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When the Note Holder Says No

Master negotiators say the negotiation doesn’t truly begin until the parties reach an impasse. Back at the beginning of my note business and my real negotiation career, this made as much sense to me as AP Physics in high school. Twenty-eight years later after closing over 2200 individual note transactions, speaking to over 100,000 note holders, hundreds of mediations, scores of speaking and training gigs and reading dozens of books, I know from experience that the word “no” signals the beginning, not the end, of any value-creating negotiation. Here’s why. People don’t like conflict. 

It is said that selling problem solving (conflict resolution) to note holders (aka the general public) is a tricky proposition because people’s primary response to conflict is denial. They will say or think “What problem? I don’t have any problems in my life. Things are going just fine. If I upset the precarious balance between me and my organization, my boss and my working group, my spouse and my in-laws, everything might come tumbling down. No. I don’t have a problem and or need a resolution. Everything in my household and in my ‘hood’ is just fine thank you very much.”

People dislike conflict so much that they tend begin their negotiations (if they’re willing to negotiate at all) in what are referred to as the nano and stratospheres. The party from whom something is asked (your note buying business), offers way too little and the one who is doing the asking (the note holders), seeks way too much. That way, neither party has to worry about fighting about anything. They’re still sitting on their chairs at opposite ends of the boxing ring. At this stage of the negotiation, the word “no” is a signal for you to get up off your stool and put your teeth guard in.

You might even move a few steps closer to your “opponent.” Here, the word “no” means the game is on. Neither party is going to be a dope by putting or leaving too much on the table. The negotiation games may now commence. People Tend to Believe “No” Means “No” but here’s what “no” actually means. 

“No” means, I don’t want exactly that or I can’t do that on those terms or I can’t figure out a way to make that happen. It means, I have to satisfy someone else’s needs or there are hidden constraints on my ability to say “yes.” It means I am serving an interest [problem I need solved or conflict to resolve] that I’m afraid to tell you about; or I don’t have the authority to say yes. “No” means if you knew my true circumstances, I’d lose my bargaining advantage or I’m out of good ideas or have a problem I don’t know how to solve. 

“No” is then your first opportunity to problem solve. Most people tend to think of negotiations as a series of offers and counter-offers without any conversation. This is the type of bargaining people do in a bazaar. It’s called haggling.  These people aren’t problem solving. They’re engaged in an age-old process – one that is controlled by the rules of the culture. And you cannot break these cultural rules, can you? But you are not haggling. You are operating a legitimate professional note business, attempting to purchase all or part of a note for a fair price. You are negotiating. You are having a conversation leading to agreement. Two entirely different things (haggling and negotiating). 

A note holder saying “No” allows the parties to make concessions necessary to make everyone happy. In any negotiation, the process is as or more important than the outcome. Sure, you want to buy the note for a fair price. But for tens of millions of years, the human animal and its primate cousins have been far more interested in comparative fairness than they have been in getting three bananas rather than two. The researchers tell us that people’s satisfaction with the outcome of a negotiation is primarily based on the number of concessions their bargaining partner makes during any bargaining encounter. If a note holder wants $10,000 and we offered $3,000, they then counter at $20,000, and we offer $5,000 and the negotiation closes at $7,000, they’ll be happier than they would have been if their $10,000 opening desire had been immediately accepted. Because immediate acceptance usually means they could have done better if they’d started higher. A series of concessions allows people to feel that they have gotten the best outcome available even if it’s less than they originally wanted. And we as people are more concerned with fairness than we are in the absolute number reached by the end of the day.

A “No” lets you solve your note holder’s problems, kicking in the power of reciprocity. To review, “no” from a note holder often means I’m out of ideas or beyond my authority or unable to serve the interests I’m required to satisfy or constrained by outside forces I can’t tell you about. If you’re negotiating, both parties have already established that they want what the other party has to offer. The best resolution for both parties is to come to an agreement. If you use the word “no” as an opportunity to help the note holder reach an acceptance, she owes you one. Once she owes you, you benefit from the principle of reciprocity. I have witnessed a lot of note brokers falter more often than they should, they hear “no” and they simply quit. Even if you’re new to negotiating, knowing that the word “no” actually means yes, but under circumstances different from this, persistence alone will likely enable you to bring the note holder to accept an offer. Remember that you’re practicing. You do not have to look like you know what you’re doing. You only have to look like you’re trying. 

Here are some easy responses to the word “no” that you should always have at the ready:

Why is that price too low for you? 

What stands in the way of your saying “yes” to one of these options?

Is there anything else I can put on the table that would give you the value you need to accept our price?

Is there any additional information you need from me that would help you understand our options?   

These are “diagnostic questions” meant to reveal your note holder’s need for additional information, their hidden constraints, the unidentified individuals (spouse, partner, family member, etc.) who they’re required to satisfy or the concealed reason they’re trying to serve (why they really need the money). The questions are “diagnostic” because you’re making an effort to diagnose the problem standing in the way of an acceptance. In controlled experiments, negotiation researchers found that only 7% of all negotiators ask diagnostic questions when to do so would significantly improve the outcome of their negotiation. The single best piece of problem-solving advice ever given to me is this: behind every accusation is a cry for help. I can also add, behind every negative response to a price for a note is a request for help in closing the transaction and getting the note holder what they need.

Remember these principles and you’ll be able to turn many more note holders’ “no” into a “yes” of equal or greater benefit to you. Hope this helps! 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 investor and broker specializing in the performing seller financed note industry since 1991. 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 to email him and subscribe to his weekly Note-Able Newsletter.

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