Coach Mitch's "Golden Rule" for real estate investing. Post 213

[Ed.] This is part of a story from the Lubavitcher Rebbe

Imagine a group of people contemplating a piano. They have never seen or heard of a piano in their lives, nor, for that matter, any other musical instrument – they live in a world in which the very concept of music is unknown.

“It’s a piece of wood,” says one. “It’s an exquisitely fashioned piece of furniture,” says another, a cabinetmaker by profession. “It’s obviously some sort of machine,” says the engineer in the group.

A musician from another galaxy enters the room. “It’s a piano,” he tells them, “a musical instrument.” He seats himself at the keyboard and plays them a symphony. Then he teaches them how to read, play and compose music.

These people were seeking the truth in their own way, drawing on their own knowledge and experience to decipher the significance of the object before them. The conclusions they reached were true — a piano is a piece of wood, a piece of furniture, a machine.

But they grasped only an outermost edge of the truth. This was not because their reasoning was faulty, or based on faulty data; it was because the piano belongs to a world – the world of music – which lay beyond the parameters of their reality.

So they did not perceive the piano for what it is, but the piano as it exists in their respective worlds — the world of physical objects, the world of cabinetmaking, the world of engineering. They were looking at it from the bottom up.

Then an ambassador from the world of music came and introduced a new perception: a perception from the top down. A vision of the piano from the perspective of the piano, the piano’s world. This is having vision from the top down, an entirely different, open and inclusive perspective.

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Coach Mitch’s REFLECTIONS™

 

In this allegory, the Rebbe showed that when we only look at a situation from our point of view that we miss all other points of view.

Imagine if we only knew hamburgers. Even if they were the world’s best hamburgers, we would miss out on world of Indian food, Italian food, French food, etc. How sad.

To achieve our aim, we must understand the other points of view and then effectively communicate that we understand.

Empathy = Acceptance

– Only when you walk in someone else’s shoes can you feel their pain.
– Only when you feel someone else’s pain can you understand their torment.
– When you resolve someone’s torment, they are grateful and you have done something good.
– Because you were good, they will see you as a person to be trusted.
– With trust comes the confidence to accept your vision.

Empathy = Profit

I often write and counsel about the idea of taking our understanding of a circumstance and then trying to understand how someone else is relating to that same circumstance. If you can understand the other person’s vision, then they will be open to more easily see your vision.

How To Deal With Sellers

This is the biggest issue that wannabe real estate investors face. I deal with the issue of how to deal with sellers all the time with my coaching students.

We give lip service to the idea of doing a “win-win” deal. However, secretly, we don’t really care about the seller’s needs, we just want to get a great deal so we can feel good about ourselves. This is the problem. Our greed glands take over, the seller feels it and it effects the transaction – in a bad way.

What we brag about indicates what is important to us

Having been successful in a real estate transaction, what do we brag about? The first thing we say is, “I made $20000.” I have never heard anyone say, “I solved the sellers need and I made $20000.” Yet, solving the seller’s need was the reason you made $20000.

Consider another situation

As a typical single man, when meeting a single woman, do we ask, “Do you have sex on the first date?” Of course not, and for obvious reasons. Yet, often, isn’t that exactly what is in the back of a single man’s mind?

One of the first questions we ask a seller is, “How much do you want for the property?” Sadly, the reasons why to NOT ask this question first is not so obvious to most investors.

I teach that you speak about the price only after you have created a rapport with the seller and only after you have found out the details of the situation and how to give the seller what they need. Getting the price is the last thing you need to know.

Example 1: A Typical Negotiation

You: “I saw the For Sale sign and thought I’d stop by. How much do you want for the property?”

Seller: “I want $100000.”

You: “That’s pretty high. Is that the best you can do?”
Seller: “Maybe I can do a little better, but only a little bit.”

Now, where does this conversation go from here – nowhere good?

Immediately, you are feeling the seller is asking too much, that the seller is being unreasonable and that you resent that the seller isn’t cooperating to give you a great deal. All negative feelings.

