Critical Negotiation Strategies With George Ross

When it comes to discovering the art of the deal, who better to learn from than the man who was the chief negotiator for the author of the book? Welcome to the Magnetic Marketing Podcast. Today, we're going to be sharing with you a presentation by George Ross, who used to be the chief negotiator previously under Donald Trump. He worked for the Trump Organization, specifically in real estate law. He appeared on The Apprentice and he teaches a course on negotiation at NYU. And what he's going to be sharing with you are the critical negotiation tactics that you need inside of business, because a negotiation is not about winning. It's about making a deal. And now might be a better time than any to learn this skill for yourself. Let's jump into critical negotiation strategies with George Ross.

I don't think there's anybody that has had a bigger impact in the field of direct response than Dan Kennedy. The legend of Dan Kennedy should be ignored at your own peril. They're not really lessons, they're kind of laws that you live by. Dan opened my eyes to what small business marketing looks like. Dan teaches strategic direct response that is timeless. His ripple effect touches people who don't even know his name.

The world as we know it was changed because Dan Kennedy became obsessed with marketing.

Welcome to the Magnetic Marketing Podcast with your host, Dan Kennedy.

I'll tell you some things about George Ross that you probably know, and I'll tell you some things about George Ross that you probably don't know. One of the things about George Ross that you probably don't know is the fact that for, I think, nearly 2 decades, and maybe even more than 2 decades, he actually teaches a course at NYU University in New York on negotiating. Another thing about George Ross that you probably don't know, I might as well get this right out of the way, is the fact that You know, when you sort of look at him on television, you look at him as this rough, tough guy, and he ain't that guy. He is one of the nicest people we've ever had come speak for us here at Glaser Kennedy. He's just really a very, very nice man to hear, and he's— I know, I know, I know. And he's agreed to stay beyond his talk in order to sign your books and also take photos out there., and we've got sort of the lines that are ready for that out there. So he's been very, very gracious with that. Another thing you probably don't know about George Ross, I'm about to embarrass not him but his wife, but he's got a lovely wife, Billie, that they've been married for just a few years now. How many? 56 years.

No, no, no. Hold it, hold it. If you clap, clap for her, not for me.

And in the 56 years in the 26 years that they've been married, she had— this is the first time ever she's ever heard him speak. So this is a first for her. So she's a little nervous in the back there, and I don't know why, because George is doing all the heavy lifting up here. But a couple of things about him that you also probably do know. He's Donald Trump's chief negotiator. He's negotiated some rather small little properties such as Trump Tower, the GM Building, the 40 Wall Street, and the Chrysler Building. He's here today to talk to you about how to deal to win with the most critical negotiation tactics and strategies that you need to know. And this is applied whether you're looking to buy a car looking to buy a diamond or you're looking to buy the Trump Tower, which he can also sell you today. So give a real warm Glazer Candy welcome to The Apprentice co-star, Mr. George Ross.

