FROM THE ORIGINAL THREAD:"Bonding With Sellers & Your Image: Your Car"THIS THREAD IS CONCERNING NEGOTIATING:
FROM FRANK ROLFE:frankrolfe November 1 FlagOK, the road goes both ways here. You don’t want a flashy car, but you also don’t want a lousy car, as that will imply to the seller that you don’t have enough money to close the deal. You need something in-between. An expensive SUV is best, as it’s not sexy or flashy, but still implies a high price tag and that you have enough money to close a deal. Dave and I both drive these. I would never use a convertible, and I think red is a dangerous color (I prefer white, black or silver). You want to appear a prosperous, conservative business person. What car sends that image?
FROM GREG:Greg November 2 FlagFrank presents a situation which is more a divided highway than a two way street. As a mom and pop park owner I view a expensive SUV as a statement of excess. It is a mini van turned luxury vehicle. Added cost without added value. If he were to come knocking on my door to buy I would defiantly see money and he would not close on my park. At least not without paying top dollar. He would walk away believing I was greedy, stupid or simply out of touch with reality. The perception is that mom and pop are not very business smart which may not be the case. Most Mom and pop owners would not consider if you have the money to make an offer they assume you have it or would not offer. It’s the buyers problem to find the money to close the deal. No money, no deal. Mom and pop don’t care how you do it. Perspective is a interesting thing the difficult part is being able to put yourself in the other persons position in viewing that perspective.
FROM ME (KRISTIN):Kristin November 2 edited November 2 FlagYour Car – Bonding With Sellers:Ultimately, it comes down to the Buyer’s Personality when bonding with a Seller.My Husband and I own two Mobile Home Parks and we manage both of them.Last year we purchased a new family car, because we were blessed with a third son. The family car that we had been previously driving was a Cadillac SRX (Crossover…Red) and the third row was big enough for babies and puppies (but not big enough for three huge car seats).Thus, we purchased a new (end of the year), domestic, SUV (Ford Expedition EL…King Ranch…Black). This SUV fit our family’s needs (sounds like Frank and Dave like SUVs also ).Do I drive the SUV to our MHPs? Yes, I do it all the time (as it is my only vehicle).Do the Tenants know who I am? Yes, I talk to the Tenants, pass out flowers to them, shake their hands and compliment their work.Could the Tenants be jealous of the SUV? Possibly. However, I have learned that if you live and breathe, then ultimately you will offend people or make them jealous. I have learned to just live my life with my family. IF someone is offended or jealous (because of their own issues), that is something that they need to deal with…not me.I am saddened by Greg’s response of:'If he ( expensive SUV Owner ) were to come knocking on my door to buy I would defiantly see money and he would not close on my park. At least not without paying top dollar.'Greg, would you really not sell your MHP because of the vehicle that a person drives?My Husband drives a 1996 Ford F-250 Diesel. He could buy a new truck, but prefers the look and style of the older trucks. His 1996 Ford F-250 has just over 40,000 miles, so it is new to him .Greg, if my Husband came a knocking, I guess he would get the green light but I would get a boot to the door (as I would not pay top dollar)?As a Real Estate Broker a ‘Sale’ is basically two parties coming to a Mutual Agreement of terms.Ultimately, it does not matter what they drive. It matters that the Seller wants to Sell, the Buyer wants to Buy and they can all agree on the same terms.We wish you the very best!
FROM GREG:Greg November 3 FlagKristinSorry my statement may have been some what confusing. To preface I spent 35 years in corporate contract negotiations. To be skilled at negotiating one must hone their skills at reading and understanding not only what is said but especially what is not said.My point regarding Franks vehicle is not that I would chose not to sell to him. I would be willing to sell however my price point varies depending on the buyer. I have a bottom line but it varies with each buyer depending on what they can afford. The only number any potential buyer sees is the asking price.The art of negotiation is determining what your opponent is capable of paying and then leading them to that point. Mutual agreement is indeed the goal. The challenge is getting the buyer to that point not the seller.Bottom line is that negotiating with Frank would not conclude with a mutually agreeable contract because he would lack the motivation to purchase at a price I would be willing to negotiate. He business practices are such that he is not motivated enough, in regards to any individual park, to be moved beyond his set price point. Neither he nor I would be motivated enough to negotiate a mutually agreeable price.As for as you and your husband are concerned I could quickly determine separately that you and your husband would have close to the same price point but I believe I could get you to pay slightly more. Assuming your husband is not also a Broker your experience would push you to stay in the negotiations longer than he would and you would likely end up paying more as a result.
