BiggerPockets Real Estate Podcast - 321: How to Negotiate Real Estate—Expert Deal-Making Tactics with J and Carol Scott and Mark Ferguson

Episode Date: March 14, 2019

Would your real estate investing business benefit from better negotiating tactics? Of course it would! On today’s show, Brandon and David sit down with J and Carol Scott, as well as Mark Ferguson, co-authors of the new BiggerPockets book The Book on Negotiating Real Estate. The authors discuss several powerful negotiating strategies, plus common misconceptions about negotiating, how “winning” in negotiating doesn’t always mean the other side is losing, and how the best deals are done through building rapport (with examples of how to do just that). You won’t want to miss their tips on how to prepare for a negotiation beforehand—something that’s made them hundreds of thousands of dollars over the years—and how to negotiate with your own contractor to get the best prices possible! This episode is full of advice to help you, the investor, save money and get deals. If you want to experience better results getting what YOU want out of a deal, download this one today! In This Episode We Cover: Introducing J, Carol, and Mark Common misconceptions about negotiating How winning doesn’t always mean the other side losing The right mindset when it comes to negotiating How building rapport can get you deals Learning to shift the negotiation off of price and into something else Tips in preparing for your negotiation beforehand Negotiating with your contractor to get the best deal possible The tip that’s made them hundreds of thousands of dollars over the years How they closed on a deal using negotiating tactics to lower the price on an already great deal And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Webinar Brandon’s Instagram Be a Podcast Guest BiggerPockets Podcast 311: 6 Rules for Investing in Real Estate in the Coming Economic Shift with J Scott BiggerPockets Podcast 010 : Flipping Houses 101 with J Scott BiggerPockets Podcast 068: Being a Superhero House Flipper, Investor, and Team Leader with Mark Ferguson The Best Ever Conference BiggerPockets Podcast 189: 500 Deals, the $100,000 Wholesale Paycheck, & the Systems That Make it Work with Tarl Yarber Books Mentioned in this Show BRRRR by David Greene The Book on Flipping Houses by J. Scott The Book on Negotiating Real Estate by J. Scott, Mark Ferguson, and Carol Scott Moneyball by Michael Lewis The Book on Rental Property Investing by Brandon Turner Long-Distance Real Estate Investing by David Greene The Millionaire Real Estate Investor by Gary Keller Now, Discover Your Strengths by Marcus Buckingham Too Perfect by Jeannette Dewyze & Allan Mallinger The ONE Thing by Gary Keller and Jay Papasan Tweetable Topics: “90% of negotiation is literally the skills all of us already have.” (Tweet This!) “Treat every conversation as a discussion as opposed to as a questionnaire.” (Tweet This!) “Negotiate everything, always.” (Tweet This!) “The person who cares the least has the most power.” (Tweet This!) Connect with J and Carol J and Carol Scott’s Website J’s BiggerPockets Profile Carol’s BiggerPockets Profile J’s Facebook Profile J’s Twitter Profile Connect with Mark Mark’s Website Mark’s BiggerPockets Profile Mark’s Youtube Channel Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show number 321. Personality trait for a good negotiator, it's empathy. And it's really being able to put yourself in the other person's shoes and figure out what they're thinking, what their motivation is, what their goals are, what they need, what they want, how they feel. And if you can do that, you can be a good negotiator. You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the height, you're in the right place.

Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What is going on, everyone? My name is Brandon, host of the Bigger Pockets podcast here with you today with my friend, my co-partner. Is that a word co-partner in crime? It's another word you've made up. David Green. David Green,

welcome to the show. How you doing, buddy? Thank you, Brandon. I'm doing good. I just did a meet up yesterday in the South Bay Area and got like four or five buyers we're looking to get under contract.

A lot of them are trying to house hack right now. So life is really good for me. I have no complaints. Very cool. And you got that new Burr book coming out pretty soon. Everyone's going to... I mean, people are...

I put a thing on my Instagram another day about like, I got a first draft copy of your Burr book and like I was holding up and like I've never seen so many people freak out about a book coming out. People are going to love that thing. Like, they were like,

I've been waiting for this book. Anyway, it's coming out soon, so you'll hear more about that. Yeah, I believe you can pre-order it right now. But it'll be a game changer, man. The Burr Strategy is powerful. It's powerful stuff. So anyway, but today we're actually going to be talking about a little bit different topic than burying and a different book than the Burr book.

We're talking about negotiation today with three just rock star investors that I know you probably all know already. But if not, you'll meet them all in just a moment. But before we get there, let's get to today's quick tip. All right, listen, for, for two. Today's quick tip, we want you to be on the Bigger Pockets Real Estate Podcast. That's right. We want you to be here talking with me and David. So we're going to choose a few of you to appear on an episode in a couple months. So here's how you can put yourself in the running for that. Go to your Bigger Pockets profile. Make sure you sign in to your account, scroll down to where

it says investments and share some deals that you've done. We're going to pick a few people who did this and invite you here on the show to talk about it. Again, I go biggerpockets.com, fill the details of at least one of your investment properties. We'll pick a couple people and bring them on the show. So, that's the That's going to be kind of cool. I have an uncomfortable question for you. If your rent collection drop to 80% next month, how long would your cash flow hold up?

What about 70% for the next three months? Would your cash reserves cover it? I talk all the time about scenario planning. Smart investors don't just model the upside. They also pressure test the downside. This is even more important in a down market. And that's why I like Stessa's stress test report. It lets you model different rent collection scenarios,

adjust expense assumptions, and instantly compare the results to your real bank balances. It's one of 12 professional grade reports inside Stessa Pro. Try it for yourself. Visit stessa.com slash mkTG slash bigger pockets and get six months of Stessa Pro for free because it's better to discover your risk in a report than in a recession. There are two kinds of real estate investors, those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. vacancy periods, rehabs, short-term rentals or LLC-held properties. These gaps surface only when filing claims.

That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NRE.com slash BP pod. That's N-R-E-I-G.com slash B-Pod.

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Communicating with guests, preparing your space, managing reservations, everything runs smoothly while you're off making memories. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. All right. And with that, we got to get to today's show. First of all, thank you to all of our listeners. You guys are what make this show possible. So you rock.

And now let's talk about negotiation. This show is one of those that's like bound to help you make more than the cost of actually attending this show. And I'm kind of kidding there because it's free to listen to. But really like this show like listen close because there's so many good things in here that's just like here's here's how to save more money. In fact, later on in the show, one of the guests Jay mentions that there's like, he's like if this is one tip that's made me 100. of thousands of dollars over the past decade. Listen for that. And there's probably 20 different tips that are in this show that are going to help improve

your business. So without further, ranting and raving, let's get to the show with Jay Scott, Carol Scott, and Mark Ferguson. All right. Welcome everybody to the Bigger Pockets podcast.

Welcome Jay, Carol, and Mark. How you guys all doing today? Awesome. Thanks so much for having us. Great day. Hey, how's you going, Brandon? How's you going, David? What up, guys?

Hello. Yep. Great to be here. All right. All right. So today's going to be a little confusing. Obviously, we have a lot of people talking. So we'll try, oh, I guess.

Here, do me a favor. So people can hear what you sound like. Jay, will you just tell us real quick who you are so people can kind of hear your voice? So as we're going through today, they know that that's you talking. Obviously, Carol, well, I'll know who Carol is. But I'll go Jay, and then we'll go to Mark and then we'll go to Carol. So Jay, for those who have not heard you on the show, the last 700 times you've been on the Bigger Pockets podcast. Can you tell us about who you are and what you do a little bit.