Thank you. Thank you, Bill. Thank you. Oh, sit down. Thank you. Thank you. Wow. You people are crazy. I'm telling you, you're going to listen to me for an hour at that point, you ought to have your heads examined. But a few things we got to get out of the way. The first thing is we got to do a couple of Apprentice items just to get them out of the way. First thing is, yes, I am taller than I look on television. You have to understand Donald is 6'3", not counting his hair, and he sits on a pedestal and I sit on the right in the basement. Second thing, was Omarosa as bad as she appeared on television? The answer is no, she was much worse. So much for that, but it's really very interesting, and I find it— see, I've been practicing law for more than 50 years, and not like I was under a bushel or anything at that point. Probably did more big real estate deals and big deals in New York City than any other lawyer, and nobody cares. Yeah, you're known in the industry, nobody cares. You teach a course at NYU for more than 20 years in negotiation, who cares? You get on television, you fire some nice young kids, everybody says, "Oh, there's George!" There's got to be something wrong somewhere, but that's what it is. But let me give you a little background that you may or may not know. Because we're going to talk about two different things. Not just going to work on negotiation today, we're also going to talk a bit on real estate, real estate investing, how to raise money, things like that. And that's what we're going to do. So I got to give you a little background. I told you how long I've been practicing law. It's been all in real estate law. But I was 5 years in and I knew basically real estate law. I had an opportunity And I became involved with two multimillionaires in New York City that were really real estate at the time. This is '56 to '66. When I joined them in 1956, they had 18 properties. When I left them 10 years later, they had 720. I did 700 acquisitions of different sizes in 10 years. And they all had a lot of zeros after them. This was not small stuff. And as a result, I got exposed to a lot of good lawyers, a lot of negotiators, and I realized how bad I was. They stole everything but my jockey shorts. And I was happy doing business. They said, oh, you're great, you're doing great negotiation. But I knew that I had a lot to learn. So when I found somebody that had something good, I stole it from him. And then later on I said, well, this negotiation is really very interesting. So why not get involved? So I started to make a study of it. And I found out, interestingly enough, the study of negotiation is only like 30 years old. 30 years old. You're negotiating every day of your life, from the time you're born. When you're born, at that point you're hungry, what do you do? You cry until your mother figures out. They feed you and then you're content and you stop. And it's something you do every day of your life when you talk to your wife, you talk to your children, you talk to your boss. And so few people know anything about it or even try to know anything about it. Somehow they muddle through. And it's you fish that make people like me very wealthy. Because you're there to be taken advantage of and you don't mind it. But you never made a study. And all I'm saying, I'm not going to teach you negotiation now, but I'm going to give you some pointers that are going to be very helpful, and if you use them, you will find it will improve everything that you do in your life. And that's really great because it's something you can use. Now let's just talk negotiation for a minute. Are there any rules in negotiation? Can you lie? Can you cheat? Of course! Where is there something you do every day of your life and there are no rules? Because people will not tell you what they want, what they really believe when they're negotiating. If I looked and I showed you this watch and I said, "Would you like to buy this watch?" and you looked and said, I'd love that watch. All my life I wanted that watch. I'd pay any price. Are you gonna tell me that? Of course not! Because that would only raise the price. So what you'd say was, "Not bad, I got 5 like it, but I might buy a 6th one if the price were right." You lied to me. But that's what happens. That's the beauty of negotiation and also the fact of it. Now, before we start, I wanna get you in the mindset of a sharp expert negotiator. In order to do that, I'm going to tell you a little story. This multimillionaire had twin sons, 10 years old. One was an incurable pessimist, the other was an incurable optimist. And he said, if I could ever get the pessimist to be a little more optimistic and the optimist to be a little more pessimistic, I'd have two great kids. So for their birthday, he decided for the pessimist he would get him a $5,000 10-speed Japanese racing bike, red and silver, it was gorgeous. He says, I don't care how pessimistic he is, a 