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A Simple Negotiating Tactic

A Simple Negotiating Tactic That Will Make You More Money

In the Note Industry, negotiation is commonplace. When you’re on the Note Broker side, you have to negotiate prices and options with note holders, and if you’re on the Note Investor side, you have to negotiate the best yield(s) for your business.

Negotiating is also something we do on a daily basis to save or make more money. Maybe you’re hiring a house cleaner and need to negotiate a better rate. Or maybe you’re selling a couch on Craigslist and need to counter a low-ball offer. Whatever the case, negotiation is a useful skill for anyone, especially note professionals, to pick up. That’s why I’m going to share a simple negotiating tactic that will help you save (and make) more money.

Several months ago, I was at a Tommy Bahama store and tried on a nice pair of slacks that I liked. They fit well, but there was one problem—the liner in one of the pockets was torn (basically a hole). Always looking to get a deal, I thought to myself, “These slacks are already on sale, and since I don’t mind putting up with this hole or getting it fixed, I wonder if I can get it for even less than the sale price.”

To test my thoughts, I went up to the checkout counter and said, “Hey, I’m interested in these slacks, but there’s a hole in the pocket. Can you guys give a discount to make up for that?”

The guy at the checkout counter responded, “We can give you 10% off, but you won’t be able to return it.”

*** This next part is the most important, so make sure you pay attention. ***

“Oh, I see,” I responded. “I did want to have the option of being able to return it in case I decided I didn’t like them. But, since I won’t be able to and since I’ll need to pay someone to fix the hole, could you possibly knock a little more off the price?”

“Let me check.” The employee walked to the end of the counter and explained my situation to the manager. Without hesitation, the manager said, “Sure, we can give him 25% off,” and then walked over to apply the additional discount.

After the transaction was completed, I walked away with a pair of $200 slacks with a hole in a pocket you couldn’t see for $75.

So, what can you learn from this? The Power of Providing a Reason. 

The most important part of this story comes from the lines with the word “since” underlined. Here’s why. Instead of just asking for a discount without providing a reason, I mentioned specific reasons why I deserved a discount. They were both specific and logical. This is much more powerful than simply asking for a discount and not being able to provide a reason.

This also goes along with a very famous study that gets mentioned a lot in marketing circles where psychologist Ellen Langer conducted a study where people asked whether or not they could cut in line to make copies at a printer.

One group said, “Excuse me, I have five pages, may I use the Xerox machine,” and had a 60% success rate when it came to cutting in line without providing any type of reason.

The next group said, “Excuse me, I have five pages. May I use the Xerox machine because I’m in a rush?” The success rate from this group jumped to 94%, all from providing a reason why they needed to cut in line.

The third group, however, was the most surprising. The third group said, “Excuse me, I have five pages. May I use the Xerox machine because I have to make some copies?” Shockingly, the success rate was 93%, nearly identical to when the second group gave a legitimate reason as to why they might need to cut in line.

People now use this study to explain why “because” is such an important word when it comes to persuasion and marketing, and in case you didn’t notice, I used the word “since,” which is a very close cousin to “because,” when negotiating to buy the slacks.

The next time you’re negotiating for something, whether it’s a discount on a note, a new car, or a Craigslist deal, be sure to provide reasons why you should get a discount.

Another quick example would be purchasing a Seller Financed Note from someone that responded to your marketing that wants the balance of the note. When they give you the information you find out that the terms are not that great. They got a $500 down payment, carried the note for 40 years at 2% interest rate secured by a 1991 singlewide mobile home on 20 acres. (There are a lot of reasons for us to use here but keep it to 2 or 3 in the beginning. More reasons can be given as the negotiation progresses.)

To get the note holder to accept a discount, you might first mention that you expected better terms of the note. Then, when you’re ready to make an offer, you could say something like, “I like the note since there are 12 months of seasoning but because of the very low interest rate and next to no cash down payment your note is not worth much. Since I am going to have to wait 40 years to get paid off will you take 60 cents on the dollar to be done with the headache of servicing the note for the rest of your life?”

Even if the answer isn’t an immediate “yes,” you increase your chances of getting a discounted offer accepted by providing a reason and using the words “because” or “since” than if you just give a discounted price without providing any type of reason.

I’ll let you in on one other secret. Most Americans are not that good at negotiating. This means that if you pick up this negotiating tactic and a few other basic negotiating methods, you’ll be well on your way to making (and saving) more money. Remember success demands action, keep on marketing, it’s going to work!  TWITA! (That’s What I’m Talkin’ About!)

Jeff Armstrong of Armstrong Capital has been a note broker and investor specializing in the seller financed note industry since 1991.  He can be reached by email at For more updated and current information on how he can help you with your note business, your note investments or to request a quote on a note you currently have visit

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