Hey, everybody. Jay Scott here. And I am the husband of Carol Scott, who's on with a. today. Carol and I started our flipping business back about 10 years ago. We've been flipping houses for the last 10 years. Also do some buy and hold, some lending, some other random stuff. But I've been a faithful follower of Bigger Pocket since 2008. I think I was in the, in the original crew of Bigger Pockets members. So thrilled to be back. Yeah, you were here before I was here, which was a long time ago. So, yeah. Cool. All right, Mark, what about you? Tell us a

little brief bio for you are. I know you were on a show. By the way, Jay, I don't remember what show numbers you were on, but I know you've been on a couple. And do you remember them? 10, 311 and one of them in between. All right. And then, good. And then Mark, you were on show, what, number 68 maybe? Yeah, 68, I think. All right. So other people can listen to your whole story. But Mark, tell us about yourself real quick for those who have not listened to that episode yet. Yeah, no, I became an agent in 2002, worked with my dad for a while. He flipped houses, so learn from him. really focused on Oreo and HUD sales for a while, then got more into flipping,

then bought rental properties, and now primarily focused on flips. We did 26 last year and 26 year before that and started my own brokerage last year too. So that's been a little crazy as well. I bet. I bet. All right. And then finally, Carol, Carol has not been on this show before,

but Carol's awesome. So Carol, tell us about yourself a little bit and how you got into this. Absolutely. After a million years doing corporate craziness back in 2008, Jay and I were like, this is not sustainable. So after watching way too much HG TV, I'm like, if these ding-dongs can flip a house, we can certainly flip a house. So we bought one, which led to another and another and

another. And the best part about it is that I get to spend my days with my crazy eight and nine-year-old boys while generating income for the family. So it's a pretty good gig. There you go. That's awesome. Well, all three, y'all, I love all you guys. So it's great to have you on the show in one big shot. So today we're talking, though, specifically about a certain topic that's near and dear to every real estate investor's heart, and that is negotiation. Obviously, the three of you wrote a book together on negotiation, specifically on real estate negotiation. We'll talk about the book a little bit more later. We mentioned it in the intro, but I want to first kind of get into the basics of negotiation. So maybe we can start with misconceptions or things that people get wrong. And I'll let you guys

decide who wants to go first. But what do you think people get wrong from negotiation? most often. So this is Jay. In my opinion, the biggest thing is a lot of people try and overcomplicate it. So I'm not going to say that negotiation, there isn't a bunch of art and a bunch of science involved. But a lot of what negotiation is, it involves the skills that all of us already have. It involves building rapport. It involves being able to have a conversation with people. It involves being able to do simple research. It involves being able to, honestly, if you were to ask me, the biggest personality trait for a good negotiator, it's empathy. And it's really being able to put yourself in the other person's shoes and figure out what

they're thinking, what their motivation is, what their goals are, what they need, what they want, how they feel. And if you can do that, you can be a good negotiator. You don't have to rely on all the tips and tricks that we hear about negotiating that make it sound like it's really complicated. Certainly there's some of that involved in negotiation, but 90% of, you know, of negotiation is literally the skills all of us already have. That's reassuring because, like, I know I'm one.

I've said this before on the show when we've talked about negotiation. I just, like, I don't like it, right? I don't like the idea of having to go and, like, whittle somebody down and take advantage of them. And like, that's, because that's the feeling I get with negotiation that I'm, like, if I win, they have to lose. Is that true? What do you guys think?

I think that's a really common misconception, Brandon, exactly what you're talking about. People feel who are really not comfortable or not familiar with negotiation that at the end of the day, somebody's going to win and somebody's going to lose. But in reality, if it's a successful negotiation, you both feel, you both at the end of the day come out feeling like you both won. And it's really all about if you take an approach where you're not necessarily trying to win, but you're trying to solve a problem so that everybody's happy at the end of the day, you're bound to be more successful. So when you get yourself in a different mindset about what negotiation is about, it's not just about, wittily, people down. It's not just about getting the best price. It's figuring out what people's motivating factors are and working together with them. And if you can kind of approach it from a

different mindset that there's so much more to it, it becomes more and more natural over time. All right. That makes sense. It's like climbing a mountain. I mean, you're climbing a mountain with somebody else. And the goal isn't to win and you get to the top. And if they fall off, who cares, the goal is to help each other get to the top of that mountain. And if you can do that, it doesn't matter who got there first. It doesn't matter who got their fastest. You can both, like, get to the top of the mountain. You can both win if you help each other. Yeah, that's great.

All right. So let me frame this discussion a little bit as well for who this is for. I mean, are we talking today in negotiation? Is that for people who are doing a lot of real estate deals? Should people still be listening to the show and reading your book? If it's, I am trying to buy my very first deal. Maybe I'll throw that one at you, Mark. You know, you haven't answered yet one of these.

So, like, who's a negotiation really ideally for? It's for everybody. Because I think echoing what Jay said, you know, it's not about winning one battle or one negotiation to get a couple thousand dollars extra. It's about building a business. And when, you know, we're doing so many flips or buying rental properties, I'm an agent, I'm a broker, I'm in the community all the time. People know who I am. And if I get a reputation of someone who's just going to beat people up all the time, they don't want to work with me. So, and that starts from your first deal, your first couple deals.

People begin to realize who you are if you're doing a lot of deals. And so you want to start building a good reputation from the beginning. And that doesn't mean you can't negotiate. You can't go back and forth. But you also want to act in good faith. And some of the best negotiating tactics that have helped me is making it as easy as possible for somebody else. I mean, I have other agents from other offices. Bring me deals because they know we'll close.

We have no inspection. And they don't even have to list the house. We can just do it right then. And that's the best deal in the world where you don't have to spend a dime on marketing. Someone comes to you. And so it's about making it easy, treating people right, and it's about winning the whole war, not just one battle, but building in the future and just having stuff come to you. Yeah. Brandon, you have a two-year-old child.

So if you don't think negotiations, you give it a couple years and you're going to realize how important being able to negotiate is. Every second of every day. That's funny. That's funny. Well, how much negotiation in real estate is similar to negotiation and other things then? Maybe I'll throw it that. I mean, like, if you just learn how to negotiate in general, does that mean you'll be better at all always negotiation? Or does it say specific, like, there are real estate specific negotiation things we

should learn? I think it's really twofold, Brandon. I think there are so many specific skills in negotiation in general that are applicable across the board. For example, one of my very favorite ones, believe it or not, is just learning to sit back and listen without talking. Really, really hard. Everybody likes to fill the silence. See, it's really. really hard to listen to, right? Silence is not a comfortable thing. But that is one negotiation skill, no matter if you're negotiating real estate. If you're trying to negotiate a better price at Home Depot, if you're trying to negotiate your kid to clean their room, whatever it is if you just sit back and wait, that across the board is just a great negotiation tactic. That said, for real estate,

there are so many different nuances as well because it's such a longer process, right? You're not just, as Mark said. You're not just trying to do that one deal. you're trying to do many, many and build upon it. You are also, though, just the nature of a real estate transaction, the price tag on it, the fact that a transaction doesn't close, it's not the same as, it's not the same as negotiating what color paint we're putting on the wall. It's a 10-minute decision. It's the nature of the process means it might take 30 days or 60 days or 90 days or two years

to get one of those deals. So there are some nuances that are very in particular to real estate negotiation. All right. One thing I've noticed while negotiating for my clients as a real estate agent and on deals I'm trying to buy is that we always have a tendency to think logically, right? Like I have the power in this way. How do I force the other side to recognize where my strength is? But I found success often comes from illogical things. The other side's emotions often influence their decisions much more than the facts that we're looking at.

Can you guys talk a little bit about techniques you found that make it easier for the other side to give you what you want? It's weird, but just being nice to people make such a huge difference and can be used, you know, in everyday aspect of every world. You know, being polite, being courteous, responding to people when they ask you to respond. And even responding to people how they want you to respond. Like if someone emails me and says, please email me, I'm not going to call. I'm going to call. I'm going to call them. Because it just makes people more comfortable, happy with you. It doesn't annoy them.

So starting off on the right foot and just being polite, courteous, and it doesn't mean you have to give up everything. but just getting on, you know, rapport, like Jay said earlier, is so important. And that plays with your emotions. And buying a house is so emotional for people and selling a house is crazy. And people will do illogical things because their emotions or they get up a right-foot, like, I don't like those guys. I'm not going to do anything for them, you know, in the inspection or someone comes in with a low offer. Like, I'm not even going to counter them.

I'm just nothing because I'm pissed off. So just trying to be nice and build that rapport really helps with getting a negotiation and starting sooner. And one thing I always do, too, if I've come on with a low offer, I'll email or I'll call that agent first and be like, hey, heads up, we're bringing an offer. It's going to be low. You know, I don't want to surprise you. Be prepared. And that helps so much in just getting it off to the right foot. That's such a good tip. Yeah. There's a story that Carol and I experienced, and so the book that you mentioned, we tried to put as many real-life stories in the book as possible. But one that Carol and I experienced was related to this back in, this was probably 2010 or 11. It was a Sunday morning. We get a phone call from our closing attorney who was a friend of ours, and he was walking his neighborhood. He went to a garage sale, and he was talking to the owner of the house or the person that was running the garage sale. And it turned out it was a woman whose mother had recently passed away. This was an estate sale. She was basically emptying out the house. And he said, are you considering selling the house? And she said, well, I don't know what I'm going to do with it, but I might consider it if you know somebody. And so he called us. And Carol and I actually, we drove about a half hour up there to meet her to see if potentially there was a deal here.

And as usual, Carol did all the talking. She's much more the people person than I am. And she talked to the woman for probably, and you can jump in, Carol, if I'm getting this wrong. She talked to the woman for probably an hour, basically just talked to her about her mom, talked to her about her house, just empathized and was there and like just formed a little bit of a friendship. At some point, I imagine she asked about selling the house. I believe the woman said something along the lines of. I'm just not ready to sell it yet. I need to figure that out.