10-year-old's gotta love that. For the optimist, he decided to do something a little different. In the optimist's playroom, he had them dump 2 loads of horse shit. He said, I don't care how optimistic that kid is, that'll take care of him. So the morning of the birthday, he goes in, he speaks to the pessimist, He was a pessimist first. And he says, "Son, how do you like your present?" The kid says, "Like it? How could you be so thoughtless? I will take that bicycle, I'll go out on the street, I'll get hit by the first bus that goes by, I'm in the hospital with two broken legs. If I happen to be lucky enough to get to the playground, some kid that's twice my size will beat the crap out of me and steal the bike. How could you possibly think of something like that?" Father says, "Okay, that's one. I struck out on that, but the other's a sure winner." So he goes and he opens the door to the playroom, and there is the other son, and he's taking the horse turds, he's throwing them in the air, and he's singing. Singing! His father says, "What are you doing?" And the kid says, "With all this shit, there's a pony in here somewhere." Now you can look at me and say, well, what does that have to do with negotiation? You want to be a good negotiator, you're going to have to go through a lot of shit to find the pony. And if you're a good negotiator, you will do that. You will spend the time and effort necessary in order to achieve the result. The result is a good negotiation, something that you're happy with, that you ended up with something that took place that you could live with. Negotiation is not winning, it's making a deal. Now there was a survey which was taken by one of the investigators, and he contacted 150 CEOs of major corporations and said, "What are the traits that you would want in someone negotiating on your behalf? List them in order of importance and tell us why." Number 1 trait. Number 1 trait of a good negotiator: personality. Wow! Number 1. And the question was, why? They said, well, if you are personable, people want to do business with you, they will like you, you can make a deal. If they don't like you, they don't want to make a deal, they're unhappy, it doesn't work. So you have to train yourself to be personable. So they want to deal with you. Now, having learned this, I figured, okay, what better way to be personable than to find out something about the other side that you're negotiating with? So I used to make it a habit, if I had an opportunity, when I was dealing with somebody I never dealt with before, that I would like to go into his or her office and see what they had on the desk or on the walls. Because this gives you good insight. If they had a golf trophy, we'll talk golf. If they have tennis, we talk tennis. I went into somebody's office. This man had on his wall, I swear it was a whale, the biggest fish I ever saw. So this was easy. I said, "You must love deep-sea fishing." He said, "I love deep-sea fishing." I said, "So do I. I get sick in a rowboat." But we were bonding. We now had something in common, until he said to me, he says, "Where do you go deep-sea fishing?" And I said, "Well, since I had my hip replaced, I can only do fly fishing." But we were now friends. Somehow we had a common basis for further discussions. We weren't talking business, but were we? Sure! We were getting to know each other. Now, second trait. This one you'll have. This one I would have thought was number one. Knowledge. Knowledge of human nature. And we're going to talk about this quite a bit because this is fascinating, and that's really what you have to learn if you're going to do any marketing or presentation or sales. Human nature is wonderful. It can be relied upon. People do it every day. You can use it to your advantage. It can be used to your disadvantage if you're not aware of it. Third one. This one surprised me. Ability to organize information. Wow! Number 3? I said, why? And they said, well, most of you, when you have an opportunity and you're working, you're doing the same thing over and over again. If you're selling houses, you're selling houses one after another. If you're making deals, they have a tendency to be the same. How can you keep them separate if in fact you can't organize your information? Made sense. I did. I said, okay. I would take a class, which I did, in time management. And I'll never forget the professor said, what you will do is on your desk you will have a spiral notebook. And in that spiral notebook where you cannot tear out the pages, you will put everything that happens in your day. Who you spoke to, telephone calls, important information goes in that spiral notebook without fail. I walked out, I said, "That's a lie, that's a crock. Nobody does that." He's talking to somebody, I use these yellow things that stick to everything except where you want them, and I now go, and I went into Donald Trump's office, and what do you think he has