What's so scary about honesty?

[Dean@Massiveaction]

I just received an email form one of the UK propety gurus called Parmdeep Vadesha about secret negotiating tips.
Sadly nearly all of them involved lying to vendors, making up stories or withholding information.
What is wrong with telling the truth and building a relationship with a vendor based on that??
what is it abou tus humans that we feel the need to deceive to get a good deal??

[SuperDad]

This is a good question, Dean.

Elsewhere I have seen you argue that a good real estate deal is one that creates a win-win situation. Creating a win-win situation seems to fit very nicely with your self-professed desire to invest with integrity.

In the latest NZ Property Magazine (page 26), you give your "6 D's" for how to get good deals. Of these 6, I can see how 5 can create a win-win situation, and so can alow one to invest with integrity. But I was somewhat taken aback when I read the sixth "D":

6. Dummies. These are people who simply don't follow the rules and fall for all the traps in the book.

Could you please explain how this sits with your above posting, where you wrote:

What is wrong with telling the truth and building a relationship with a vendor based on that??
what is it about us humans that we feel the need to deceive to get a good deal??

I'm having trouble reconciling the two, and I didn't think that you would buy into dealing with dummies. Note that not all deception is done by telling untruths - some is done by withholding truthful information where it ought to be disclosed. I just don't see how one can build a relationship with a vendor that one sees as a dummy.

I expect that what has happened here is that you have described the 6 D's to NZPM, but the way in which they have reported your comments, they make it sound as if you endorse all 6 D's. My understanding of your principles is that you would not endorse 6. Is that correct?

Paul.

[7Jones]

Good point, Paul.

[adambaird]

The 6th "D"

Great Post Dean!

There is a lot of perceived need for mis-truths in negotiation. I have read many books, most recently "Trump" and this endorses mis-truths in negotiation.
I certainly don't agree with this. Common sense is required.

You're not going to tell a vendor (a dummie) "Sorry, I don't think you should sell me your house because my valuation shows the property is worth $30k more than you are willing to sell it for!"

But, you wouldn't say on the same senario "I think we need to talk about price because my valuation shows the property is worth $30k less than what you want for it"

Then later example wouldn't be truthful, however I think Dean is referring to the first senario.

Happy Negotiating!

[BusyLizzy]

Exactly! It is not up to the purchaser to educate the vendor. We all have to take responsibility for whatever action we are considering taking, whether it be buying a house (due diligence), selling a house (knowing the value of your house and how to market it), buying a car (how to spot a lemon and do finance checks), or deciding what movie to go and see (what did the reviewers have to say?).

You can take advantage of a situation where the vendor hasn't done their homework and do not know the value of their house (thereby placing themselves in the 'dummy' category). But that doesn't make me dishonest by not disclosing the error of their ways.

It would be dishonest of me, however, to lie about my intentions for buying the property, or about any other intentions that I supposedly have for the property. By this I mean declaring an intention or situation that is not true, as opposed to not declaring your intentions or situation at all; these are quite different.

Dean - I haven't read the article you mention. What in particular was he suggesting?

[Dean@Massiveaction]

Hi Paul. I was quoting a standard strategy of the 6 D's. One which I quoted and discussed at the PIA meeting you attended. What you do in those situations is where your integrity comes in. I have advised a vendor to not sell on more than 1 occasion as I felt they were getting dicked by agents trying to give their property away. And I have often advised vendors that there property is worth more than my offer will be, but if they want a simple clean sale then I am interested in buying. This is my standard line and I have bought many many many properties on that basis.
As I have said often "there are a thousand reasons why someone might be willing to sell a property for less than it is worth." You don't have to lie to achieve a good deal!!

[Dean@Massiveaction]

Hi busy. Paul is referring to the July PIA mag. I am quoted in there in 2 articles. One about my baby boomer theory and the other about the 6 D's!!

[7Jones]

Thank you Dean, for the clarification.

[SuperDad]

adambaird and BusyLizz,

I agree that good deals are found when people haven't done their homework. For example, a person might not realise that their section is subdivideable, and so are willing to accept quite a bit less than the property is worth. It is O.K. to deal in such a situation. Presumably, the vendors are still happy with the asking price, or they wouldn't list it at that price.

I was just thinking about the idea that dummies fall for all the traps in the book. If the purchaser is setting the traps, then he or she may be acting without integrity. But if the vendor has effectively set the traps themselves - perhaps by neglecting to do their market research - then that's fair game. Or, at least, it might be fair game.

I recall Dean posting a story on another thread (or he might have given this case at a talk I attended), which I think went something like this. He went to an open home, the RE agent had listed the house for well below its value, and Dean told the vendor this when the RE agent was out of the room. Now, the vendor had fallen for a trap here - the RE agent undervaluing the property to get a quick sale. The vendor was, in a sense, a dummy. But Dean acted with integrity - rather than put in an offer, he alerted the vendor as to the fair value for her property.

Paul.

P.S. Dean, I've just read your posting - my memory does serve me correctly. Also, the NZPM has not done you justice. As I suspected, you were desribing the 6 D's, not endorsing them as the article implies.

[NZGEMS]

DEAN just wanted to say I love your pussy. He has attitude!
Robyn

[whitt]

Dean
I also read that you suggust to buy up large then sell off into the next boom. Pay down debt and live off reminder rents.

What recommendations do you make with regards to tax implications, depreciation clawback, tainting etc should a person decide to head down this track?

[Josko]

Hi Dean, Paul...

would either of you mind listing the other 5 D's.

Thanks, in advance

[Dean@Massiveaction]

Hi Ivi. Death, divorce, debank, deadlines, developers and dummies.
Whitt. Difficult to answer generally because it will depend on your situation. I am putting some properties that I am most likely to sell into a trading trust to solve tainting issues etc. I will pay tax but tax is life.
The rest are in hold entities.
Depreciation clawback is no issue providing you are selling to end buyers and you have owned the properties for a reasonable length of time. I simply have a clause that speciifes the improved value and there is then no clawback. But at the end of the day if you choose to pursue thi sstrategy you sit down with your advisors and work out what is best for you

[Perry]

Just where did you get the notion that it's a he cat?
Bitches come in beanies, too, y'know.

[leapy]

Did the house you told the vendor was under-priced sell for a better price in the end?