I wrote that I ordered this book back on December 5th and I just finished reading it a few days ago. I must say that this is the first real estate book in years that has taught me something new. This book really has the “Trump” name only for exposure and marketing. It is nothing like any of the other “Trump” books, which I do not like. This book is really about George Ross, Trump’s attorney and deal negotiator. In this book, there are many examples of how deals are done and how liked minded businessmen work out deals for the benefit of everyone.
The book’s table of contents are shown on the right. I found the two chapters about negotiation very insightful.
Principle 3 in the Chapter 3 is about pre-planning. It hits on “Ziff’s Principle of Least Effort” which states that people will expend the least amount of effort neccessary to conclude any transaction. Pre-planning for negotiations allows you to have answers and solutions ready when the opposite side presents an issue.
This is a simple example, but it fits perfectly with this principle. My first realtor here in Phoenix was very prepared when we went out to look at properties. She had a mortgage broker available instantly by cell phone. We would go look at a property and if I was interested, she would call up the mortgage broker and tell him the asking price, rents, taxes, HOAs, PM fees, etc… I was already pre-approved so he had an idea of my FICO, what I would put down and finances. He would call back and get me my exact cashflow on this property at full price before we had left the property.
By doing this, I put in the least amount of effort while searching for properties. All I had to do was see it, like it or hate it. Imagine that before we’d even walk into a property, she’d say this would cashflow $223/mo at its current price. Remember, those numbers are based on actuals, not estimates. Of course I would double check them afterwards, but they were so accurate that after a while, I didn’t have to.
Principle 4 is to avoid a quick deal. This was very interesting to me since I’m a numbers person. I like to go straight to the point and talk numbers. I don’t like lengthly negotiations. George says that a quick negotiation will leave one party feeling bitter and/or one party will have forgotten something important.
Here is an excerpt from the book:
“I put an ad in the paper for sell the same Porsche for $30,000, but this time you phone me and offer $20,000. And I say, “No, the price is $27,000.” And you immediately reply with , “Okay, I’ll give you the $27,000.” Now the question is, am I happy? No! Because you went so fast from $20,000 to $27,000. If I had stuck to my guns you probably would have gone a little higher and paid the $30,000. I got what I wanted, and you got the Porsche for what you were willing to pay, yet neither of us are happy because we didn’t spend enough time going through the bargaining process. In an successful negotiation, I have to convince you, the buyer, that you got it for the cheapest price. And you have to convince me that I sold it for the highest price, so that I feel I got the most out of the transaction.”
Principal 5 is the Time Invested Principle. Basically it states that as more time has been invested in a transaction the less likely he or she will give it up.close. It’s pretty easy to walk away from buying a car if you just say I’ll pay $5,000 and the seller says, “No, I want $5,200.” But imagine that you’ve already taken it for a test drive, run a carfax on it, had a mechanic inspect it and bought a cashier’s check. All you really going to walk away and invest the same time in another car for the difference of $200?