Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital
Your favorite Master Note Buyer – Straightforward, Honest, Fair…
Here are the results of a recent ABCnews.com poll: What’s the toughest part of negotiating a sale?
- Overcoming objections, 15.8%
- Getting them to sign on the bottom line, 41.1%
- Getting your foot in the door, 42.9%
Most people believe that the goal of negotiation is to get all you can – to vanquish the “opponent” as if you were at war. But negotiation isn’t war. It’s trying to reach an agreement. And the goal should always be to make both sides come out winners – because that way you can continue to work together smoothly.
So, after you have collected the pertinent information on your mortgage worksheet and received a couple of bids from your favorite funding source or Master Broker, as you prepare yourself to call back the potential note seller and negotiate a price, ask yourself the following questions. I have adapted them from a book called Roger Dawson’s Secrets of Power Negotiations (Career Press, 1995).
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- Are you assuming that the party across the table wants the same thing as you do? My brother liked brown M&Ms and I liked the green ones. The beauty of life is that sometimes you can get exactly what you want because the other person’s interest lies elsewhere. Take the time to find out what they really want, and you may be surprised to find out how easy it is to give.Paula note seller wanted to sell her entire note. The funding source wanted to buy a partial because of poor credit of the payor. I knew that Paula did not want to sell part of the note and thought that negotiations would be over when I told her the offer. To my surprise, Paula accepted the partial offer price for the entire note! (And I kept the remaining payments!)
- Can you get what you want by sweetening the deal for the other party? My sister’s taste in M&Ms was less easily solved: Like me, she loved the greens. But she also hated the yellows. So one day I offered her a “package deal”, I said I’d take all of the yellows off of her hands if we could split the greens. That was our last fight over M&Ms—and it gave me terrific insight about how to overcome resistance in business negotiations.Bill note seller wanted to sell his entire note but still needed some income for awhile. I offered the seller a price for his entire note now and the funding source would pass-through the next 12 payments to him. The overall price for the note was lower but Bill was happy that I figured out a way for him to keep some income and sell the note now!
- Can you leave something on the table? Joseph Kennedy, Sr., observed, “Only fools go for the last dollar.” Do you know why? Because most negotiations mark the beginning of the relationship, not the end—and it’s tough to develop a close working relationship with someone who feels screwed.
James note seller had many properties that he was starting to sell off and carry notes on. He didn’t have a need for cash now but he also did not want to deal with the headache of collecting all of the payments after he had sold all of his properties. I thought if I could buy a few notes and keep a small commission for myself ($500) he would eventually trust me and come to me first with all of the notes he would carry back in the future. The plan worked and James sold me about 12 notes over a span of about 2 years. If I had tried to take even just a $2,000 commission on the first note I don’t think I would have even done one transaction with him.
Now, don’t get me wrong. I am not advocating that you negotiate from a position of weakness. You need to know your interests and be sure they get met. But this is a business of negotiation, not a bar fight, and the most successful negotiations are collaborative rather than adversarial. Remember, in the words of an English proverb, “A lean compromise is better than a fat lawsuit.”
I believe the winning strategy for negotiating with a potential note seller involves the following: Don’t just focus on the close but rather seek to cultivate a relationship. To be successful in negotiating and in the note business I believe you’ve got to be part professor, who knows the product and options available (including calculator skills) better than anyone else; part detective, who can find out the who, what, when where, why and how; part networker, who knows how to get things done; and part schmoozer, who knows how to make a potential client feel important
Remember, success demands action! Keep on marketing, it’s going to work! TWITA! (That’s What I’m Talking About!) J