Carol's like, no problem. They talk for a while. at the end of the day, Carol got her address and got her name. Actually, I'm going to jump in. You know what? I didn't even make it close, but I didn't even make it that formal. Just like you said, we chit-chated forever. I think at the very end as we were walking out, I asked her if she was going to sell the house

and she just didn't know. Like, you know, great, here's my card if you want it. And then I just decided a couple months later, it's Christmas time, right? And I figured mail that was still going to mom was probably being forwarded into her house. So I didn't, I wasn't even direct. I was just very, very subtle about the whole thing. I just sent her, oops, I sent her a Christmas card to the mom's address. And it just said, just thinking of you at the holidays, it's got to be really hard.

I can imagine it's difficult to celebrate this first Christmas without your mom wishing you all the best. And fast forward another three or four months and she picks up the phone. And so I've been thinking, I think it's about time to sell my house. Do you want to buy it? So it was just establishing that long-term relationship and not going really hardcore. according to, I want to buy your house. It's a great deal. Let's make this happen. Again, it was just about really empathizing and really, really getting to the heart of what those emotions and what that person is all about. Yeah, that's really good. So let's shift a little bit

here and talk about some specific tactics that real estate investors can do. Right. I mean, I know we've already talked about a number of them. I want to get a little bit deeper. So let's just say somebody here is marketing for deals, right? Maybe they're sending direct on marketing or maybe they got a website. They're putting out signs, whatever. They're doing something to get the phone ringing. Now the phone rings. They get the phone call coming in. I'm assuming that you'd say, like negotiation really begins there, right? It's the building relationships, empathy. But what are, some things on that first phone call that our listeners can like do right now or to try to help their chances of the deal coming, you know, down the pipeline later working out? Yeah. So I'd say the

first thing is it's very natural for us as investors and talking to people we don't know to treat the whole thing very transactionally. Yes, I have some questions for you. Tell me what's the square footage of the house? What year was it built? How many rooms? How much work does it need? But instead, think of it from the perspective of somebody picked up the phone to call you because presumably they have a problem. They're in a situation. And they are, they're putting themselves out there. It's hard to call somebody and say, I need to sell my house. If they weren't desperate to some degree to sell their house, but they wanted to sell it, they probably would have gone to a real estate agent or they would have listed it themselves. But they're in some situation where they feel like this random

letter that they got in the mail is worth picking up the phone to call and talk to a stranger on the other line and basically say, I need to sell my house. So if you approach it from that perspective of somebody has a problem and they're reaching out to you to solve their problem, it, again, it goes back to the empathy thing. Put yourself in their position. What would you want somebody to talk to you about? Would you want them to just jump into a whole bunch of questions about your house and treat it like a business transaction? Or would you want to want to, you want to be somebody to talk to you about, them to try and get to understand you and what your needs are and what your situation is. And when you approach it from that position, it's really easy to start with, hey, tell me about

what's going on. Why do you need to sell your house? Oh, my husband got a job in a new city and we have to move in two weeks. And, oh, that's great. What does your husband do? Oh, you have kids. We have kids. Let me, like, where do your kids go to school and build that relationship?

And then by the time you get into the questions about, well, what year was your house built? and how much do you want for it. At that point, you've built some trust. You've built some rapport. And it's a lot easier for them to give you that information because they're not just answering questions that the strangers ask them. You didn't call them up and say,

I have a poll I want you to take. Now you're having a discussion with somebody that you have at the very beginnings of a relationship with. And so treating that first phone call more like a discussion, treating every conversation like a discussion, as opposed to a questionnaire. is really, really important. That's really good.

I actually, so a couple years ago, I was negotiating this deal. I ended up wholesaling it. I guess I just gave the end of the story away. Anyway, so I got this deal. I'm sitting here at this woman at her house and I'm talking to her about the property. Well, I'm talking to her, right? But before I talked about the property, yeah, I asked, you know, so what's going on? Why are you trying to sell?

And yeah, I found out that in like, what was it, two weeks, two weeks ago, her husband, I think it was, had left to go to California, got a new job. And she was there in charge of selling the house. So she's missing her husband a ton. I got really, in a. that story of why she wanted to go to California so bad and all her family was down there. There's all these reasons. The house was just embarrassingly in bad condition.

And the more I talked to her, the more I realized that she just was really embarrassed to have people come over and look at it. And it was hard enough for to have me come over and look at it. And so, like, I mean, she was a static when I ended up buying her house. And I got a great price on it and I made some good money. And it was all because, like, she had some other reason for selling that I just figured out in that very first conversation. Yep.

And there's also the benefit. of if you can figure out what those other reasons are, it gives you more negotiating leverage. It gives you other things that you can negotiate in. I talk about the situation where we had somebody who, we talked to him for a while and we realized that his biggest thing was he wanted to move across town and he just, he felt like he had to pack his, he didn't know to call movers. Like literally he just, he hadn't moved in maybe 40 or 50 years. I don't know. But he seemed to be really concerned about how am I going to get all my stuff from here to where I need to get it to. With us, it was easy enough to say, hey, we've got moving companies we work with, and we can take care of that for you.

We'll pay for it. We'll send somebody out to talk to you, look at your stuff, we'll take care of it. All you have to do is be there. They'll pack it up. They'll put it on the truck. They'll move it to the other place. They'll take it off the truck. And to a lot of us, that's obvious.

You call movers and you do that. It hadn't occurred to him that it's that easy. And when we offered to help him do that, and we offered to pay for it. So he didn't even have to worry about it. Is it going to cost me $500 or $50,000? It was just one huge thing off his place. And at that point, he's now out of the mindset of worrying about that thing. And now we can get into the real discussion about negotiating the price of the house and all the other stuff.

You know, I find that in so many areas of life that, and I know I'm hogging all these questions, David. I'll let you jump in in a second. But like so many areas like, people just want to be told what to do, like clearly and easily. And because things seem overwhelming when they're not clarified, right? I mean, real life example, I was at a conference last week, the best ever conference in Denver. and there was one night where like, there was like 10 of us that had kind of talked about doing dinner that night, but nobody really knew what we were going to do.

And then my friend Tarle Yarber, who you guys know Tarrell, right? Tarle comes in, he's like, hey guys, I made reservations, there's spots for 11 at this place. Here's the 11 people that are coming. We're leaving at this time. Go. And I was like, thank you. Like somebody just like took control.

And like it wouldn't have a matter. I mean, like, I know that wasn't like a financial thing. But like, I just like sometimes in life, people just want to be told what to do, where to show up, how to be there. And when you can be that person as a real. stay invested, but like, here, we're going to take care of all this for you. Don't worry about it. Like, that is so valuable. There are plenty of studies that show that if somebody has too many choices, it makes it a lot

harder for them to make a choice. If you walk into the supermarket and there's one brand of oatmeal on the shelf, you pick that brand of oatmeal. If there are 30 brands of oatmeal on the shelf, you look for 20 minutes and you walk away, frustrated because you don't know the benefits and drawbacks of each. It's the same way with any type of negotiating as well. If you give somebody too many choices, if you leave it to them, to make too many decisions, it's going to get overwhelming.

And so a lot of times one piece of conventional wisdom in negotiating is give three offers, give the cash offer, give the financed offer, give the whatever other offer, and let them decide what offer works best for them. That's good, but presenting it as I'm going to give you three offers may not be the best way to do it because it just adds more on their plate. So there are other ways to do that where you don't overwhelm somebody with decisions or choices that they have to make, but at the same time, you still give it. give them choices and decisions.

Yeah, I love the multiple offer thing. I've used that successfully a number of times. Well, it speaks to human psychology because like Brandon said, we want someone to tell us what to do. But like Jay said, we don't want to be feeling like they're forcing us to do something we don't want to do, right? Like a good negotiator makes you want what they want you to do. So that was one of the things I wanted to ask you guys.

Obviously, if you go in there and try to strong arm somebody, they're going to push back at you, right? And that's why building rapport in the beginning is good. because they don't know they're in a negotiation when you've built a relationship. They like you. They want to help you just like you're trying to help them. Can you give us some tips from the book about what you guys do to win over another person onto your side while holding to the stance you have of you need to get this property for a certain number?

Yeah, and this kind of goes back to what I was going to mention to going back to the first time you talk to somebody, I'm an agent and a broker. So the first thing I have to do is disclose that. So for people who are brokers, you know, it's very important that you say, I'm an agent. And some people don't want to be agents and investors because they say they have a disadvantage by disclosing that. I think it helps me. So when I say, hey, I'm a broker. I give a short presentation or, you know, I've been an agent for 17 years. I've been in this community for 17 years. We bought 30 houses last year. I'm not going to list your house or sell it. I'm a buyer.