on his desk? A spiral notebook. What do you think I have on my desk since that day? A spiral notebook. Now let's get to the concept of Understanding human nature, because we're going to talk about this in business. This is really the crux of every business relationship and everything that you want to sell or what have you, because this is how you get sold and how you sell. First element: everybody loves a freebie. Buy 2, get 1 free. You now got 3 items you never wanted. But that's human nature. Look at the one-cent sale on this. We fall for it constantly. Another item: people want what they can't have or everybody else can't have. So what do you see? They tell you last 2 items. If they sell the 2, they got 2 more. Limited edition. Oh yeah, how big is the limited edition? Could be 10 million, but it's limited. Therefore, we must buy it because it is limited. Fire sale, going out of business, all of these things that people fall for, and you do it and you expect it. Probably the biggest one of all time, and remember this, is what I call the aura of legitimacy. And this is a powerful, powerful weapon. The aura of legitimacy. People will believe what they read and see. "I read it in the New York Times and therefore it's true." Bullshit! That's what some reporter wrote. That was his or her interpretation of a state of facts or news. It's got nothing necessarily to do with the truth, but people read it. "Yes, I believe it." believe it. Not true. Go into a car dealer. What do you see on the back? Manufacturer's suggested retail price, right? It shows you how to buy a $40,000 car for $23,000. But you're paying $1,000 for a floor mat. But you look at it and say, oh, what a bargain. Look at that. It was $40,000. No, don't believe it. That's what the manufacturer wanted you to see. See, believe me, go into a store. You go into a store, suppose you buy a men's suit. On it it's got retail price $750, our price $400. Hey, I just made $350. In your dreams. Who made the retail price $750? The guy who wanted to sell it to you for $350. And what did he do? They cross it out, special today only, right? $200. Hey, I just made another $150. No, that's what they want you to believe. It's not true. Don't fall for it, don't believe it. But if you're on the opposite side and you're selling it, it's a great way because people will look at it and believe the $750 price tag. Now there are times when the aura of legitimacy is overpowering, and I'm gonna give you two examples, both of which are true. And you'll be able to see it right away. First one, there was an appliance store, appliance salesman, who had a hearing aid in his ear. Couple came in looking at a washing machine, and they say to him, "How much is this washing machine?" He looks up and he says, "Hey Joe, how much is the Amana 395X?" And Joe says, "$595." And the salesman with the hearing aid says, "$395." They heard $595. The woman nudges her husband, "Let's buy it, we saved $200." Yes, they bought a $195 washing machine for $395. Is that legitimate? Seems legitimate. The best example I've ever had of legitimacy is another, again, true story. I had a client who was building one-family houses in New Jersey. Opening day with the model, he's got flags flying all over the place, and he brought in this young Cracker Jack salesman, which of course it has to be for that particular day, which you got opening, you would want it. And he goes around to the house, and in the basement there is a foot of water. If it happened to me, I'm history. The kid took a yardstick yardstick, put it in the water, took a chalk mark and put it around the level of the water and put the yardstick in the corner. Potential customer comes in and she says, "This is a nice house. I like it. Does it have a basement?" He says, "Oh, sure." She says, "I'd like to see the basement." So he says, "Fine." They go down in the basement. She says, "Do you know that there's a foot of water in the basement?" He says, "Of course." She says, "What do you mean, of course?" The builder wanted to show that the basement was watertight, so he filled it with water. When I came in this morning, the water was up to the level of this yardstick. He puts the yardstick back in the water, it's the same level. He says, do you see not one drop has leaked out? How could you not believe that's authentic? Legitimate, absolutely. It's too good not to be legitimate. Legitimate. Another one of legitimacy which they use constantly is the standard form. This is our standard form of contract. You sign it. If you look carefully, you'll see above your signatures, "Subject to the terms and conditions on the back." Do you ever turn it over to read those? If you did, you'd probably never sign it. Let me tell you, I've been practicing law for more than 50-some-odd years. What the big print giveth, the little print taketh away. So read it. But on your side, understand with the aura of legitimacy, if you prepare