properties go up, because the neighboring properties don't have all that work. So, guys, we're talking, we're really kind of covering, we're covering real estate development in a lot of ways, because I'm talking through the negotiations that a real estate developer has on an everyday basis. But this is valuable for anyone in any negotiation. So terms is maybe the most flexible way to create a win-win Get what I want, give them what they want and use time, use structure. And I won't even go into all of the ways today for the sake of the episode on how to do that.
Speaker 1:I'm just trying to convey a philosophical point that I don't have to drive the hard bargain and I can be, and you know it takes a lot of. You have to set ego aside when you're negotiating too, because it's really easy for someone to come back and say their property is worth four times what it really is today and have you not be triggered and have that knee jerk. So remember, guys, lead with love. So love, if you can have love be part of the negotiation, then I just have you consider you're creating an opportunity with a landowner or a condo owner, someone that you might have an opportunity to do future business with, if they feel satisfied and I feel satisfied and we all won in this process. Word of mouth travels. Reputation management is crucial for me. I mean, my reputation is worth more than the money or the land, and so how did I get there? The how is a big deal for me.
Speaker 2:So what would you say are best practices of getting there? Right if you had to say so, like for me, for example. I'm sitting here and listening to this. I'm like, okay, you wanna listen? Listening is super important. You're leading with love, but could you break it down for us, cause you're doing this active.
Speaker 2:What are things that I could take, that a listener could take, like the top three, top five best practices for negotiating, and whether that's terms or that's price, whatever, and whether that's real estate development, buying a condo, buying a car, whatever what would you say are the top cause? You're talking about the how.
Speaker 1:Yeah well, let's talk about it. Alan, I appreciate that question that has multiple answers. This will be good, I think, to clarify so ears to hear that's a critical piece of mindset going into it. A lot of people have read or heard these archaic tactical cliches never be the first to speak the price, okay. Well, that's a frustrating thing. I have a business negotiation happening right now. These guys for months refuse to say the price Really and that's frustrating.
Speaker 2:Oh, that's interesting.
Speaker 1:And so what do I do? Anchor low Chris Voss talks about this, you set an anchor. Now when I go into the land negotiation I'm setting an anchor. Now there's low balling you've heard about that where you just throw some arbitrary dumb number at someone and that can really offend them.
Speaker 1:Or you can use data and back up that low anchor so that in real estate, if you're talking about condos, you're gonna go get comparables and you're gonna submit with your offer five comparables. Here's why I'm offering this low number and it's not low to me. This is what it's worth. They might think it's low, but I'm not afraid to go set an anchor and that helps them mentally check into where I'm at Now.
Speaker 1:In one of the negotiations on land that I had, I sent an offer and it was like under a million and they came back and said, oh man, I mean we had this whole site like parceled up for like over a thousand homes and I mean the price is like closer to 20 million and it's like. So now Ego wants to jump in and say how foolish that is. And you have to soft pedal yourself. I soft pedal myself and I say, okay, I consider their perspective, I consider where they're getting their valuation from, and then I start to shift gears into terms, because that price and I'll be clear, I'll tell them hey, that price is way more than I'll pay I mean I do not agree with that price. So again, integrity. Yeah, I'm not playing games in negotiations.
Speaker 1:I'm not sitting here like making you guess what I think it's worth Okay we don't have to play some mental game, because that's frustrating and I think it's disrespectful.
Speaker 1:So, I'm, I risk if I respect you or I can I have an opportunity to show you respect by being an integrity. That means I'm shooting straight. So that means if I give you a low anchored number, it's backed up with data. There's a reason why I come with that number now, when they counter to this 20 times what I say it's worth. Now we're gonna talk about more data. I'm gonna consider their perspective. I'm going to offer them respect and Not just eviscerate them verbally, because that's the natural reaction.
Speaker 2:We want to. You want to say, you want to tell them you're out of your mind. 20 million stupid.
Speaker 1:But you so. So now you now. Now I go into the delicate, the more delicate. This is the actual negotiation, because we've got numbers flying around, we, we have timing flying around. So now it's up to me to to really model and sharpen my pencil and figure out how much I can pay, and Is there any way I can pay more and get closer to their number without me losing some way, some, oh, somewhere along the line? So now I'm really going into an, an integrity, a process of Back to the drawing board, sharpening my pencil, looking at that number and then trying to understand terms that I could offer, and a lot of times It'll be land options or a land contract, and I'll come back and say, hey, why don't I take down 10 acres now?