That immediately builds trust from somebody who might be very skeptical about calling this number who they have no idea who this person is. So by giving that short little presentation about my and telling them who I am and building that trust, that kind of starts off the whole conversation as, hey, I'm not trying to, you know, steal this house from you. I'm not some weird guy off the street who has never done a deal. And that, I think, helps you get on the right foot about I know what I'm doing. I know values. At the same time, I'm very honest, too, that, hey, this is my business. I will be honest and say, I might buy as a rental. I might want to flip it. I have to make money doing this. And I hope you understand that. It works for some people. It doesn't work for

everybody though. Yeah. And really knowing what's important to the other side, what they need, what they don't need, asking if you can figure out a tactful way, and there are tactful ways, especially once you've built the relationship a little bit, they're tactful ways of asking, what are you going to do with this money? And if the answer is, I'm going to buy another house, I'm trading up to a bigger house, well, they're probably going to need all the money. If the answer is my daughter has a wedding coming up in June, well, then the conversation comes comes to, oh, yeah, we had a wedding. They're so expensive. We spent 25,000 on ours. How much are you planning to spend on yours? Oh, yeah, our budget's 35,000. Okay, great. They just told you they

need 35 in cash. So if the pay off on that- How did the Jedi mine tricks involved. Yeah, yeah. And if they say to you, I don't know, I don't really need the cash. I just, I need to be out of this business. Well, okay, in that case, how about if I, if we do seller financing and you're making, oh, this is a rental property for you and you're making $500 a month off on this property, I make a deal. I'll give you $500 a month for the next 20 years. You make the same amount of money you were making, but you don't have to manage this property. And in 20 years, it's paid off. And they're like, great. I'm making the same amount of money, and I don't have to do any work. And now you're getting an interest-free loan.

So there are a lot of things. Once you know what their motivation is and what they need and what they want and what they're going to do with the money, it gives you a lot of options on how you can structure a deal that can benefit you and them. And this goes to David's question of like without strong arming them, you figure out what their motivations are and you appeal to those motivations to those needs. You solve those problems. And at the same time, hopefully there's something that they need that you're willing to give and then you get what you need and hopefully they're willing to give on that. So obviously if both sides, if both sides only care about price, if it boils down to you, you want the lowest price and they want the best price for their house, then you probably have a

negotiation that's not going to work out. And that happens a lot. Let's be honest, 80, 90, I'm making up numbers, but a large percentage of real estate negotiations are never going to work out because both sides care more about price than anything else. But it's that other 10 or 20 percent where being a good negotiator and listening to the other side and figuring out what they need. It's that other 10 or 20 percent where being doing that is really going to make a difference and that's going to be where you make all your money. There are two kinds of real estate investors, those who have reviewed their insurance,

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Again, that's biggerpockets.com slash dominion. So Carol, I was going to ask you, Carol, I've always found that I have the hardest time negotiating against women because men tend to be just overall, not every man, of course. We tend to be a little more analytical and just like purpose driven, like what are the facts, what do I want? Whereas women always kind of have a way of making you like them or empathizing with you or making you feel like they're on their side. And maybe they are.

But it's just so much harder to stand your ground against like a really kind, sweet woman. Can you share like some of the strategies that you've used that maybe guys just overlook. We don't put as much importance on when it comes to what Jay was mentioning earlier, getting somebody to see it from your side or looking at things other than price that they might care about? For sure, for sure. Again, I know we've brought this up over and over and over and it's about listening and seeing what really motivates them, but I don't know how to put it into a solid tip, but at the end of the day is a woman. And it's interesting you bring this up because I think I think about this a lot when I'm negotiating with men because let's be real.

Let's just be completely honest. In real estate investing, it is primarily men, right? There are very few. So fortunately, I've adapted to that over the years. And in my old life, when I do corporate stuff, same type of thing. But one thing I realized, and not all men are this way, is that at the end of the day, to feel successful, men need to think that the end solution was your idea. So it's my job as a woman to sit back and listen to what's important to you.

And if you spit out some numbers, you want some information about some numbers, I'm going to give you some information about those numbers. And also, if you thought about this in relation to that, and going through that dialogue over and over, I'll subtly suggest little things to add on to the deal, to sweeten the pot. And then, not most of the time, but at the end of the day, I can't tell you how many times, the person on the other end of the phone is like, I think I've come to the best conclusion. And it was all the stuff I've been planting in their brain

for the past seven weeks. But that's okay. At the end of the day, it works out. So, and obviously, I think you all know that I don't mean that in a rude way by any stretch of the imagination. It's just women are the same way. Trust me, we want to think that everything was our idea. And we're going to tell you it was our idea,

whether it was or not. So I would say, keep that in mind, is just find ways to really honor that other person on the other end of the phone, no matter what gender they are and realize that everybody likes to feel that they have good thoughts and ideas to bring to the table. That's a really good. That's a really good tip. People want to make, they want to believe that was their idea.

100%. Everybody wants to feel smart. Yes. Yeah, exactly. And that they came out. Valuable. We've talked to this before on different negotiation shows we've done where we've talked about like at the end of the day, a lot of people just want to be able to go later

and tell their spouse or their family or whatever, that they won the negotiation, that they got what they wanted, right? And that's why, like, you know, I was negotiating a mobile home park last year and the seller who listens to our show, actually, like, so Ed, what's up? Like, he really wanted a certain price.

Like, it was like, that was the number he wanted. And so we gave him the number he wanted, and so he won that, but I, I mean, like, he also wanted passive income for life. So what do we do, seller financing, right? So I got what I want. I got my deal. And he got what he wanted.

And it was kind of his idea, but it was kind of my idea. But both of us probably felt like we won and it was our idea. So that's really powerful. So what about, what about, let's shift slightly away for a minute from the buying, the selling, the deals. Let's talk about contractor negotiations, right? Because a lot of us who flip houses, do rehabs, that's one of the things I hate almost

more than more than the real estate negotiation. I'm actually a decent at real estate negotiation. But when it comes to a contractor who asks him how much it's going to be and he says $30,000, I'm usually like, okay. Like, well, I don't know where to go from there, you know? Because I need him. I need him to do work in my house. So maybe I'll start with Mark.

them will go around, whoever else has ideas, but like, what do you do to get your contractor to negotiate with the contractor, whether it's somebody you've been working with forever or somebody brand new? Other than give the phone to David and let David do the negotiating for you. Yeah, I've done that. This is a horrible question, Brandon. I'm dealing with this all the time. And one easy solution, which most people can't do is I hired contractors full-time employees

and then I don't worry about. But for other guys, I've had this come up right now recently. where he keeps coming in high on everything. And I'm just like, I can't pay you that much. And we've sat down with him a few times and shown him the other deals he did and be like, we didn't make hardly any money on this deal because we paid you so much. And he kind of realized, like, he didn't even realize how much he was making because his extras were being charged on and other stuff.

And we went through all the numbers with him because I think a lot of contractors, see the spread like, oh, you bought that house for $100,000 and you sold it for $180, you just made like $60,000. I'm like, well, no, we had all these other costs, carrying costs, financing costs, selling costs, and they don't understand that we're not making like millions of dollars every year coming in. So just being honest with them and showing them that. And then I have to play the card of, hey, I can hire somebody else cheaper to do this. I can bring in subs who can do this paint for $2,000 where you're charging me for. I can bring a drywaller in to do this.

I can bring other guys in that can do this cheaper than you. You have to come down in price or we can't use you. And we have done that a number of times and sometimes they leave and it sucks and we have to find new people, but it doesn't make sense to keep using somebody if you're not making any money. And other times they realize it, we negotiate, sometimes we meet in the middle. But you really have to be on them every single job and just letting them know that you're paying attention to the numbers and really keeping track of what they're bidding and they can't just wildly bid whatever they want also helps as well. Because we've had guys just coming at double what they should be just thinking, he's not going to care. So every deal, you really have to lock in with him, show them what's going on,

and be up front with them. Jay or Carol, anything you want to add to that? We are, we're actually dealing with some right, right downstairs right now. I'm so thrilled. It's awesome. I have some contractors downstairs. And we had an interesting situation come up. We had them just last week. We're looking a bunch of stuff to do with the house. And they came in with the number. And it was about double what we wanted to pay. And I just kind of looked at him and he just kind of looked at me and I just kept kind of looking at him and he just kind of kept looking at me. And then finally he's like, uh, and then next thing, you know, he comes down a little bit, right? He comes, you know, he's, he slashes his price about 15%. And then I just kind of looked at him.

And then I just waited and then I finally said, I was like, I'll break the silence. I'm like, realistically, this is what I need done. This is how much money I have to spend on it. Can you do it or can you not do it? He's like, I can't do it for that. I'm like, okay. Fair enough. What can you do for that number? And you went through my laundry list of all the stuff I had jotted down on my pink post-it note that had like a million little line items. And he said, I can do this, I can do this, I can do this, I can do this, I can do this, I can do this, I can do this, I can do this, I can't do this, this, this, this and this. And then at the end of the day, of course, we started adding in, well, we could do this, but we'll do it, you know, we'll also do the doors or something.