numbers, projections, figures, pictures, people will see them and right away they say, "Oh, that's great, it's beautiful." But it's a rendering of what you want them to see, which probably has very little relationship to the actual facts. But that's good because they will remember what they saw, not what you're going to see. This is especially true if you're building something. If you're not even out of the ground, show them a great rendering of a mansion. It's not what it's going to look like, but in their mind, wow, that's beautiful. But they have nothing else to go on. They will think that that's true, and then they will do that. They will go at it and they will be impressed. So if you have your choice, of marketing strategy, if you do something that they can see and visualize, it's much more, it's stronger than something like audio or interaction or even talking face-to-face. So concentration there. I've always told, done a lot of speaking in front of college students graduating because they're coming out and they're getting into the business world and they have no idea what's involved out there. It's tough. There's a world, you know it. And I say to them, if you want an executive to read something of your resume, you better catch him in the first 2 sentences, 'cause he ain't gonna read anymore. They don't have the time to do it, they don't wanna do it. And as a result, that's the time that you have to catch the feeling of what you want to say to someone. Now, in negotiation, you have— there are times when you should stop negotiating and you're satisfied and don't get carried away. Unfortunately, there was one instance where, you know, it's a good one, we'll tell you it's also true. I was on the beach with my wife and we're in Acapulco and down on the water At that, there's a guy selling Mexican blankets. The sand has got to be 2,000 degrees. And he pulls up one of the Mexican blankets, and my wife says, "You know, that's very pretty. I wonder how much it is." "Don't worry, honey, I'll find out." I now go hopping across that wet sand. He sees this gringo coming down there, and he says, "If there's a fish, this is it." So I said to him, "How much for the blanket?" He says, "$40 American." I said, "$40 American? Are you Pancho Villa?" And he says, "How much you give me?" I said, "$10 American." He says, "$10 wouldn't pay for the wool." I says, "It doesn't look like wool, it looks like rope." He gets very insulted and he's gone. Half hour later he comes back and he goes to the same to the same blanket, and he goes, "35." And I meet him halfway, "11." Yeah, yeah, go ahead, laugh. This went on for 3.5 hours. Up and down, every time he gets to the same blanket. And I want to tell you the story ended. He offered to sell it to me for $15.50, I offered to pay $15, and we never made the deal. I wouldn't give him the satisfaction of beating me out of 50 cents, and he wouldn't give me the satisfaction of beating me, you know, getting 50 cents. I look and I say, you know, that was a damn nice blanket. What was I arguing about, the 50 cents? But you get caught up in the negotiation and you have to feel, yes, I have to win. And therefore, if I have to win, and you forget what you're negotiating about. Don't do that. You get a deal, you're satisfied with it, or you got it pretty far, take it. Go on to the next one. Don't win it, you can't win everything that you wanted. Don't even try. Now probably one of the best ones, and we'll get off negotiation for a while,, and we'll go on to the real estate and investing and that side, and we may get back to negotiation. We'll also have a Q&A later on. You can ask me any questions you want except anything about Donald's hair is out of bounds. Now I get, there was, as you know, I've been married, very happily married for 50-some-odd years, and it was some occasion, and a friend of my wife's had seen a bracelet in Saks Fifth Avenue, and explained the bracelet to me, diamonds and silver, what have you, and said your wife might like it, so go look for it. First of all, Saks Fifth Avenue's got a jewelry department as big as this whole room. I finally find the bracelet, and it's a beautiful bracelet, and the price is right, it's fair, I'm buying that bracelet. I can't do it. It's not my style. So I now say to the salesgirl, "Beautiful bracelet. How much of a discount can I get?" She says, "Sir, this is Saks Fifth Avenue. We don't give discounts." Stopped me cold. I said, "Maybe you don't. Get me somebody who does. I'd like to speak to the buyer or the manager." So she goes back, comes out. Guy hugs me, says, "Sir," he says, "you have a problem?" I says, "Yes. You have a bracelet that I'd like to buy, but it's got a very serious flaw." He says, "Our merchandise is He says, "Perfect. What's the flaw?" I says, "The price." "Price is too high. How much of a discount can I get?" He says, "Sir, this is Saks Fifth Avenue. We don't ordinarily give discounts." We don't