Mastering Negotiation in Real Estate – Key Strategies with Tom Zeeb

Today, we have a special guest with us, Tom Zeeb, an experienced real estate investor who has mastered the art and science of negotiation.

Tom’s journey in real estate began in 2001 when he was broke and had a near-death experience while rafting. This life-altering event pushed him to find a new way to break free from his nine-to-five job, and he discovered the power of real estate investing. Today, Tom is going to share his insights and strategies on negotiation that can help real estate investors secure better deals and make more money.

The Power of Problem Solving in Negotiation

When it comes to negotiating your first real estate deal, it’s important to remember that both parties involved have their own pressures and problems. Instead of solely focusing on getting the deal done, it’s crucial to understand the other party’s perspective and find a solution that works for them. Tom emphasizes the importance of digging deep and asking difficult questions to uncover the seller’s problems. By doing so, you can help them solve their problems and create a win-win scenario in the negotiation. Tom explains, “When you push somebody to actually think about their problems and push them to solve it, you’re helping them out in life.”

Identifying Troubling Situations for Negotiation

To effectively negotiate a real estate deal, it’s essential to identify troubling situations where you can offer a solution. Tom highlights a few scenarios where negotiation can be particularly fruitful:

1. Pre-Foreclosure: Homeowners facing foreclosure are under immense pressure to find a solution before losing their property. By approaching them with a potential offer, you can help them avoid foreclosure and alleviate their financial burden.

2. Probate: Inherited properties can often become a source of stress and conflict among family members. By offering to purchase the property, you can provide a solution that allows the heirs to move forward and avoid further complications.

3. Tired Landlords: Landlords who are tired of dealing with problematic tenants or the challenges of being a landlord may be open to selling their property. By understanding their frustrations and offering a solution, you can help them transition out of the landlord role.

Building Your Negotiation Toolkit

To become a skilled negotiator, it’s crucial to develop a toolkit of negotiation techniques. Tom shares that he has 52 different negotiation techniques that he teaches his students, and these techniques are modular, allowing investors to customize their approach for each situation. He emphasizes the importance of understanding the science behind these techniques, as they are based on human psychology. By mastering these techniques, investors can put downward pressure on the price while simultaneously solving the seller’s problem.

The Art and Science of Negotiation Techniques

Tom provides a glimpse into a few negotiation techniques that can significantly enhance your negotiation skills:

1. The Flinch: When the other party presents a number, act as if you were attacked by that number. This technique creates a sense of discomfort and prompts the other party to question the validity of their offer. Tom demonstrates, “Whoa, 300,000? That’s a lot.”

2. Bracketing: Engineer the middle ground by offering a price that is lower than the seller’s asking price but higher than your target price. This technique allows you to converge towards the middle and find a mutually beneficial solution. Tom explains, “If you’re 50,000 high above my target price, then I want to go the same distance lower. So instead of you’re at 300, I’m trying to get to 250. So I’m going to start at 200.”

3. Specific Numbers: When making an offer, use specific numbers to convey precision and thoughtfulness. Tom suggests using numbers like 203,579 instead of round figures. This technique creates the perception that you have carefully calculated your offer and adds credibility to your proposal.

The Power of Active Listening

Active listening is a crucial skill in negotiation. By paying close attention to the other party’s words, body language, and emotions, you can gain valuable insights and build rapport. Tom emphasizes the importance of asking open-ended questions and peeling off layers of the conversation to uncover the seller’s true motivations and concerns. He advises investors to keep asking questions and encourage the other party to open up, saying, “The more they’re talking about their problems, they’re building rapport with you because they’re confiding in you.”

Knowing When to Walk Away

While negotiation is a powerful tool, there are instances where it may be necessary to walk away from a deal. If there is no movement or the parties are too far apart in their expectations, it may be wise to put a reminder on your calendar and revisit the negotiation in the future. Tom suggests, “No doesn’t mean no forever, it just means no for now. I’ve got more work to do.”

Negotiation is a skill that can make or break a real estate deal. By understanding the other party’s problems, offering creative solutions, and mastering negotiation techniques, investors can secure better deals and create win-win scenarios. 

Successful negotiation is both an art and a science. By incorporating the techniques discussed in this article and continuously honing your skills, you can become a master negotiator in the real estate industry.

Remember to always focus on solving the other party’s problems, actively listen to their needs, and be prepared to walk away when necessary. With these strategies in your toolkit, you’ll be well-equipped to navigate the world of real estate negotiation and achieve success in your investment endeavors.