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- Never Say Yes to the First Proposal
Never Say Yes to the First Proposal Article by: Roger Dawson
Saying “Yes†to the first proposal from the sellers will automatically trigger two thoughts in the seller’s mind: 1. I could have done better. 2. Something must be wrong.
I once bought 100 acres of land in the state of Washington. The sellers were asking $185,000 for the land and I felt that if I could get them down to $150,000 it would be a terrific buy. (I don’t recommend bare land as an investment. It’s more of a speculation than it is an investment.) I asked the real estate agent to present an offer at $115,050. By picking that price, I was using these two negotiating principles:
1. Specific numbers have more credibility than rounded numbers.
2. Bracketing your objective assumes that you will end up midway between the two opening negotiating positions.
I knew that I was making a very low offer and thought I’d be lucky if the sellers responded at all, but to my amazement, they accepted the offer. What was my reaction? Something must be wrong! I suddenly wanted to take a very close look at the preliminary title report when it came in. My second thought on that land in Washington was, “I could have done better.â€
Those two thoughts will go through anybody’s mind whenever you say “Yes†to the first offer.
Imagine if your son came to you and asked to borrow your car tonight and you said, “Sure. Take it. Have a wonderful time!†Wouldn’t he automatically think, “I could have done better? I probably could have gotten $10 for the movie out of this too!†And, wouldn’t he automatically think, “What’s going on here? How come they want me out of the house?â€
What does this teach you? You should always go through the process of negotiating because you want the other side to feel that they won. Never say “Yes†to the first proposal.
Note: Always make your offer to buy real estate subject to your approval of the preliminary title report. That’s important because anybody who previously owned the property could have put a restriction on its use. I was once looking at a property that would have made an excellent shopping center development. When I checked the title, I found that a former owner had put a restriction on it that there could never be any liquor sold on the property. That nixed the deal because a liquor store not only builds traffic, but it is also a big money maker when leased on a percentage basis.
Source: Adapted from Roger Dawson and Mike Summey‘s audio program The Weekend Millionaire’s Real Estate Investing Program. Learn more about Roger Dawson and his bestselling audio program The Secrets of Power Negotiating.