So I guess the tip that you can glean from that is when your contractor comes in high, say, this is the realistic number. First of all, silence and wait for them to come off of their original price. Second is tell them the realistic budget you are willing to spend and see what they're able to do for that number. And you'll be surprised. At the end of the day, we've had so many situations where our contractor would much rather just figure out a way to get that work done rather than risk losing your business to somebody else. Yeah, I mean, we started this whole discussion with when you're talking to a homeowner, don't make it transactional. because there's a lot of emotion involved in selling a house and all that. But when you're talking to a contractor, it is transactional. And there is no emotion involved or there shouldn't be any emotion involved.

So when you're dealing with a contractor, taking kind of a different tact instead of going after, hey, tell me what you need, blah, blah, blah, blah, blah, a contractor, most business people, they're going to have no problem actually talking about the numbers. So instead of saying, hey, okay, $40,000 for the scope of work, let's see a breakdown in the line items. And exactly what Carol said, start breaking down the numbers a little bit more closely. See what numbers you can agree on. You can't agree on.

Negotiate things individually as opposed to as a big group. Too often we look at a negotiation as all or nothing. We look at, okay, you're going to do my scope of work for $35,000 or you're not going to do it. Or you're going to do it for $30,000 or you're not going to do it. But instead, hey, you guys have a good breakdown the price for me. I can look at it. Your plumbing prices are great. So let's do the plumbing.

And your drywall prices are great. Let's do the drywall. Okay, electrical, you're a little bit high. Let's talk about negotiating electrical here. And before you know it, you've gotten the scope of the work could be the same, but you've gotten the price down to something that's reasonable. So don't be scared to break things down into line items and get very transactional about it. Yeah, that's fantastic.

Anything else you guys want to add before I move on? Yes, I mean, just the other thing to point out is if we were having this conversation 10 years ago, it would have been a very different conversation. So 10 years ago, contractors were really easy to deal with after the recession from 2008. Most contractors went out of business, and those that were still in business after 2008 were the good ones. They were good at dealing with cash flow. They were good at doing the business stuff. They were good at customer service.

They showed up on time. They did quality work. The ones that couldn't do that went out of business after 2008. But the ones that were left were good. And dealing with contractors, I mean, I wrote in my first flipping book, the first edition of my flipping book that the easiest part of flipping houses is dealing with contractors. Basically, you incentivize them by offering them more work and treating them well. And as long as they're getting more work, they're going to keep coming back over and over and over again. Five years later,

I wrote the second edition of my flipping book and it went from this is the easiest part of the job to contractors are literally the most difficult part of the job. So just something to keep in mind that times change and it very much boils down to when it comes to contractors, how much leverage you have. And when it's a buyer's market and there's contractors who are desperate for business, you've got a lot more leverage. You can get a lot more concessions. These days, it's a seller's market. Contractors can make, frankly, they can make more money working with homeowners than they can working with investors for less headaches. And so these days, you just need to be able, you need to be reasonable. And as investors, we give in a lot more than we probably want to

when it comes to contractors. But that's the way it is until the next recession. Yeah, that makes a lot of sense. All right, so I want to shift down. In a second, I'm going to ask you all if you want to start preparing in your heads, like what your all-time favorite or current favorite negotiation like tactic is. And then if you can back it up with a story even better. But before I get there, I want to just mention the book real quick because we talked about a number of times.

I just want to say what it is. And so if people are interested in picking it up, they should. It is called the book on Negotiate in Real Estate, expert strategies for getting the best deals when buying and selling investment properties. And it's out today over on bigger pockets. and we would love of all of our listeners went over there right now and picked it up. Just go to biggerpockets.com

slash negotiating book. Negotiating book. If you don't know how to spell negotiating, Google it. You might as well order like the ultimate package there. I think it's like 50 bucks, something like that. But you get the physical copy. Yep, shipped to your house,

the audiobook version, the ebook version, and a bunch of bonus material, including a few videos where I actually drill down on some of these concepts with Jay and Carol. That was actually really, really fun, you know, to work on. Anyway, it's all there.

And there's access to you. Q&A webinar with all three of our authors and more. So, oh, I know. And then there's a quick reference guide that's just super cool. It's like a one page sheet sheet, all the most important tips on there and tricks. Like that cheat sheet alone, like I would pay the 50 bucks for. So anyway, you can get it with the ultimate edition or you can get just the audio, just the ebook, just the physical and all that good stuff. Again, biggerpockets.com forward slash negotiating book. If you can't remember that, just go to the bookstore. It's up in the navigation bar. Anything you all want to add to that?

No, that was great. All right. Yeah, look at that. All right. It's really fantastic. I mean, you guys like really are like changing the game here. It's one of those, again, I say this with some of other books that we've done, but I'll say it again here, maybe even more so than any other book we've launched. Like, it would be almost impossible, I feel like to not make way more in the next hundred years of your investing career than what a $50, $20, $30 book cost, right?

Like, it's one of those like returns on investment that is like infinite. You know what I mean? Like if one tip helps somebody negotiate. one better deal and get one percent more on the sales price or, you know, one percent lower on a purchase price, well, there you just paid for itself. So you might all get it, get one and get one for a gift for somebody else. But we got to move on. So I'm going to start with you, Mark. Awesome, Brandon. Well, thank you. Me. All right. What's that with Mark? Mark, what's your favorite? If you have one tip or something that just you think, maybe not a favorite,

but something that usually is cool, that you use in your business. And if you have a story to go with it even better. We'll start with you. Yeah, I still buy most of my deals from the MLS. So I'm doing two to three properties a month. And we're in Colorado, which is a crazy market. It's not like we have a ton of properties. No, but Mark, you can't find deals in the MLS. So clearly, right? Exactly as possible. Don't do it. Yeah. Hear it all the time. And but I do a few things to my offers that get them accepted over other higher offers all the time. And the first thing, obviously, we act really fast. So first day we'll submit offers. But I only have asked for an inspection in, like 95% of my deals, I don't ask for an inspection.

And that's part of experience walking through a house, no one wants to look for, and always building room into your price for those unknowns. But the other cool thing I do is I'll always make them cash offers, but I still get a loan. So I won't have any inspection contingency, no appraisal, no loan conditions, but I've got private lenders,

I've used hard money before, I've used banks. And all I do is I write a little clause that says, hey, I have the cash available to buy this house. house. However, I may use a private loan or a bank loan to purchase it, but it won't affect the seller at all. No contingencies, you know, none of that. And that allows me to do these kind of cash like deals, but still use, I can do 100% financing still. So that's one trick that has really helped me get more deals. Because I struggle with that, the whole like, I want to say cash, because it is cash, sort of, but it's like I'll use a hard money lender sometimes, sometimes I'll

pay cash for it. I never really know what to do there. I'm going to totally take that from now on every offer. I'm going to have that little clause in there. It says I might use a form of financing, but it doesn't affect you at all. Yeah, that was, that was worth this hot cost of this interview right there. The first couple deals I did, I just wrote cash. And then the title company's like, why are you getting a loan? I'm like, well, it's not really like, you have to do it. So I'm like, okay, I made that little clause. Never had a problem since then. Love it. Love it. We do the same thing on every one of our offers. Why did you guys tell me this stuff before? Come on. Brandon, I do this all the time, too.

I think you're the only one who hasn't been doing this. No, I always struggle with the whole like low cash. Yeah, whatever. All right. Jay or Carol, Carol, Carol. I'll go. I actually have two. The first one is, it goes back to something you said earlier, Brandon.

It's all about kind of get the eb-d-bees when it comes to negotiation. People just don't like it, right? So my number one tip is negotiate everything always. for the simple purpose of just learning how. So you're always, always, always practicing. Every time you go to Home Depot, I don't care if there's a sale. I don't care if it's not scratching down. I don't care what it is.

Talk to somebody and ask if you can get it for a lower price. And you will be amazed. Maybe you won't be amazed. You always get something for a lower price. They can always figure out a way to do it. So no matter where you are, maybe not the grocery store. That's excessive. But beyond that, just negotiate everything always.

And like I said, it just keeps you in the mindset of waiting and being patient and all those, all those things you need to do as part of a successful negotiation. You probably could do the negotiations, though. I mean, imagine you get a big bag of oranges, right? And there's like, you find the one bag that has something wrong with one of the oranges, right? So like, you go put it in the thing. And then like, as they're ringing up, you're like, oh, wait, there's something wrong with that one.

Can I just get a discount on that one since there's one orange bed? Sure, we'll take off half price. You know, like, they'll just take that off of the thing because it's easier to do that back and replace it. Exactly. You always ask because you have to remember the worst that can happen is they can say no. So number one negotiating tip is always, always, always negotiate everything. Can I throw something in about that?