Worse, the seller is feeling the same, but from the opposite direction. The seller feels that you are not a serious buyer, that you are wasting his time, that you want to take advantage, which is not being fair, that you are probably one of those real estate investors like you see on TV who want to buy everything with no money down, etc. Are any of these positive feelings? No.

None of these feelings help in creating a successful transaction. This is why you don’t speak of money right away. First you must build rapport, based upon understanding the situation from the seller’s point of view. Look at things from the top down.

Example 2: A Coach Mitch Negotiation

You: “Hello. I saw the For Sale sign and thought I’d stop by. If you don’t have time to speak about the property, I can come back when it is more convenient for you.”

Seller: “It’s OK, I can speak with you now. Thanks for stopping by.”

Can you see that the seller is responding well to your consideration about their convenience? When you are kind, the other side notices and will usually respond in kind.

You: “Well, thank you for taking the time. This is a nice property, why would anyone want to leave?”

This is an open-ended question, i.e. a question that can be answered in many ways and will usually get the seller talking.

Can you see that as you complement the property, by extension you compliment the seller, and also, their good judgement for having purchased this property? Wouldn’t you feel good if that statement were said to you? Of course, this helps the seller to have a good first impression of you.

This question was stated in the third person so that it can be perceived as not being personal. “Why would anyone want to leave?” is perceived and felt differently from “Why are you leaving?” Yet the answer will be the same – the seller will tell you their motivation for leaving.

This question is also designed to find out why someone is selling? Sometimes people open up right away and sometimes not, but they will only open up to someone they like. Based upon the stilted conversation, do you think that the seller in Example 1 would be forthcoming or would they be hesitant?

You: After you sell the property, have you decided where to go?

Another open-ended question.

Of course people know where they are going to go. If you have details, then you can speculate and have info for further questions. For instance,

Seller: We’re moving down south, near my brother.

Wow! That’s a big mouthful. Why would anyone move across the country? Perhaps they lost their job and can’t find anything locally. That speaks to motivation, which is exactly what you are trying to find out about. However, maybe the brother is sick and the seller has to care for him. You don’t know until you know. Don’t presume.

You: “That’s a big move. It takes a serious set of circumstances to require a move like this.”

Yes, that kind of statement seems a bit pushy, but it’s not. The trick is that it is not a question. You did not ask, “What kind of circumstance would require a move like that?” That is pushy and I can see a seller getting peeved at you.

Negotiating requires skill

You can ask many more open ended questions. A good Rule of Thumb: Start all your questions with Who, What, When, Where, Why, How or How Much.

All the questions will get the seller to talk – while you listen. You will gain information and the seller will appreciate that you are listening. Don’t we all really like to talk about ourselves? Don’t we all like it when someone is letting us talk?

The speaker knows that you are interested because you are leaning in, nodding your head at the appropriate times and being encouraging, for instance, when the seller says something interesting, you say, “That’s interesting.” and the seller continues with enthusiasm because you are being entertained and we love being in the spotlight.

BTW

Have you noticed that I have not asked about the price? That question only comes up after I have figured out the sellers’ motivation and what they are trying to accomplish, which is the most important question that you can ask because it gives you the sellers hot button. And satisfying the hot button will almost always lead to a successful negotiation.

Coach Mitch’s Sales Formula: MS + GST = HPSN

A Motivated Seller + Your Good Sales Technique = High Potential for a Successful Negotiation

Back to the beginning

Building rapport is all about truly being interested in someone else, understanding their circumstance, their motivation, their hopes, desires, but especially, by acknowledging and understanding their fears. Walk in their shoes, feel their pain, then figure out a way to alleviate their pain by giving them what they need – but in a way that you can make a profit. That is the Coach Mitch Way. This is Coach Mitch’s “Golden Rule” for real estate investing.

Coach Mitch says, – Just say, “Yes.”™

If you want to do better in your real estate investing career, then consider getting a coach who can lead by example. Consider Coach Mitch’s “Ridiculously Simple System…” ™ for inspiration.

G-d Bless US