The Low-Key Approach to Buying a House - Negotiate Like Detective Columbo
When investors buy houses, negotiations can easily turn to into a tug of way where neither side is willing to give an extra inch, or make another concession. It's like war.
A better technique is to take the "softer" approach of using language that doesn't put the seller on edge, and makes him feel that you are more interested in a win-win deal, rather than a win-lose scenario.
Two approaches I have adopted are the "suppose I gave you .. is there any reason" technique described by Bryan Wittenmyer in his book Perpetual Income, and the "and just one more question" technique of Jay DeCima in his book Start Small, Profit Big in Real Estate.
"Suppose I gave you ... is there any reason" Technique
Many people feel the direct approach is the best way to negotiate. Maybe it is in some instances, like hostage negotiation, but when purchasing real estate, we need to be extra careful not to appear like we are trying to take advantage of someone. We may be dealing with someone who has never sold a house before, and they may be intimidated or suspicious of someone who regularly buys houses. We need to be conscious of that and use words in the most non-threatening ways.
Instead of making a direct offer ("here's my offer, take it or leave it") frame the offer in the least offensive way by saying, "Frank, suppose I gave you $5,000 down for the property, is there any reason why you wouldn't carry the mortgage?" Bryan Wittenmyer says that people are conditioned to say "no," and with this technique, the answer you want is "no," but "no" means "yes." This is a very non-threatening way to present your offer because all you are doing is just proposing a possibility, not making an offer.
"And just one more question" Technique
Jay DeCima also takes a low key negotiation approach, based on the style that former TV-detective Columbo used when he interrogated suspects. Detective Columbo was the most polite and unassuming detective in the world. Even the criminal that committed the crime felt comfortable around Columbo.
Instead of putting the seller on the defensive, don't directly tell them what's wrong with their house, no one wants a complete stranger to come up and criticize their house. Instead, always show respect to the seller, and have the seller tell you what's wrong with the house by asking him a series of polite questions.
Columbo had this special technique that just as was going out the door and you thought he was leaving, he would always turn around and say, "oh by the way, just one more question for you." He asked it in the most polite way, and often the answer to that question was the one that cracked the criminal investigation he was working on wide open. But it was the way he asked the question, in the most polite way that got people to open up to him.
Listen carefully to what the seller has to say. You can learn a lot by listening. Don't be critical, never talk down to anyone. Even sellers who must sell won't sell to you if you try to intimidate them. This, of course, doesn't mean that buyers don't have to diligently verify any information you get from the seller, but you'll get more honest information form them if they trust you.
I may not be a professional negotiator, but I do know that if you offend the seller in any way, he will not sell to you even if you make a good offer. If the seller's pride is offended by an offhand comment like "this house is worn out and needs a lot of work," you have just criticized a place he has lived in and maintained the best he could for the last 20 years. You can forget about buying that house.
I still remember a disparaging comment that someone make about a house that I was selling in 2002. I overheard a guy tell his wife "this one is a loser." Steam came out my ears. Having spent the last 8 weeks fixing that house up, I thought it was in pretty good shape, so I took his comment personally. You don't easily forget it when someone offends you (whether real or imagined).
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