Speaker 1:You get a cash now. Then we can start moving through entitlement zoning. If I can check those milestones and I can get you another big chunk, and, and when they can see that I'm really working to use my own unique skills To improve the land value, a lot of the time they'll see that it's going to be way easier for them to take the money and the deal now with me, because I'm an experienced operator, I know what I'm doing, I know what I can do, and they're sitting here. They've played a mental game with me. Well, we'll just develop it ourselves. They're not developers. That's a bluff. And if they want to be developers, there's a learning curve that will take them 10 years to get through, to get to the level that I'm at, to be able to execute Something like that.
Speaker 1:Yeah you don't just turn into a developer overnight and to go develop a few hundred acres Effectively. You will lose money in the process, and so I want to help them. Without offending them and being respectful to them, I want to help them find the win and get the value the best value they can, at their property. So that's in a nutshell, how I break that down.
Speaker 2:Yeah, that's interesting. So I want to kind of just spit it back to you. Kind of what I'm hearing here is you know, you obviously want to listen, but at the end of the day it really tight. It really boils down to considering their perspective and then, with integrity and respect, outlining, you know, beginning really really specific on what you can and can't do and it's sticking to it.
Speaker 1:Yep, avoid the nabulous broad strokes.
Speaker 2:You cannot you cannot become desperate.
Speaker 1:Yep.
Speaker 2:Because the second you become desperate is where you lose.
Speaker 1:Yeah, is it kind of like telling me that that would desperation and negation for sure?
Speaker 2:So essentially what I'm hearing here is you're saying, like you know, if you can go into this logically and with only Calculated look, this is as much as I'm willing to go. If it's more than that, then you have to be willing to walk away. That's huge, yeah. And then two is maybe you can afford to pay a little bit more If you can control terms, if you can balance it out with that other side yep, Find the other benefits to me and right yeah because there's inherent value there too. Yep right.
Speaker 1:Very interesting now final thought, before we wrap the episode down, is when we talk about relationships like interpersonal relationships, like you know, with my wife, or with kids, or friends and family, it's a different situation.
Speaker 2:Okay, does this apply right?
Speaker 1:can apply in many ways. But but I'd have everyone consider that if I'm negotiating something with my wife, it is a way more delicate. There's got to be even more respect, more compassion and more effort and thought given to her feelings, her needs and her Mental state. So I'm not trying to negotiate, you know, going to spend money on this thing like let's go get some patio furniture, when she's stressing out about this thing over here. So picking the time from the negotiation is critical and then and then contemplating and understanding how I present it and being much more in the win-win. If I can really give her what she wants and needs, then I win.
Speaker 1:So it's a different like I'm willing to give a lot more in an interpersonal relationship because it's where it's a long-term Relationship building. It's not just a piece of land and once I buy it, they potentially I never talked to them again but someone I really, really want to establish and build relationships with and I'm going to give a lot more. And I'm going to give without expectation of it being reciprocated. Because now I'm getting into depositing political capital. I'm building up my bank account of political capital. You can call it different things, but political capital gives me. It gives me the, the power and the ability to negotiate certain things, but but. But giving without the expectation is a big piece in an interpersonal negotiation.
Speaker 2:So let me ask you this, and maybe this is a whole nother conversation about relationships but when you say that it's like okay if you're giving without expectation, if, if your partner does not feel the same, you know, is there a point where it's too much and and what.
Speaker 1:You see what I'm trying to ask?
Speaker 2:Because if you I can, and again, I'm not. You know, I'm not currently in the relationship like that and so I'm not speak. I'm curious, and I think a lot of the listeners might be curious as well. It's like man, if you're just giving, giving, giving yeah, you'll get worn out, You're right.
Speaker 1:So what's that?
Speaker 2:So, you know, I think maybe something we all need to consider is like what's the balance?
Speaker 1:Yeah right?
Speaker 2:Yeah, because if one party is doing the give with no expectation, yeah, it's not, it's not sustained.
Speaker 1:Yeah, that's a, that's a whole, nother episode, that's a relationship. We will definitely continue on that. Yeah because that's a big one. That's a big conversation. I know the listeners will want to hear more on this and I've got a lot more to contribute about that.
Speaker 2:So let's wrap it up for now. Yeah, let's get, let's get that.
Speaker 1:We're gonna actually add that to the list of one of the upcoming episodes. Let's do it and for now, guys, thanks for chiming in. Please share this with your friends, family, anyone that might be wanting to start a business, get into Airbnb business or, you know, starting a portfolio. This is for you guys. We're just trying to inspire you guys and give you some tools For your success. So thank you for listening and we'll catch you on the next one. You