Negotiation Tip: Setting an Up-Front Agreement

Hi Everybody,

I'm on my way to this summer's Maui Mastermind event but I wanted to post this blog on a key negotiating technique called an "up-front agreement". I hope you enjoy it! (Don't worry, I've made arrangements so that you'll still get your weekly doses of ideas, tips, and strategies from me.

Setting an Up Front Agreement

What is your most precious resource as an investor? Some people will say money. Others will say good credit. We say it's time. Yet I watch so many beginning investors work for FREE! By this I mean that they invest all kinds of time and energy with a seller and on a potential deal all before they have a definite commitment from the seller that they have reached an agreement.

I am not willing to work for free and don't think you should either.

Instead, you will create the context up front with the seller that you will spend the time it takes to work through their situation and all the details provided they agree up front, that when the conversation is over, both you and the seller will let each other know exactly where you stand--either you have a fit or you don't.

Period. That simple.

In it's plainest terms an up front agreement is simply a commitment you and the seller make to each other to tell each other yes or no at the end of your conversation about the property.

Here's how it sounds:

Investor: Samantha [seller], I'm willing to sit and invest the time to listen to all the details of your situation and to talk through all the possible options we can come up with. All I ask is that when we're done talking this all through that if what we talk through obviously isn't a fit for you, that you be willing to let me know that. If it obviously just isn't a fit, are you willing to tell me that?

Seller: Sure.

I: I appreciate that. I'm letting you know that you are not going to hurt my feelings. On the other hand, if what we talk through is a fit for you, are you willing to let me know that when we're done here today?

S: Yes if it is a fit I can tell you that.

I: Now I'll be doing the same thing in reverse. If I can't see a way where I can meet your needs and make a profit for myself, then I'm not going to want to buy your house. Are you OK if I have to tell you no I don't want to buy it? I mean, it wouldn't be anything personal about you, it would just be me saying it's not a fit.

S: I understand this has to work for both of us.

I: Exactly, and if I feel it's a fit then I'll let you know that too. I'll say, 'Samantha, this is a fit for me too.' So what we're agreeing to do up front is to let each other know when we're done exactly where we stand. Either, no it's not a fit. Or yes it is a fit. Is that what we just agreed to do? [This is called "reinforcing" the up front agreement.]

S: Yes it is. [and on to the next phase of the negotiation]

Do you see how powerful that language and strategy is? It's your way of telling the seller that you'll put your time in to see if it's a fit, if and only if they will promise to give you a decision right at the end.

(If you are really interested in negotiating strategies and techniques, check out the negotiating course I recorded last year called: Influence: How to Handle Every Business Negotiation You'll Ever Face. It's one of my best courses ever, but heck, I'm biased!)

That's it for this email. I hope you are enjoying your weekend!

My best to you,

David


P.S. Reminder that that special offer for you to get TWO workshops for the price of one is about to expire this coming Tuesday, July 31st at midnight! So if you wanted to be able to attend BOTH the August Preemptive Tax Strategies Workshop AND the October Wealth Vehicles Workshop for just $3,997 I urge you to register now. For more information or to register click here.