Tips and Traps When Negotiating Real Estate: Be Irrational, Occasionally

Learn to Act: Be Irrational, Occasionally


If the seller thinks you’re a little bit crazy, he or she may be more inclined to accept a goofy offer. After all, what can you expect from someone who’s nuts?

This doesn’t mean you should be carrying on conversations with spirits or foaming at the mouth. Rather, it means that you always want to keep the other side guessing about what you will and won’t do. One of the best ways to accomplish this is to make them think you’re a little bit irrational. (The word, after all, suggests that you take actions that to others appear to be against your own advantage. In truth it really means that others simply don’t understand your “rationale.”) There’s nothing better to help you to keep your morale high than to know you have the other side off balance.

The best application of this rule that I ever saw had nothing to do with real estate. Instead it was in the world of politics. President Richard Nixon always sought to keep his opponents off balance by convincing them that he was just a tiny bit crazy. Push him too far, and who knows what could happen? As President he might launch nuclear missiles . . . or send troops into Cambodia . . . or reconcile differences with China. He even said as much.

While it remains for history ultimately to judge his actions, to me it seems clear that Nixon, in truth, may have been many things, but was anything but irrational. I can still remember his fall from popularity during the scandal over the break-in at the Democratic head­ quarters in the Watergate building. Nixon was vilified and Congressional hearings were held to minutely investigate every aspect of his presidency, including audio tapes of conversations. He was put under a microscopic examination that very few of us could have survived emotionally. Newspaper and television pundits repeat­edly wondered about his grasp on reality and his ability to handle presidential issues given the stress of the situation. People feared the “irrationality factor.” And that gave him an edge. Nobody wanted to push him too far. In my opinion, it allowed him to hang on for far longer than he might otherwise have been able to.

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Yet, from his perspective, it seems to me he acted with great ratio­nality through it all. While under fire, he continued to fulfill the basic functions of his office as best he could, given the circumstances. Only when it became “perfectly clear” that he had completely lost the support of his own party did he choose to resign. And he did that with remarkable grace.

The man was certainly calculating. But I seriously doubt if any­ thing he ever did could be considered truly irrational.

Something similar (in terms of “acting” irrational) was the case with a friend 1 once had. Jerry bought and sold an enormous amount of investment real estate, making quite a bit of profit along the way.

He negotiated his own deals with buyers or sellers, although I occasionally sat in as an agent. Often, just when things were the most seri­ous in the negotiations, he would surreptitiously wink at me and all hell would break loose. Once, I had trouble concealing a smile when, in the middle of a serious discussion about price, Jerry asked a seller if he would accept a truckload of potatoes to sweeten the deal.

The poor seller didn’t know if my friend was making a real offer or was Just plain crazy. And Jerry didn’t help him out. He began extolling the virtues of baked potatoes, fried potatoes, even potato skins. He said he could have them delivered and dumped at the seller’s back door.

“I don’t want potatoes,” the seller said in frustration. “I just want to work this deal.”

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“It’s potatoes or nothing,’’ Jerry replied, and went into the kitchen for a cup of coffee.

The seller leaned over and asked if Jerry had a problem. I replied that he was a serious buyer making a serious offer, although he him­ self was a bit eccentric. The seller nodded agreement. Later that evening the seller accepted Jerry’s offer almost in total.

Why would irrationality help Jerry? When my friend pulled one of his calculated “irrationality” stunts, more often than not. the routine broke the carefully built up understanding of my friend the other party had. One moment the other person, buyer or seller, thought he or she had a handle on what Jerry really wanted out of the deal and how far he could be bent. The next, the other party was thrown into confusion, concluding that he or she really had no idea what Jerry’s bottom line really was.

Of course, it doesn’t always work that well. Sometimes, when you’re dealing with a really solid adversary, it doesn’t work at all. But, as with other devices, it can cause a “change up,” which acts to keep your opponent off balance.