RESPONSE TO GREG CONCERNING NEGOTIATING:Greg, first of all I respect your knowledge and experience of spending 35 Years in Corporate Contract Negotiations.However, I respectfully agree to disagree with you.You (Greg) wrote:"I (Greg) would be willing to sell however my price point varies depending on the buyer. I have a bottom line but it varies with each buyer depending on what they can afford."As a SC Real Estate Broker your Bottom Line for a MHP (or any real estate) should be what the ‘Real Estate’ is worth…not what the person can afford.When I negotiate Real Estate for a Seller, first off we will determine what the List Price will be and what the Bottom Line will be. For a Buyer when we find Real Estate (before we negotiate) we will determine what the starting off price will be for the negotiations and what their Bottom Line will be.This information is written down on paper and signed by both my Client and myself. This helps to eliminate the ‘emotion’ which can come into play when buying Real Estate.Thus, the ‘Bottom Line’ (for either Seller or Buyer) is determined before negotiations even begin.Greg, you indicated that your ‘Bottom Line’ changes based on the wealth of an individual (or perceived wealth).The book ‘The Millionaire Next Door’ indicates that you might not even be aware that someone is wealthy (or wealthier than the average person…as everything is relative) by visible signs such as their home, car or clothing.Your ‘Bottom Line’ for your Mobile Home Park should be based on a set formula not the perceived wealth of a person.Greg, you also indicated the following concerning Frank:"Bottom line is that negotiating with Frank would not conclude with a mutually agreeable contract because he would lack the motivation to purchase at a price I would be willing to negotiate."Frank uses a set formula to arrive at valuations for Mobile Home Parks. Thus, Frank is not willing to pay more than his formula calculates. Frank has indicated that he has walked away from many a deal. Sometimes the Sellers come back to him and accept his offer and sometimes they do not.Greg, you also indicated that I would be willing to pay more than my Husband for a MHP:"As for you and your husband are concerned I could quickly determine separately that you and your husband would have close to the same price point but I believe that I could get you to pay slightly more."In reality both my Husband and I would have the same ‘Bottom Line’ as we would have agreed upon this price before negotiations began.We actually wrote 3 different offers (spaced out every year) on one of the MHPs that we purchased. We had no problem walking away when our ‘Bottom Line’ was not met.As a Real Estate Broker I ‘might’ or ‘might not’ play the negotiation dance with you longer than my Husband. It really depends upon my perception of how serious you are. If I think that you think your MHP is gold plated and you counter my offer with full List Price, I will just walk away as my ‘Bottom Line’ is my ‘Bottom Line’.We wish you the very best!
I just want to jump in here and talk a bit about ‘bonding’ with sellers. Off the bat, I think if your in your own vehicle, what you drive makes a difference. I have a couple vehicles to choose from, and if I am meeting with a seller I choose my SUV (Yukon) over my convertible (sports car). I will admit, from time to time if my SUV is being driven by my daughter (when she is in town for collage) or my wife I will visit my closer parks in my sports car. For the record, my tenants treat me no differently no matter what I am driving. If I were buying, and in my own car, I would drive my SUV. It is a ‘big tent’ car, seats lots of people, good visibility, easy to work out of. It also does not become any sort of ‘focal point’. No one comes out of their home and checks out my SUV. Like it or not, some cars attract attention. That can distract from matters at hand.Now lets move past that because what you drive creates a impression, but so do many other things. When I show up to a owners home, park, meeting whatever I show up in park operators clothing. No suit and tie stuff for me. I am getting on the ground, climbing over stuff, climbing under stuff etc. I am their peer most likely. The old expression- do not look a gift horse in the mouth does not apply. This is an exam and I will dress accordingly. Dirt, cold, wind, rain, snow, heat etc should all matter little to the task at hand. Show up in fancy shoes and a coat and tie, and the seller will know your more a hands off owner and less a hands on owner. I bond by talking about the sewer, the electric, the gas system, the water system, the home set ups, the state inspectors, the collections, the court system, the basic make-up of the tenants. When we start talking about value I know that probably the only person in the room that really knows how to price the park is me- so now I must be a teacher. I need to slowly, from the very basics walk the seller (and real estate agent and attorney or whoever) through the process. Gross income, actual expenses, presumed expenses the appraiser will add in, loss, vacancy, net income, interest rates and how all of this folds into the CAP rate. This takes LOTS of time and it will probably not produce the number the attorney, real estate agent or friends told the seller to expect. Then we talk about options, seller financing, master lease - option, cash sale etc… In the process of walking the park with the seller I have tried to learn things about them- I call it the FORD system. Family, occupation, recreation, dreams. Knowing this about the seller I am trying to figure out how to put together a offer so it can meet their needs. Do they need some cash and income= seller financing (maybe with a very high