“In business and in life, you don’t get what you deserve, you get what you negotiate.” — Chester Karrass
Whether you’re buying a car or finding new tenants, the two most important negotiating tips to learn are:
1. Negotiating is not about you; it’s about the other party.
This might be contrary to everything you think you know. But if you aren’t constantly evaluating the other person’s point of view, you’ll lose.
2. Be prepared to walk away.
If you’re not in a position to walk away, you’ll probably lose the negotiation. At the very least, you’ll lose the most optimal outcome.
Related reading: How to Raise the Rent in 4 Easy Steps [Free Template]
Here’s a simple framework for landlords to use on how to execute some best practices of negotiating:
Many negotiation experts use a B-A-T-N-A strategy, which stands for
Best Alternative To Negotiated Agreement
The acronym is kind of confusing and is even harder to put into practice. Why?
Well for starters — it’s confusing! Also, most skilled negotiators know about B-A-T-N-A, so the negotiators just go around and around in a big circle. This is exhausting, and doesn’t help anybody.
Here are six steps for better negotiations: L-I-S-T-E-N, which stands for:
- Look interested, get interested
- Involve yourself by responding
- Stay on target
- Test your understanding
- Evaluate the message
- Neutralize your feelings
The L-I-S-T-E-N acronym embodies the two principles of listening to the other person’s point of view, and being prepared to walk away.
A Real-Life Example
I have a small two-bedroom, one-bath house for rent. The rent is substantially above the market, but so is the quality of the house when compared to the other rental properties nearby.
Instead of going into this negotiation with the mindset of: “I have to get this property rented to get revenue,” I have this mindset instead: “There are people out there looking for a high-quality small house with plenty of storage and a nice backyard. I have to choose whom I think will be the best tenant for this property.”
The second mindset changes the attitude from scarcity to abundance.
Instead of having the view that there are a limited number of renters who can afford this property, I have the mindset that there are an abundance of renters who want a high-quality house to live in.
Here’s how it really played out: Two college kids wanted to rent my house. They wanted a yard, and were tired of apartment life.
- I listened to their pain point to address their need and motivation.
- I involved myself by asking where they go to school, their major, and who some of their teachers are.
- A conversation followed, and then I stayed on target by turning the conversation back to the property and asking whether they had any questions about the property.
- I then tested my understanding by letting them know how the nice backyard will give them the extra space and privacy they want. I added that the screened-in porch and extra parking are also nice.These potential renters countered that the price was just too high. My response was this: “The price is justified by the quality of the house. I am also having second thoughts about renting to college students with limited income. I am going to have to require your parents to co-sign on the lease.”
- I could have easily been defensive about the rent rate, or worse, folded and reduced the rent. But, by turning the tables and going on the offense, I evaluated the message.
- The parents agreed to co-sign the lease, but they wanted some wording changed on the rental agreement and wanted a walk-through checklist inspection before their kids moved in. I agreed, neutralizing my feelings to strike a deal. The renters moved in, and they paid their rent on time.
Negotiation is a soft skill, a skill that helps you have effective interactions with people, which you can use every day in all sorts of situations, not just landlord-tenant ones. If you don’t want to implement L-I-S-T-E-N, just don’t forget the two most important negotiation tips:
- Always evaluate the other person’s point of view.
- Always be willing to walk away.
Do you have favorite negotiation tips? Let me know in the comments!