So when I was in the corporate world, my company that I worked for paid a lot of money for me to take this high-price negotiating course. And it was a couple-day course. And I remember our homework on the first day was go to a department store, pick out an item that I wanted to buy anyway, and negotiate the price. and basically the goal there was going into the place where you're least likely to get a discount on something and doing the best you can because what you realize is it's kind of like for all the guys out there that have like hit on women or ask women out and it's terrifying it's nerve-wracking and you don't want to be rejected but what you don't realize is there's nothing wrong with rejection and when you're negotiating there's nothing wrong with having the other person say no and the more times you hear no no no no

And trust me, when it comes to women, I know this really well. Carol was the only one that was brave enough to say yes. If you hear enough knows, you get desensitized. And it makes it a lot easier. And a lot of us are just so terrified of getting that first know that we never try it. But you realize that the worst thing they can do is say no. So here's the homework that I have for everybody that's listening to this. Go to JCPenney or Macy's or some department store tonight.

Pick out something that you're going to buy anyway. and do your best to try and negotiate it. Just to see what the other person says. They might be so caught off guard that they say, well, I do have a 15% coupon here that we're allowed to use for customers. Great, you just got 15% off. Not only did you just get 15% off, but you know that there's a coupon sitting behind the desk

so the next 50 times you go, you get 15% off that time too. Well, what's funny is every time somebody has ever emailed me or sent me like an Instagram message, I get a lot of Instagram messages over on at Beardy Brandon. I like that plug. So like I get a lot of Instagram messages. People are, and people occasionally maybe like once a month or maybe once every couple weeks will say, hey, is there any current discount codes for our pro membership?

I have, I don't think I've ever once not given them a discount code for a pro membership, like every time. Because I'm like, I know what they, if we have a sale running, I know what it is on my head. So it would be easier for me to write that to them. It doesn't affect me at all and give it to them. And like, and that would save them, you know, potentially up to $100 a year on your pro membership just by asking me that question.

And like very few people ever do though. But now I'm going to get slammed. But yeah. Yeah. What's that code? Yeah. We should make a code just for the show. Hey,

hey, if people are listening to the show right now, we should make the code negotiating. Negotiating gets a 20% off of pro membership right now. You have to buy it. If you buy the book. Ooh, if you buy the book, 20% off your pro membership,

yeah, use the code negotiating. We will make that happen. There you go. Kevin is our podcast producer. Kevin, I'm putting you on charge of that one. See, you make that happen. Get her done. Carol, I'm sorry. I interrupted you. You had a second tip. That was fantastic. So my second tip is every negotiation always practice, patience, sit back in wait. I know I've said it before, and I cannot emphasize it enough. I want to share a recent story. I was selling a property, and we listed it. And we had a ton of show like everything now. You know, it's like 40-some showings the first weekend, et cetera, et cetera, et cetera. An agent called me over and over and over and knew she really wanted it.

sends me an offer and it was the list price on the house was $6.50. She brings me an offer for $6.25 and basically no contingent, the financing contingency, but really, really simple deal. This was actually, this was not an investment property. This was a deal I was selling for a friend. I took it to my friends, the sellers, and I was like, guys, because we're thrilled, we're thrilled with the $625 offer, but I'm like, eh, I'm just going to sit back and not entertain this right now. and I just waited a day. She had priced the property really high. Yeah, price the property really high.

We're like, let's just see if anyone bites. Let's see what happens, right? So I priced at $6.50. They bring me an offer for $6.25. Sellers are thrilled. I wait a good 24, 36 hours. And I'm like, I'm just going to hang tight. Agent calls me back, you know, day, day and a half later.

Apologizing for sending me such a low offer. I so wish we could have brought more to the table. They really, really, really want the property. and I'm just sitting here listening and listening and listening, we're thinking, oh my goodness, we were ready to accept this offer, but now you're apologizing that you think it's too low. So, well, who has the power now? So it shifted all the power. We ultimately landed at 648 on that property, and it all worked itself out.

But it's just one quick and dirty of many, many examples where if you just sit back and wait, the person, to a point, you don't want to freak people out too much. But you got to let them freak out just a little. You've got to cause a little bit of friction. If you make it too easy, then people go away feeling like, oh, maybe that was, maybe I should have fought a little bit more. But if you, if you're patient and you wait it out, you very often end up with a better deal. Carol and I have literally made hundreds of thousands of dollars over the last 10 years because she is so good at this. If it were just me, I hate doing it.

I get an offer and it's like, it's the same way when I get texts or emails. It's just like, I don't like things sitting on my plate. I just respond immediately. And if I get an offer, I remember, and Carol's always like, uh-uh, we'll call them back. tomorrow or the next day or the day after. And it's driving me nuts because I just want to, I just want to get a deal done. I just want to get something locked up.

And she's like, nope, just wait. And invariably, I mean, we make more money the longer we wait, the more money we make. And it's so effective. And I couldn't do it myself, but luckily, Carol does it for me. That's sweet. You know, it's that old adage, the person who cares the least has the most power.

Yeah. Keep that in mind. If you care less, you do have more power. That's fantastic. Very, very cool. All right. So let's move on. Jay, did you have one or did I ask you? Is yours or the would get rejected one? Yeah, no, I'm going to give one real quick. So, and this is another thing Carol is so good at. She is so good at research. Constantly. I mean, if somebody makes an offer, she finds their Instagram, their Facebook. She finds them on LinkedIn. She'll go back and look through property records. She'll call family members and ask them. I mean, she'll do anything. And it's amazing. what you can find if you're willing to do a little bit of research. And we have a story in the book that I really love. We had this property that we were selling and it was a few years ago and we listed it and

we got no offers and it was like two weeks and we were getting ready to drop the price and we had a showing and we got a low offer on the property. I don't remember any of the numbers on the deal, but we got a low offer on the property and we were getting ready to accept it because we were going to drop the price anyway that weekend. And Carol's like, okay, well, let me do some research on the on the on the on the on the potential buyers and she's doing research and she comes to me and she says you got to come see this and i actually took a screenshot of this and i put it in the book because i know nobody would believe me if i didn't screenshot so i did it at that moment because

i knew it was going to be useful at some point the she found the person on facebook this is a few years ago back when everybody's facebook profiles were public and this woman we knew that she was looking at this house she had a boyfriend or a husband that was far away that that that didn't come with her, but she wanted him to see the house. And she wrote a post on Facebook, and I'm reading it out of the book. And she wrote on Facebook, was getting ready to give up on this trip, but I think we found our house today, exclamation point, made an offer this morning and waiting to hear back from the agent.

I have a name blacked out here for privacy. Blank hasn't seen it yet, but I know he's going to love it. Best part is it's only a couple blocks from, and there's another blacked out name there. We could be neighbors, exclamation point, exclamation point, fingers crossed. So basically this woman went on Facebook and wrote a Facebook post that she was so excited about this offer that she made, her boyfriend or husband or whoever it was, was going to love the property, and they could be neighbors to somebody that they knew. So basically, this told Carol, especially because she was doing the negotiating, everything she needed to know. This was their house. This was the last house they were going to look at.

She said, finally, was getting ready to give up. So this was the last house they were going to look at. It was the perfect house for them. But they put it at a low offer. Ultimately, what happened? we didn't drop the price. We negotiated it. I don't know if we got full price for it, but I'm sure we got close to full price for it because this person put information out there that we were able to leverage. So research is that important. We did the exact same thing on one of the last projects we did. We looked on their Facebook, find out some really good information about how excited they were about it. Yeah. I mean, like we have to remember too as when we're selling a property like, you know, as an investor, it's fairly a numbers game for us. We just like, you know, throwing a number. We don't get an offer except not a big deal. When you were selling properties, though, if somebody goes to the hassle of making an offer, like, that's a pretty big deal to people.

Like, they want the house. Like, they do want it a lot of times. Like, they're not going to just give it up real easily. So when you're selling a property, like a flip, whatever, you can, I think, push a little bit harder on negotiation than maybe we all believe we can. Well, let's shift us over to the next segment of our show, which is our deal, deep dive. Tax season reminder for all the real estate investors listening, if you own, rental properties, short-term rentals, commercial buildings, basically anything that's not

your primary residence, you need to know about cost segregation. It's an IRS-compliant strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost segregation, guys, is the go-to firm, having done over 12,000 of these studies with $500 million in total depreciation identified. Head to costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off and suddenly your

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$100 Amazon gift card. That's bill.com slash bigger pockets. All right, let's get to today's deal deep dive. This is part of the show where we dive deep into one particular deal that our guests have done today. I believe, Mark, you're the man in the hot seat today. Is that correct? Yes, I am. All right. So we're going to jump into this deal of your. yours. And we're going to fly through this because I know we have a hard stop in a short while. So we're going to fly through it. Let's start with, first of all, what kind of property is this? Let's start there. It's a 68,000 square foot strip mall I bought last year. Whoa. And that's where I started my office. And yeah, I decided to go big. So.

