Some tips to be considered when negotiating with a

1. The New Normal
Negotiations (Asymmetric Information)
13 Feb 2010
London
Tuesday, 23 February 2010 1

2. Copyright
John B. Corey Jr.
Chelsea Private Equity, LLC
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Tuesday, 23 February 2010 2

3. Copyright
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John B. Corey Jr.
Chelsea Private Equity, LLC
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Tuesday, 23 February 2010 2

4. Introduction
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5. Introduction
John B. Corey Jr.
BS in Computer Science
www.LinkedIn.com/in/JohnCorey
Follow me on Twitter -> www.Twitter.com/John_Corey
25+ years of real estate investing; UK resident since 1994
UK, US - spanning 11 time zones
www.ChelseaPrivateEquity.com/blog
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6. Why Are You Here?
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7. Why Are You Here?
Why are you here? Let’s negotiate today’s session goals
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8. Why Are You Here?
Why are you here? Let’s negotiate today’s session goals
What do you fear?
What if your fear is actually true? How bad could it be?
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9. Why Are You Here?
Why are you here? Let’s negotiate today’s session goals
What do you fear?
What if your fear is actually true? How bad could it be?
How will you know if you are getting better at negotiating?
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10. Why Are You Here?
Why are you here? Let’s negotiate today’s session goals
What do you fear?
What if your fear is actually true? How bad could it be?
How will you know if you are getting better at negotiating?
What does the word ‘negotiate’ actually mean to you?
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11. Why Are You Here?
Why are you here? Let’s negotiate today’s session goals
What do you fear?
What if your fear is actually true? How bad could it be?
How will you know if you are getting better at negotiating?
What does the word ‘negotiate’ actually mean to you?
Let’s go back to square one (‘first principles’)
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12. Definition: Negotiation
negotiation
noun (also negotiations)
discussion aimed at reaching an agreement
noun
1 (negotiations) the negotiations resume next week: discussion(s), talks,
deliberations; conference, debate, dialogue, consultation; mediation,
arbitration, conciliation.
2 the negotiation of the deal: arrangement, brokering; settlement,
conclusion, completion, transaction.
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13. Why Are You Negotiating?
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14. Why Are You Negotiating?
Decide what your high level goals are. A sense of direction
Avoid assumptions about what will happen. Keep an open
mind
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15. Why Are You Negotiating?
Decide what your high level goals are. A sense of direction
Avoid assumptions about what will happen. Keep an open
mind
Why is the other person there? The counterparty must have a
reason for engaging with you. Find out what it is. It might take
time as you likely need to build trust first
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16. Why Are You Negotiating?
Decide what your high level goals are. A sense of direction
Avoid assumptions about what will happen. Keep an open
mind
Why is the other person there? The counterparty must have a
reason for engaging with you. Find out what it is. It might take
time as you likely need to build trust first
Know your position at all times. Spend more time doing your
homework than negotiating
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17. Background & Homework
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18. Background & Homework
Reseach the facts. For real estate figure out the details about the
property, who the owner of record it, what else might be on the
property title, the numbers, the area details, the demographics
You cannot brainstorm for ways to make a deal work if you do
not even know what you are dealing with. Grab the bull by the
horns. And keep an open mind
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19. Background & Homework
Reseach the facts. For real estate figure out the details about the
property, who the owner of record it, what else might be on the
property title, the numbers, the area details, the demographics
You cannot brainstorm for ways to make a deal work if you do
not even know what you are dealing with. Grab the bull by the
horns. And keep an open mind
Understand the counterparty’s problems. They do not volunteer the
ugly stuff to a stranger. Get to really know them. Two ears, one
mouth. Listen. [Bring duct tape if necessary - joke!]
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20. Use a Process
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21. Use a Process
Use a standardize process to stay on target. Scaleability is improved.
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22. Use a Process
Use a standardize process to stay on target. Scaleability is improved.
Turn your process into a methodology. Brand/name the methodolgy
Methodologies have visible attributes: forms, checkpoints,
deliveries
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23. Use a Process
Use a standardize process to stay on target. Scaleability is improved.
Turn your process into a methodology. Brand/name the methodolgy
Methodologies have visible attributes: forms, checkpoints,
deliveries
Tangent: People pay more for a methodology than they will pay to rent
time from a person. The Big 4 sell methodologies. Security & trust
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24. Use a Process
Use a standardize process to stay on target. Scaleability is improved.
Turn your process into a methodology. Brand/name the methodolgy
Methodologies have visible attributes: forms, checkpoints,
deliveries
Tangent: People pay more for a methodology than they will pay to rent
time from a person. The Big 4 sell methodologies. Security & trust
You can build trust with a stranger when you show them how you will
use a methodology to safeguard their position; to solve their problems
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25. Methodology
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26. Methodology
(1) Initial contact - standardize the info you collect
Educate the counterparty as to the steps they can expect
(1-7)
Do what you tell them you will do. Make it easy for them to
see you are doing it. Reports, check lists, email updates
(2) Research the property & collect all the background info
(3) Interview the counterparty to fill in the gaps plus verify the
info; due diligence. Remember, verify the facts independently
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27. Methodology (cont.)
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28. Methodology (cont.)
(4) Present your offers. Yes, seriously consider presenting multiple
offers so the seller has choice
Explain how the each offer addresses what the counterparty
needs. Logically, let them write the offer
(5) Follow up to get closer one way (deal) or another (no deal)
(6) Execute to plan following on the methodology. No ad-lib
(7) Manage steps after agreement to completion using the methodology
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29. Poker Face
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30. Poker Face
Be prepared to walk away.
No deal should be a make or break deal. Avoid those situations
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31. Poker Face
Be prepared to walk away.
No deal should be a make or break deal. Avoid those situations
Let the counterparty come back to you. If your offer is a good one
then let it stand. Be in no rush to change or improve your offer
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32. Poker Face
Be prepared to walk away.
No deal should be a make or break deal. Avoid those situations
Let the counterparty come back to you. If your offer is a good one
then let it stand. Be in no rush to change or improve your offer
Silence is your friend.
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33. Poker Face
Be prepared to walk away.
No deal should be a make or break deal. Avoid those situations
Let the counterparty come back to you. If your offer is a good one
then let it stand. Be in no rush to change or improve your offer
Silence is your friend.
Let the counterparty speak first. First person to specify a number
looses
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34. F.U.D.
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35. F.U.D.
Fear, Uncertainity & Doubt are the three horseman that will kill many
a deal. Sometimes you have it and sometimes the counterparty has it.
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36. F.U.D.
Fear, Uncertainity & Doubt are the three horseman that will kill many
a deal. Sometimes you have it and sometimes the counterparty has it.
Break down the issues. Smaller issues are easier to handle
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37. F.U.D.
Fear, Uncertainity & Doubt are the three horseman that will kill many
a deal. Sometimes you have it and sometimes the counterparty has it.
Break down the issues. Smaller issues are easier to handle
Use checklists so you do not miss things
Share the checklists so the counterparty knows you have them
covered and your competition is not equally prepared
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38. F.U.D.
Fear, Uncertainity & Doubt are the three horseman that will kill many
a deal. Sometimes you have it and sometimes the counterparty has it.
Break down the issues. Smaller issues are easier to handle
Use checklists so you do not miss things
Share the checklists so the counterparty knows you have them
covered and your competition is not equally prepared
Reduce F.U.D. by reviewing so many deals you know the checklist by
heart
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