down payment). That can be offset with a very low interest rate, non recourse assumable financing and a higher CAP rate. Just cash, quick closing- lower purchase price, high CAP rate, very fast due diligence and contract dates. Maybe even no loan, pay cash and get the deal done in weeks. Does estate planning play into the mix- now maybe we are looking at that owner financing part that moves to a trust, or maybe a lease - option that converts to a sale at the owners death. Low down to the estate and long term income for the benefactors. Great sales and negotiating is about making sure each party drives home in a limousine. Not every thing in the process will feel that way, going through inspection items that probably result in value reductions can be tough, but again there can be win - win even here. If the down payment is important- leave it regardless of the price reduction, just take a larger part out of the purchase price, or adjust the interest rate on the owner financing part, extend the term etc… The bottom line is, as a buyer you need to be part peer, part mentor, part professional and part counselor / adviser. I show up with extra legal pads and small calculators. We all sit at the table and do the math. I only direct the process, so they can see how to do the process. I know once I leave they are reworking the numbers to see if there is more value someplace. Here is a tip- practice. You MUST understand the process and how all the pieces fit together better than anyone. Try this with your friends at a restaurant, a kitchen table and a conference room. Encourage them to ask any and all questions. You need to be able to explain in detail every aspect. If you do not have a rock solid answer- you need to do some research and figure out how the parts fit together and why they affect each other. One last part- learn to present your info upside down. Know your contracts well enough so you do not need to read them. Looking at the header should be enough to present what the entire section says. Be ready to explain each aspect of the contract. lastly- know how to separate income. Space rent, home rentals, home payments, laundry, soda machines etc all are treated differently. If you CAP the soda or laundry income, you will not like what your paying for the equipment. bottom line- you bond with people by being authentic, personable, knowledgeable, humble and in sharing like / kind experiences.
Kristin.Bottom line is in fact what the market dictates. Reaching a predetermined bottom line, however, is never the end goal of negotiations. If it were there would be no point in negotiating and very little value in having agents. My agents understand and profit from knowing I am in control of all negotiations. There is no place in business for emotions as it weakens ones negotiating position. Taking advantage of buyers emotions is a given in my negotiating. The price I negotiate with a buyer depends on many factors, buyers emotions, their motivation in buying, creative contracts, and defiantly their ability to pay (wealth). There is no point in me negotiating with a buyer locked into a “formula” if that formula does not provide me the number I want. Fortunately there are few buyers that operate on a formula and among those that do there are even fewer that can strictly adhere to that formula. Emotions usually trip them up. Bottom line is not the goal of negotiations.As for evaluating the ability of a individual to pay is concerned there are many factors involved in determining this besides vehicles and cloths. Once I determine a buyer is serious I always research their back ground prior to negotiating. Family, employment, income, business/real estate holdings etc. A little research with todays technology is very revealing. The amount of research dependant on the entity I am selling. As far as pricing my properties is concerned my goal, any sellers goal, is of course top dollar. My prices are not gold plated they are within the market but realistically as an agent you yourself know the majority of buyers have a different end point based on emotion tied to their ability to pay regardless of any predetermined top point they may enter negotiations with in mind. You can not tell me you lock a buyer to a set top point if they chose to go higher. Your advice to your client only goes so far and I am fairly certain you would not prevent the closing of a deal your buyer wants. You validate my point in regards to selling to Frank. No room to negotiate. I would simply wait for someone that is negotiable. Unless of course I was desperate to sell in which case I would not be in any position to negotiate.As far as you and your husband were concerned it was assumed you did not know each other and came to the table separately.When I buy properties I always personally go directly to the sellers agent (this is allowed in my market) and I always make multiple offers on a property at the same time. Each with different options for the buyer to consider including price, conditions, financing etc. I especially enjoy working directly with a buyers agent as they are in business to make money and only do so when a deal is closed. Money may have no emotions but generally those that want it do.Jim.Your outline of being in the position of a buyer is on the money. As a buyer my negotiating position is obviously opposite to being a seller. I have always felt, however, that negotiations are never about winning. They are only about coming to a mutually agreeable end. Rarely does this involve actually winning anything but rather is a process of compromises. I see negotiations as both sides striving to do the best possible under the given circumstances. Win/win is to imply or attach an emotion to the process.