All right. That sounds good. Question number two, David. How did you find this property? It was a pocket listing from a commercial agent who I'd worked with. I'm a broker agent, but I knew to do this big commercial stuff, I had to have help from somebody else. All right. That's smart. How much was it? 2.1 million.

Wow. 2.1 million. All right. And how did you negotiate that price? Well, he brought it to us as a pocket listing, told us it was a pocket listing. I had a partner who bought it with me. And they're asking 2.25 million.

He's like, just buy it at that price. You're dumb if you don't. I'm like, well, nobody else knows about it. He wanted to sell it to me so we could get both sides. So I said, see what happens. It was an amazing deal. Like I would have paid 2.25, no problem. And they counter us at 2.1. So I said, done. Deal. Let's, let's do it. All right. Yeah, I think sometimes agents will be not exactly on our side because they just want the, I mean, they make no difference,

really no big difference commission if they pay 2.2 versus 2.1, but they could lose a deal at 2.1 or 2. Right. So like an agent will always encourage you, not always, but will oftentimes encourage you to do something that's not in your best interest. And they're not, they're not being bad. They're just, it's just how they think. It's the business. business. All right, how'd you fund this deal? We used a local bank. So part of the reason I brought a partner in was because I didn't want to spend $500,000 for a 25% down. So my partner helped fund the down payment. We used a local bank. And that's actually my partner's local bank he used, because he's a flipper from in the past. Now he just kind of lent his private money. So that's

why I had my partner was to really secure that financing. And it was a 4.6% interest rate with a 25-year amortization and a 10-year balloon. That's awesome. Yeah. To clarify, a pocket listing is a house that is listed for sale with a broker or an agent, but is not put on the MLS where everybody else can get it. It comes from the before the internet, when agents would have a book of houses for sale, and they would put like a piece of paper that showed all the detail, well, that agent might keep that in his pocket so no one else could see it. And it's a way that they can give a deal to someone specifically. So it's kind of like an off-market deal, but the person's still being represented by an agent. So anyway, what did you?

And from a negotiating perspective, the most interesting part of that deal was the fact that Mark was able to build a relationship with that broker that the broker brought that brought him that deal before they took it to anybody else. Yep. So yeah, that started long before the deal ever came up. Yes. Exactly. Yes. I mean, full circle. Okay. What did you do with this deal? I still have it. So we bought it at about a nine cap where properties around here were selling at a six cap for commercial. So it was an amazing deal. I had a grocery store in it, coffee shop, restaurant. Some,

office space. And so we basically did nothing to it. But I started my own office and started paying myself rent. And that increased income even more. I plan to keep it basically forever. That's cool. That's cool. Well, so what was, I mean, what was the outcome? But maybe specifically, like, I mean, do you know, like, and if you're comfortable with saying, like, what kind of cash flow does this generate or a return does this kind of give? After our loan, we're making about $10,000 a month on it after all expenses. That's awesome. And our loan is paying. off 4,000 to 5,000 a month in principle. That's amazing.

So yeah, no, it's, yeah, it's so awesome. I want 10 of them, but I can't find them. You said you put about $500,000 down. You're making $10,000 in cash flow a month, which is about $120K a year. So basically, you're getting back about 25% cash on cash on that. Yeah, that's awesome. That's awesome. Not counting the taxes, the principal, yeah, all the other stuff.

That's amazing. Very, very cool. All right. What lessons did you, sorry, David, I'm taking your question. What lessons did you learn from this deal? The biggest one was we almost lost it. So we got under contract. We had an inspection on this one because I'd never bought anything more than, you know,

5,000 square feet before. And the inspection came back and said the roof needs some work. There's some electrical. There's a whole list of stuff. And my agent actually is like, okay, we can kind of use this to push against the seller, which is weird because he's representing both of us. And I'm like, well, all right. But he's like, let's really try and get the price down.

And so we asked for, I think, $125,000 concession. And we didn't hear from the seller for weeks. I'm like, what's going on? That's the other weird thing about commercial is it's done so different. It takes so long to get stuff done. I'm used to having it done that day. But nothing was happening. I kept asking my agent.

And eventually he's like, yeah, seller doesn't want to do it. He wants me to cancel the deal. I'm like, what are you talking about? So I actually, he, our broker accidentally forwarded me some emails that showed some stuff I wasn't too happy with. And so I contacted the seller directly and told them the whole situation. We still wanted the deal. I'm like, you know what? We won't even ask for any inspection items. Let's just continue. He's like, okay, cool. I'm glad you told me. Let's keep doing. Let's do the deal. And my big lesson was like, we asked for way too much stuff. If we would have asked for 25, 50 or some other stuff,

we might have gotten it. But because we went full bore, let's get as much as we can, we got nothing. and we almost lost like the most amazing deal in my life. So being realistic with your inspection stuff was my biggest lesson. All right. That's good. That was a good fire round. I mean, deep dive because,

again, we don't always like talk about the commercial side of things, but it is a fascinating thing that we're, I'm looking to get more into it. It sounds like you are as well. So awesome. I love it. With that,

it is time for the fire round. It's time for the fire round. The fire round. The fire round are the questions that come direct out of the, well, the fire round is. Do I say the fire round are, the fire round is? The fire round is the questions. That's weird to say, isn't it? Any of you guys, grammar?

Fire round. Round is singular. So is. Fire round is the questions, which sounds weird to say. The questions, weird. Weird. All right. The fire round is the questions that we ask every guest that come out of the forum.

So there are different questions every week. And we throw them at our guests. And so we're going to throw all them at you right now. Flaming hot. Number one, let's go, I'll do this one first on Jay. I found a really nice deal on a single family home that seller owns the property outright. It seems like she is open to seller financing. Any advice on getting her to agree to this and making it work? Yeah, absolutely. So the nice thing about seller financing is because you're not getting a bank loan, you can typically pay more if you provide a lower interest rate. A couple things. One, you're saving money on your upfront loan fees.

So let me give an example from the book. And it's an example which is in the book real quick. We had a house in a neighborhood. We had bought the house next door. A woman, we send out letters. Woman calls us and says her dad owns the house. He wants to sell it. And I knew the house pretty well because it was right next door to another house we were doing.

I knew we could pay 94 for it. And she basically said, my dad wants 100 for it. He's not going to take a penny less. I know that. That's just his nice round number. and I can tell that negotiating wasn't going to help here. Like 100 was his number. And I said, we talked for a while.

I basically said, what are you going to do with the money? She's like, I don't know. He doesn't, he just, he's just keeping the money. It's an investment property for him. He doesn't really need the money for anything. So we don't know what we're doing with the money. Okay. So that was, that basically told me everything I needed to know.

They didn't need the money tomorrow. So what I figured was, okay, if I do a zero interest loan, I'm going to save, I was going to flip this house over six months on $100,000 loan at, I don't know what it was. Let's say it was 12% back then. And so that's $6,000 in interest I was going to pay, plus I was going to pay a point or two up front. So basically, I was going to pay $8,000 to get the loan from the bank. So what I said to her is, I'll give you the $100K, but I want him to sell or finance it for

six months for me while I do the flip. And then at the end of the flip, I'll give him the full amount, I'll give him the $100,000. then. So I knew I was going to save 8,000 in loan costs, which basically takes my 100K purchase price down to 92,000, which was below my 94,000. Went back and forth a little bit. Ultimately, I gave her like 20,000 down, did the other 80K later, but it worked out because the numbers worked for me. I was saving money by doing the seller financing. So that's the story behind the answer. The answer is figure out how much money you can save by doing seller financing. Figure out if you do a zero percent down loan, how much money are you going to save?

If you don't have to pay the origination costs, how much money are you going to save? And then take a portion of that and roll that into the purchase price that you're going to willing to offer. So if you're willing to offer $200,000 and you are going to spend $30,000 in loan costs over 30 years, well, maybe offer $220,000 for not having any loan costs. They get $20,000 more on the sale price. You save $10,000 on your costs. It's a win-win for everybody.

So that's the benefit of seller financing. You can generally offer more money because you're saving money elsewhere. Really, really good. Really good. All right, number two. Number two, this one's for you, Carol. I have a condo under contract that was a foreclosure and it is being sold as is. I just came home from the inspection and there were some problems.

