Tips and Traps When Negotiating Real Estate: Invest in Time

Control Time: Invest in Time

This is a little bit tricky to understand at first, but once you get the hang of it, you’ll find it really works. Let’s say you want to lease a house. But instead of the customary one-year lease, you want a lease for only six months. And instead of taking the place “as is,” you want the owner to paint the entire interior of the house. And you have a dog and three cats . . . and a waterbed.

You get the idea. You’ve got a whole lot of extras that make you a landlord’s nightmare. How do you get. the landlord to accept you anyway?

Let’s say you walk up to the owner and simply blurt it all out. “I want to rent your house, but you have to repaint it, give me a six-month lease instead of a full year, accept my pets, and allow me to keep a waterbed, which could leak and ruin your property.” Now, how do you think the typical landlord is going to react? If it were me, I would show you to the nearest door and not breathe easy until you were long gone. (Just in case you’ve never been a landlord, the only thing worse than dogs, cats, and waterbeds is tenants who want to stay only a short time.)

On the other hand, let’s say you tried a different approach, one involving time. You came to the landlord and indicated you were interested in the property, but you weren’t sure. You talked with him a while, not mentioning your “problems,” and you got to know one another. Then you left.

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Chances are he was favorably impressed by you and, all things being equal, considered you a likely candidate for a tenant. He hoped you’d come back. (Landlords hate showing property to peo­ple who have no intention of renting but are just out “shopping,” or people the landlord would never want as tenants—it’s a complete waste of their time.)

The next day you do come back and you say you’re definitely interested. The landlord is going to be pleased. At last he’ll get that empty (and costly to maintain while empty) house off his hands. You further add that the rental amount is okay and you have excellent credit, which you’d be more than willing to let the landlord check out. Now the landlord is sure to be delighted. But, you mention, you want to be sure the property is just right. Could he tell you about the neighborhood, the schools, the shopping?

The landlord proceeds to spend the next hour telling you about the marvelous environment around the rental. At the end of that time you appear duly impressed. You mention that you really are interested, but the place seems so dingy. Would he consider repainting it?

The landlord might think to himself that he’d really rather not paint it. He might honestly think that it’s probably rentable as is, or else he would already have painted it. On the other hand, during all that time spent talking, he’s learned a lot about you. You’ve effectively presented yourself as a good catch as a tenant. While he would probably have said no if you had just walked up and asked him, now he’s going to seriously consider acquiescing. The truth is, the time you and he have spent together has been well spent. Better a bird in the hand than half a dozen in the bush, he may think to himself. A good tenant, after all, is worth a paint job. And now you’re seen as that good tenant.

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So he agrees to the painting and you say that as a consequence you’re quite sure you want it, but you’ll be back tomorrow with your husband. You want to make the final decision together. The land­ lord pretty much figures he’s got the deal sewed up and makes arrangements with the painters. You fill out an application and give the landlord permission to check your credit.

Tomorrow you and your husband show up and go through the house all over again. The landlord’s now pointing out how much nicer this room or that cabinet will look with new paint on it. He’s already accepted repainting and it’s no longer an issue. You ask how well the heating system, the air conditioning, the features such as the fireplace, the dishwasher, etc. work. Time drags on. Finally, you say you’ll take it. The landlord is very pleased.

However, you say you can only take a six-month lease. The land­ lord is not pleased. He has assumed all along that you would take a year’s lease. He says he really wants to lease the property for a whole year. You nod that you understand, but point out that you’re not sure just how long you’re going to be in the area. You can only guarantee six months. If things work out, you could stay longer.

The landlord is thinking to himself that he should say no and wait for a tenant who will agree to stay longer. But if he doesn’t accept you, he’s got to start all over with someone else. Further, by now he’s obtained a credit report and knows you’re a good risk and probably will take good care of the place. And, he may rationalize, one never knows what will happen after six months. Maybe you’ll stay another six months, or even longer. What it comes down to, finally, is whether or not he’s going to throw away all the time and effort he’s already expended on you . . . when the only problem you offer is a shorter term. (By now, the issue of painting has receded into yester­ day’s problem.)

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TIP

A concession, once made, stops being a concession.

You shake hands with the landlord and sit down to read the rental agreement. After spending some time going through the contract boilerplate, you come to the subject of pets. You say you have several pets that are well behaved. Three are outdoor pets and one is a potty-trained indoor cat. The landlord grits his teeth and writes the number 4 into the contract with regard to pets. He also adds several hundred dollars to the security deposit, to which you happily agree.

Finally, before signing off, he asks if you have a waterbed. You innocently mention that you do, and ask if that’s a problem. The landlord shakes his head and says, “I’ll have to increase your deposit some more.” You sigh and say that it’s already high and you’re quite sure the waterbed is safe. It has never leaked and is of a special design that simply doesn’t get holes. Okay, he says, worn out, and the agreement is signed. You’ve negotiated the deal you wanted.

Of course, in real life one never knows what any landlord will do. However, the point here is that as more and more time is spent on the negotiations, it becomes increasingly hard for the landlord to dump the deal. If all the extras or problems are brought out at the beginning, it’s so easy for the landlord to just say “No!” He’s got nothing invested in you. You don’t conform to his requirements. “No!” is the easiest thing to say.

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On the other hand, after three days of negotiating (all that time spent looking at the rental and thinking about it was negotiating, whether either of you realized it or not), it’s a different story. Now the landlord has a vested interest in finding a way to make it work. He wants you, so he’ll paint. In the end, he really can’t abide the pets. So he increases the deposit to make it work. If he had not spent time getting to know you, the answer to both would surely have been, “No.”

TIP

The more time invested in a deal, the more each party has to lose if it doesn’t go through. Any time spent considering the deal always increases the chances of get­ ting the other party to say, “Yes!”

Of course, this applies to all types of real estate transactions, not just rentals. I’ve sat with sellers/buyers into the wee hours of the night while they tried to decide whether or not to accept a particular condition (such as the interest rate on a mortgage, the date of occupancy, or even the price) of a sales offer. They might not like the condition, they might not want the condition, they might be inclined to refuse it. But after having spent six hours or more dis­ cussing it, the thought of simply giving up without getting some kind of deal becomes abhorrent. In some cases, it actually becomes a challenge to try to figure out how to make it work. Thus, the sell­ers/buyers no longer simply wrestle with whether or not they want the particular condition in question, but instead worry over accepting that condition or losing everything. The fact that there’s some­ thing to lose is a result of investing not money, but time.

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TRAP

Until you’ve got just what you want, don’t hurry the negotiations. The more time you get the other party to spend considering the deal, the more likely he or she is to accept your offer, regardless of what it is.