At the writing of this article, the real estate market is exceptionally hot and competitive.
Ludacris bidding wars have emboldened sellers to be picky on who they want to sell to and demand above asking prices.
As real estate investors, our numbers and offers are roughly similar.
The basic MAO (Maximum Allowable Offer) is, in general, computed at 70% of ARV minus the cost of repairs. Google “What should I offer a seller” and that formula will come up because it has been taught to thousands of investor buyers.
Sure, we can fudge the numbers a bit based on the exit strategy or great relationships with contractors getting materials at wholesale (another crazy market!).
At the end of the day, what I can offer and what you can offer to a motivated seller still based in the realm of math.
How then, can I lock down the deal and get my contract signed?
It is possible if I get my offer in first. It is possible if my numbers are slightly more appealing (cash, timing, terms). Also, it is possible if the seller LIKES me more than everyone else.
In business and everyday life, the ability to make people like you is an invaluable skillset. As we have said before at REI Mindset, the real estate business is a people business. People do business with those they know, LIKE, and trust.
First and foremost, I like being liked by people. It is a nice emotion! It feels good. It stands to reason that if I enjoy working with people I like, then the people who like me will naturally want to work with me over others. Communication, work, negotiations, and relationships are just a bit easier when dealing with someone we like.
From a practical point of view, we want to be liked because it makes life easier. All other things being equal (finances, efforts, complexity) being liked is a tactical advantage.
- If a wholesaler likes me more than another investor, they will call me first.
- If a contractor likes me more than another investor they will choose my project first.
- If my tenant likes me then I will have fewer complaints and they will take better care of the property
Simple human nature.
This book is dense like a triple brownie. It goes deep into the psychology and techniques universal to human nature. The why and how of influencing others is explored using body language, word choice, tonality, vocal patterns, and non-verbal cues.
While I cannot do it justice in a single article, I do want to focus on the biggest lessons learned.
Lesson 1: The Golden Rule of Friendship
This is one of the central concepts of the book and the key to being a likable person.
The Golden Rule of Friendship is, “If you want people to like you, make them feel good about themselves”.
One would think that if I want someone to like me they should feel good about me! It is about the other person, not us. The key is positive feelings about themselves in our presence. We are drawn to people that make us feel good about ourselves when interacting with them.
- We want to be around someone who makes us laugh
- We want to be around someone who compliments us (genuinely)
- We want to be around someone who appreciates and understands us
How do you start making people feel good around you? It begins before the first words are ever spoken. There are three physical techniques in the book, but I want to focus on the one I believe is the most important.
Smiling! A genuine smile is common sense when it comes to connecting with people, but easily one of the “moves” performed incorrectly. The subtle reason this needs to be called out is that when a fake smile is forced it closely resembles a smug smirk. Look at the photos below.
- What do they make you feel?
- Where are the differences?
- Who are you more drawn to?
- Who would you rather spend time with?
Notice the wrinkling around the eyes and the upturned corners of the mouth in the genuine smile.
The genuine smile releases endorphins that create a feeling of well-being creating a more receptive mood to both the person smiling AND the person viewing the smile.
“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel” – Maya Angelou
Lesson 2: The Skill of Active Listening
The authors define active listening as a way to effectively show someone you care through the use of verbal and non-verbal cues.
It isn’t enough to hear someone out, you need to show them you are listening and comprehending. It requires listening with total focus.
Some of the most effective active listening techniques in the book that I have personally used as a real estate investor and recommend are:
- Allowing the seller to talk (and importantly not interrupting)
- Eye contact (sustained yet appropriate and non-confrontational)
- Head nod (slow = empathy; quicker = enthusiasm)
- “I see” “Uh-huh” “Right” “Correct” “I hear you” “Ok” “Understood” “Yes!”
- Mirroring or parroting what was just said or rephrasing it to show I understand
- Use of inclusive language “Us” “We” “Our”
The next technique to enforce active listening is the empathetic statement. Listen to what the person says and focus on the emotional aspect. The wording of the empathetic statement is similar to:
- “It seems like…”
- “It sounds like…”
- “You must feel…”
Why does this work? It shows the person you are talking to that you are listening to their words and going on the same journey as they are. It shows you have emotional intelligence, are paying attention, and are interested in what is being said.
The empathetic statement works because human beings connect more strongly through emotions than through logic.
“People don’t care how much you know until they first know how much you care” – Zig Ziglar
Lesson 3: Combating Anger
I chose this lesson because anger is an emotion real estate investors need to deal with skillfully, especially when prospecting for motivated sellers.
One of my main prospecting activities is cold calling. If you have ever done it, I assume you are shaking your head right now. If you haven’t done it, rest assured, someone will get angry with you on the phone.
The better you are at getting past the flash of anger that sometimes occurs, the higher your chances of continuing the conversation, and the more likely you are to help people in bad situations.
Here are the Big Three anger resolution steps:
- Allow them to vent = active listening, no interruption
- Empathetic statement(s) = “You must be extremely frustrated with the volume of calls about your property” “I imagine it can be overwhelming”
- Presumptive statement(s) = “But that wouldn’t stop you from hearing my offer, right? (Grant Cardone special) “Five minutes talking to me is worth it so you can tell the rest of them it’s taken care of, right?”
A couple of things to note about this pattern. They are more cyclical than sequential. If you get to the presumptive statement and they still are not in agreement then their anger isn’t fully dissipated. Go back to listening and empathetic statements allowing them and encouraging them to vent.
Note that when people are angry they are not logical. Connect to them emotionally because logic isn’t the right tool for the situation.
Also, make sure to craft the presumptive statement so that their anger is what pushes them to take a specific action moving forward in the conversation.
Yes, they are angry you called but, if they make the decision to listen to you right now then that will make it so that this situation is handled in the near future. No more real estate problems!
Lastly, the Big Three is amazing even OUTSIDE of real estate investing.
This lesson, by FAR, is the most impactful thing I have taken from this book. Teach it to your partner. Teach it to your kids. Teach it to your employees, colleagues, and friends. It is LIFE CHANGING.
Understanding how to correctly deal with anger is not a manipulative parlor trick. It can SAVE relationships by allowing others to be genuinely understood and feel heard.
It is not possible to come up with empathetic statements without feeling and developing empathy for the other person.
There is no need to attach right or wrong morality judgments because you don’t have to agree with their choices, beliefs, or positions. But, at the very least, you can see how another person can feel a certain way in their current position.
Understanding point of views, perspectives, and motivations bring you closer to a resolution.
There are many books on my shelf, but this one stays near my desk! It is a fascinating textbook on human behavior and what we can positively do to influence interactions and guide people to more productive outcomes.
The three lessons above don’t even include any of the awesome FBI agent stories packed inside. The highly credible authors based this book on science and real-world high stakes implementation.
Practice these life-changing and essential skills on everyone you know to strengthen relationships and make others better off for coming into contact with you!
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