The AC breaker was not powerful enough. The furnace needs to tune up. And there was a wet spot on the ceiling from the upper neighbor's unit. Any tips on how to lower the price after an inspection on an as-as sale? Absolutely. That's a great question. We've had lots of those. So you might be surprised at just how many foreclosures, how many bank-owned properties, how many of the banks are willing to drop that price if they do realize what the true condition of the property is. A lot of times these banks, they have guys that go out and snap a bunch of pictures, but they don't really know exactly the true condition of the property. So if you can come in with some solid bids from your contractors on, it needs $8,000 in route. work. It needs $7,000 induct work. Guess what? The AC unit is missing. There are all these things I didn't know about and you can provide an itemized list along with contractor bids and present that as one big

package back to the bank. Very often they will open up that negotiation process again. I would say pretty much without fail, every time we've done that when there are some big ticket items that are substantial, the bank would really rather work with you because they've already started the process and a lot of times it's been on their books for such a long time. They want to be able to keep that momentum forward. So as long as you really go in armed with really good, solid information and just say this is what needs to happen, they will very often work with that price, work with you on that price.

That's great. As is, even when a listing says as is, it's never as is. You know, I mean like. Exactly. Yeah. I mean, like oftentimes like if it's between them losing a deal or not, all of a sudden, it's no longer as is. Now all of a sudden they're willing to move.

You got to remember that as is. often just means they don't want to have to deal with the repairs themselves. They're happy to throw money at the problem. They don't want to throw time at the problem. Yeah, I love that. Great tip. Great tip. I number three, Mark, I'm naturally not very aggressive or confident in myself.

And I'm wondering if that's hurting me. How important is sounding confident in negotiations? And if it is important, what can I do to become more sure of myself on the phone? Oh, wow. That's a good question. I'm a natural introvert. Like, I hate talking on the phone. When I was a kid, I was the person who hid behind my parents' leg whenever anybody else was

around. So it can be a problem. And I think, you know, it's not, you don't have to sound crazy salesman confident. You just have to be yourself, you know, just talk to people, right? Just talk to people. If you've been done your education, if you've learned about real estate, being knowledgeable is the most important thing about being confident. So if you know yourself, just be yourself and just talk to people. And if you have a problem with confidence and being, you know, I hear some people say, well, I'm an introvert. I just can't do that. And that's not true. You just don't want to do it. So, I mean, I've spoken at conferences before and it was the scariest thing in my life, but I still did it and you feel absolutely amazing after you do it.

So you just have to kind of practice, you know, talk to yourself in the mirror, talk to your friends, role play if you have problems with really, you know, talking to people. And the more you do it, the more we practice, the better you'll be at it. Yeah, really, really good tip. Yeah, the more you do it, the more you're going to get better at it. I almost wonder also if like talking like, you know, being the confident person, like really like, you know, high D like to go to the disc profile or like super confident. That probably actually hurts oftentimes the negotiations.

Yeah, because then people think they're going to get taken advantage of rather than taking care of. Yeah, I remember that book Moneyball that Billy Bean wrote from the Oakland days? And he was just like beating everybody in every trade. Well, there came a point where nobody wanted to negotiate with them anymore because they just thought they were going to lose. And it actually was not in his best interest that everyone knew he was good at that. Good to know. Good to know. All right. Well, let's head over to the last segment of the show, which we lovingly refer to as our. These are the same four questions.

We ask every guest every week. So we're going to start. I know Jay, you've answered these before. Mark, you've done it before. But just real quick, let's have everyone just fire off. Favorite real estate book? We'll start with Jay. Current, other than you've written.

The book of rental property investing. Wow, look at that. Long distance investing. Wow, nice guys. So honestly, I have spent the last eight months writing, and I haven't read a book that was that I haven't been writing for the last eight months. So I'm going to let the other two handle these questions. All right. Carol, favorite current favorite real estate related book.

I can't not say the book on negotiating real estate, Brandon. Come on. I write them. I write them. Good negotiation there. That was good. That was good. Mark. Oh, current. I really like Gary Keller stuff. It's just so timeless. So it's not really that current. But millionaire real estate investors, kind of like a Bible for a lot of people. Yeah. And when I think her, I mean, like, you know, It changes every year or two for me. Not 30 years ago. Yeah. Well,

it can be like some people's current favorite might be Nickerson's, you know, 1752, amazing book. I don't know what it was like the 1920s. But anyway, all right. How about each of you? A current favorite business book, like something that you're just really enjoying from a business standpoint right now or that in your past you've loved.

I'll go. This is a, it's an old one. This is from maybe 20 years ago, but it's one of my all-time favorites. I still recommend it to everybody. It's Marcus Buckingham's Discover Your Strengths. And it has,

I think 30 different strengths. And it's really good building teams and working with other people. It's worked really well for Jay and me, for example, because we're our husband and wife investing team. And in the beginning of our working together, we were both positive that we knew everything about everything. So we tried doing the same stuff always. But discover your strengths.

You figure out who's good at what. Divvy up the roles and you're far more successful. All right. All right. Anything for you, Jay? Oh, sorry. Anything business book for you, Jay or Mark? Too perfect is, I forgot the author's name, but it's all about like being OCD and just that book is just makes you relax and kind of realize nothing, not everything has to be perfect. And sometimes doing 90% of the work is just as good as 100% and you get much better results.

All right. Yep. So I picked up the one thing last week. We did a little vacation and and so I read it before, but I, I picked it up and read it on the plane on heading out on vacation a couple weeks ago. And just reminded me, I really like that book. It just has some really good high-level concepts in there to help you focus and really get your business moving in the right direction and free yourself from the stuff that you shouldn't be focusing on. So true. All right, hobbies. One word each, hobbies.

Sorry, David, I just totally took your question. No, David asked it. I'm going to let David ask you. The cat's out of the bag. I get paid per question. and this has costed me a lot of money. All right. Cars.

All right. I knew that. Yeah. Building epic box forts. Wow. Carol breaking the rules again. She's doing a lot of the box forts these days. Nice.

What are my hobbies? Do I have any hobbies? Clearly not thinking of what they are. Yeah. Okay, I'm going to go with poker. Poker, yeah. That's like a perfect Jay. Scott hobby right there.

That's great. Which I still want to play some poker with you, Jay. We have not played you. yet, but we'll get there. You'll never beat Brandon because he's wildly unpredictable. Brandon's whole strategy is to not even know what he's doing. Like you could never read his mind because he doesn't even know what he's thinking at any given time.

It's the best strategy. No, my strategy in poker is easy. I just look at what the guy next to me is doing and I just do exactly what he's doing. If he folds, I fold. If he doubles down, you know, no matter what. It works surprisingly well. Anyway. All right.

Last question. Because I took yours, David. You want to take mine? All right. Tell us, what sets apart successful investors from those who give up, fail, or never get started? Okay, I'll start. Just taking action every day. It's really that simple.

I see too many people that they spend so much time planning and they think about where they want to be a year from now or five years from now or 10 years from now. They get overwhelmed because they think, oh, that's unachievable. But instead, don't think about a year from now or five or 10 years from now. Think about what you're going to do today. And every day, just do something. and I probably use this tip on my last three times on the podcast, but I love it. It is very, very rare that I ever meet somebody that has only done one deal in real estate. If you can do that first deal in real estate, you're going to do a whole lot more.

Nobody stops at one because after the first, it's easy. That first deal is really tough, but just keep going until you get that first deal. And I promise you, once you get that first one, you're going to do a whole lot of deals. All right. I would mention knowing your market. So many people don't know what a house is worth or they don't know if they're getting a good deal. And if you know you're getting a good deal, it makes buying it so much easier. And once you do it like Jay said one time, it just snowballs and you keep doing it over and over and over again.

But you have to study your market. You have to know your market. You can't depend on agents or other people to tell you. You need to know yourself. All right. That's really good. Thank you very much. And lastly, it would be Carol, but actually Carol, we just lost her.

So we'll come back to that or y'all can follow up with Carol. Actually over on the show notes over on biggerpockets.com slash show 321. But you guys, this has been fantastic. So I think we got one final question. David Green here will ask the final question. David? Tell us, how can people find out more about each of you? All right.

Well, investformore.com is my blog. InvestF-O-M-R-M-R-E dot com. Started about six years ago. So have a bunch of articles on there. We do videos of almost all my flips and rentals on YouTube, the Investmore channel. I have a few books besides this one as well as I've written. And you can always email me, Mark at Investmore.com.

Happy to talk to people and help any way I can. Jay, where can find you and Carol? 123flip.com is our blog. The number is 1,23 Flip.com. We are on Bigger Pockets, Jay Scott and Carol Scott. And you can find me on Facebook, J Scott Investor. Letter J. Scott Investor is my Facebook

handle and one, two, three, flip on Twitter for anybody that wants to follow me on Twitter. That sounds good. Well, thank you guys all for joining us today. This has been a fantastic show. I hope this is helping a lot of people negotiate better. I know it's definitely helped me. So without further ado, I'll let David Green just take us out. This was awesome.

Thank you guys. This is David Green for Brandon. I buy houses cash. Well, with someone's cash, Turner. Signing up. You're listening to Bigger Pockets Radio. So simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the height, you're in the right place.

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