Who's an expert on negotiations? Not me! But have a look at the link below for some good lessons:
Chemill
P.s. Credit for this link goes to another forumite
Chemill
P.s. Credit for this link goes to another forumite
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Actually I guess credit comes to yet another individual here who posted one article of the series some time ago...
.... and the winner is... muppet!Don't argue with idiots, they'll drag you down to their level and beat you with experience. -
Compulsory reading. Wicked site!! Thanks ChemillComment
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As negotiation is an important skill, I propose to use this thread to collect or point to sources of information on negotiation.Comment
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Liberated from mastermindforum:
link:Author: TheGrocer (---.jetstream.xtra.co.nz)
Date: 09-12-02 13:10
Hello Keith,
when I first started to look at houses to purchase for investment, together with my wife, I spent just over six months looking at about 500 properties. At first we thought that we were looking at houses, but after a while the penny dropped and what we disscovered was that we were actually looking for real estate agents. This is one of the most important parts of your business jig saw puzzel. The other two being a good mortgage broker, to finance as much property as possible, and a business structure specialist for your tax stratergy.
Now after looking at a large number of houses you will get a gut feel for your market and you will have found maybe one or two agents that are hungrey and are prepared to take your offers seriously. As Joe Arlt says above you cannot expect them to present all of the offers personally, my agents would not have enough hours in the day to do that, but you should expect them to take time over the ones that they believe have a good shot at being accepted.
The secret in dealing with the serious agents is not to waste there time. Build up a repore with them. In my career before property investeing, which was the grocery industry, I had to learn the art of dealing with people. You cannot run a chain of 125 stores on your own. This has helped me in building relationships with agents. Work on your people skills to help you build your own team. I also learnt the art of negotiation while working as a shop keeper. It is very simple. Do not negotiate. Below is an extract of a book that I am writing about why you should invest. The passage is about how I buy products for a business or houses;
"This is the art of how to acquire goods from suppliers with the most favourable terms to you. There are allsorts of books and business programs that teach, or at least aim to teach you the science of negotiation. Most of them tell you that it has to be a win, win situation. Personally I have not found that to be the case at all. Let’s look at one case as an example. In England, Australia and New Zealand there is a product called baked beans. These are haricot beans in a tomato sauce. They are sold in cans and the best by far are Heinz especially there organic version. This is subjective but this is my book so you are getting my opinion. They are best served after having been heated up slowly for about half an hour on the stove top. This way the tomato sauce reduces and the beans soften, lovely, especially when served with bubble and squeak an English dish of fried potatoes and cabbage. In New Zealand they are sold under the Wattie’s label which since 1992 has been a division of Heinz. In New Zealand, Australia and in Britain Heinz Baked Beans, is one of any grocers best selling products, usually one of the top 100 sellers, which is a big achievement in a store that can sell 50,000 products or SKU’s (stock keeping units) as the industry now likes to call items . As Heinz has such market domination they are, what is known in the trade, as a KVI or known value item. Everybody knows how much they cost. There price will vary from store to store but not by much, although in convenience stores they can be 30% more expensive than in supermarkets. Now if I am buying beans for a group or a store, Heinz will come to visit me. They already know what price I am going to sell the goods at, they only have to look on my shelves. Being professional they will also know what margin I am expecting to make, they get this from my competitors. Therefore they can work out within a percentage point or two at what price I will want to pay for the beans. So all we have to discus is the quantity that they can get me to take to get the price that I want to pay. Where is the negotiation? There isn’t one. It is simply a discussion on quantity of product. You see grocery buyers, those that are good, simply show there hand to the supplier up front, because the manufacture or wholesaler already knows the information anyway. We do not play games, we don’t have the time. Therefore I have developed a style of buying, no matter what the product is, baked beans or houses, where I tell the supplier or vendor what I am prepared to pay. It is then there choice as to whether to accept it or not. It is a one time offer. Would I open a store without Coke or Heinz? Yes I would. Would I walk away from a house where the vendor would not lower there price by a grand? Yes I would. This is one of my rules and I do not break my own rules. Does it work? Yes it does. Both in the grocery industry, I have never opened a traditional grocery store without Coke or Heinz, and in our first year of buying property in New Zealand, we had not far short of 100 acceptances of offers on my buying terms. This includes no deposit and a price that is at least 20% below FMV (fair market value) i.e. FMV is what the house is worth." Copywrite Michael J. Pettett 2002.
As you can see I do not negotiate, I just offer the most money that I can, over time your team of agents will realise that you will never go up in price from your first offer. This is a powerful tool for them when they are talking to a vendor. I am absolutly serious about not moving too. I have lost three deals over small amounts of money. One was for only $1,000 a second for $3,000 and a third for $3,500. I do not budge from my original price, unless it is to lower it. Over time the agents have come to realise that they never should bring back to me an offer that has been countersighned, I will simply tear it up. This process saves everybody a lot of time. It takes time at first to set up but then the system runs almost by itself.
Last edited by Ivanhoe; 22-02-2006, 02:00 PM.Don't argue with idiots, they'll drag you down to their level and beat you with experience.Comment
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and another one:
link:Author: TheGrocer (---.jetstream.xtra.co.nz)
Date: 09-12-02 15:50
Hello Gregg,
thank you for your reply. You stated that you dissagree with me on the point that negotiation in my opinion is not about win/win. You have made an assumption that I think that it is about win/lose. I don't care weather the other party thinks that it is a win or a lose situation. I don't use emotion, if they do thats there problem. I work out the price that works for me, thats the highset price that I can offer, in the case of a house, because what is important is the margin nothing else, to me. If the seller agrees with my offer then there is a deal. If not I move away and don't think about it. In about 15% of all the offers that are turned down they come back to me at a latter date and ask for me to re offer. It does work. Think about the margin. This does apply to houses and beans. The market place dictates the price within a relativly small band, with the exception of a few high margin low volume houses and food products, mansions in the style of Frank McKinney ("the king of ready made drea homes") and caviar. In both of the latter cases there is no general price.
Making an offer is not negotiating, you are asking to enter a contractual agreement with the seller, jst like walking up to the checkout with your grocery's. Your not negotiating, you are asking the store representative, the checkout operator, if you may enter into a contract to purchase goods in the store. The operator ringing an item up is agreeing to the contract. If the operator before scanning an item was to say "the price may be different for you depending on when and how you wish to pay," then a negotiation would have started. This is the same in house purchasing. There is no negotiation until the vendor replys to an offer.
In my humble opinion, most books, courses and seminars about negotiating are about as wrong as you can get, for both parties. We live in an emotional world so if you have a system that removes it when ever possible and makes things black and white you get better and quicker results. Imay be wrong but I have been in the position of having to talk to suppliers for contracts worth in todays money around three hundred million pounds sterling per year,to build more than 20 stores costing more than fifty million pounds in total and I have bought cars and more than 100 houses all using my don't negotiate style. I have also trained a number of buyers to do the same for both real estate and groceries. It seems to work for them too. The one down side. You have to be prepareed to walk away when they don't play ball. A lot do and a good number of those that don't come back to you eventually.
TheGrocer.
complete thread "Presentation of written offers":
Last edited by Ivanhoe; 22-02-2006, 02:01 PM.Don't argue with idiots, they'll drag you down to their level and beat you with experience.Comment
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Dean (Pooomba), what do you think about this discussion? Is this approach still applicable in current market?
Regards
IvanLast edited by Ivanhoe; 22-02-2006, 02:02 PM.Don't argue with idiots, they'll drag you down to their level and beat you with experience.Comment
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