ordinarily give discounts. "Oh," I said, "well, this is an extraordinary situation. I like the bracelet, but I don't like the price." "Best guess, how much of a discount can I get?" So he looks, he sees he's gonna have a little problem with me, so he said, "Well, how much of a discount do you want?" So I figured I would go easy, I said, "50%." He says, "50%? I never ever gave a 50% discount on a piece of jewelry 'Like that.' I said, 'No, how much is the most you ever gave?' He says, '35.' Are we making headway? So I said, 'Okay, I'm at 50, you're at 35, let's split the difference, make it 49.' So he said, 'That's That's not splitting the difference. I said, I can't deal with somebody that's got such a fine mathematical mind. I don't even want the biggest discount you ever gave. How about I'll take 34%? So he thinks for a minute, and he says, let's see, 34%, 33% is a third. And he said to me, could you possibly do it at 33%? So I thought for a minute and I said, "Boy, you really drive a tough bargain. But okay, for you, I'll do it." Let me ask you a question. Would you ever think of doing this? A negotiator, why not? I'm gonna teach you right now how to be a good negotiator very easily. Next time somebody gives you a price, all you say these words: you've gotta do better. See what happens. Most of the times they do better. So what do you do then? Well, we're getting closer, but you still gotta do better. 'Til finally you say, I can't do any better. All right, for 2 or 3 gotta do betters, I got the price down. I never said I would buy it or I wouldn't buy it. So you try these things, and we'll get back to negotiation a little bit later. Right now let's talk real estate for a bit. And the first book which you have, which they also have out there, was Billionaire Lessons for the Small Investor. If you look at it, you'll see the big name, big letters, Trump. If I market it under the name of Ross, nobody buys. If you market it under the name of Trump, everybody buys, but it's my book. So Donald, of course, has been very successful in real estate. And the reason I wrote that book is I was very unhappy with a lot of advertising that was being made on the air and what have you to tell people, hey, if you go into real estate, you will make a fortune right away. You don't have to know anything. Boom, we can do it without any money. And that's wrong. More fortunes have been lost in real estate than have ever been made. And the reason I wrote the book is I wanted somebody going into it at least go into it on an intelligent basis or stay out of the business. So that was the basis for the book. And a lot of it says get to experts. And one of the things that I've always said in there, and I say it in the book and I tell you again, borrow as much as you can for as long as you can, as long as you have the right to repay it. I was against the APRs, the adjustable rates. I was against it because I said you never know where it's going to go. But borrow. You got a house, borrow it to the hilt, but take the money and invest it wisely. You're not going to lose your house. Not because you had the money to pay for it. And take the money and use it somewhere that you can do well and use it to make more money. It's very hard to get people to invest with you if you go in and say, I'll put in the expertise, you put in the money. They don't like that. So you've got to put in some of your own money. And raising money is difficult. Not easy. Try it. I tried it the first time I went to raise money. I was working as a lawyer for these two millionaires. And I said, I'd like to place a mortgage, I'd like to sell How do you get people to invest in a mortgage? And they said, all right, we're gonna show you how hard it is to get people to invest. We're gonna give you a mortgage, $35,000 mortgage, first mortgage on a nice building, 1 year, 16% interest, and we as the millionaires will personally guarantee it. Snap to sell, right? And I had all kinds of investors that were interested. I had a dentist who has a lot of money. Oh yes, George, you know real estate. They'll invest with you anytime, no problem. Had other people invested. And now I went to get the money and found out that the hands got very nervous. They can't write checks. The only one that had faith in me was my mother-in-law, God bless her, and she went for $5,000. And then I'm short 30 grand. So I go to a bank and I said, I'd like to borrow $30,000. And I make out the application. And I've been a lawyer for like 8 years, own my own house, very good credit. And he said to me, "What do you want the money for?" And I said, "I'd like to invest in mortgages." And the bank officer said, "I don't like mortgage investments." I said, "I didn't care whether you like mortgage investments. Am I worth $30,000 on the hoof?" You know what he said? No! No! Shocking to me. So I got the connection, went to another bank. Yeah, we'll take the mortgage back, we'll loan you $30,000, not a problem. And the mortgage, my first deal closed. And every month I would send a check like clockwork to my mother-in-law. And she would tell her friends who didn't invest in it, what an investment I got, I get I get 16% a year, like clockwork, and I get it from my son-in-law for the investment. And they said, well, why didn't he let us in it? And they said, well, he did, but you didn't want to go into it. So now the next deal came up. And the next deal came up, I said, all right, let me try one a little further that I will go for $60,000. Went for $60,000, I spoke to this dentist who had all the money, he said, "I'll take the whole 60." I said, "No, I'll give you 10." He says, "That's not enough." I said, "That's all you're gonna get." There is no better way to get money from someone than not taking it. If you tell them you won't take their money, they'll throw it at you. Interesting. You wanna borrow money from a bank, the time to borrow is when you don't need it. They'll give you all you want. So knowing this, I said, "Okay, there's gotta be a better way." So I now went to the bank, paid off the first loan, went and borrowed a second loan, and I kept pushing the bank to increase the loan. And since this was a new bank, I said, "All right, now I want a loan for $100,000." And they said, "Well, what are you going to do with it?" And I said, "I want to have it so that I can take advantage of an opportunity when it comes along." So I didn't tell him what it was. So therefore I'm taking the money and I have no need for it. So I now take the $100,000 and I use it. And I said, now I'm buying— I'm doing mortgages, 16%. I'm only paying my people 10%. I'm making 6% on the money I'm borrowing from the bank at that time at like 5.5%, 6%. I'm doing very well. I pushed and pushed and pushed, and I finally got the bank. I said, good, now I want to credit line of $200,000. We won't do it. I said, good, get— if you won't do it, I'll get another bank that does. And they went and got the right bank officer, and they cleared it and took them up to their limit. And I kept pushing, and I didn't need the money. I always prepaid it, paid it back when it had to be paid back. But I got up to a point where I had a half a million dollars credit line on my signature, because if you have a good track record with the bank, they will do business with you. If you don't have it, they won't. So you have to think, how do I build it up? How do I build up investor confidence with people in me? You got to start small, and then you go bigger and bigger and bigger, and you make it, you make it work. If they have confidence, then they will deal with you. And this was, if many of you were aware, When Donald Trump had his problem in the 1990s, 1990, he was $990 million in the red. And one of the reasons was the same thing you see today in the subprime mortgages. The banks were throwing money. So he'd go in and say, I need $60 million to build this building, and they'd say, take $80. They'd give him $80 because he was a good credit risk, they knew what his business was, and so forth. So when it wasn't worth the $60,000, and then when the time came when the market changed, what happens? The property is not worth the amount of the mortgage. And as we look now in the subprimes, this was a tragedy. And who pulled it off? The banks. The banks pulled it off, and the brokers. Why? Because there was a foreign group of hedge funds and what have you that had a pot full of money. They put it into a pool and they were buying mortgage-backed securities, and they didn't really care about the securities because they didn't start them. So a bank, somebody would go in and they'd say, I'd like to buy a house for $100,000, but I haven't got the money. The bank would say, well, can you put up a $20,000 deposit? They said no. They said, well, make the house, we'll make it $150,000 and we'll loan you the $20,000. Well, I can't pay the payments on the mortgage. I thought, okay, we'll reduce it. You don't even have to pay the interest. You pay what you can pay, and then we'll talk again in 2 years or 5 years. And then 2 years or 5 years came around. They raised the interest rates, and next thing you have, the poor people couldn't pay the debt. Now, the only reason the banks did this is they could sell it to somebody else. They didn't care if the loan was good. Why? Because we're not responsible for it. I'm selling it into a pool. And a whole bunch of people and companies invested in that pool of services, and therefore when the thing started to go down, you had this massive situation where you had Bear Stearns and they started writing off $12, $15 billion of bad debts of mortgages that should never have been written. And it's a little, you know, it's interesting Now the government is first getting concerned about it. Where were you? Those in the industry knew all about this. Where were you when the time came? You got all these people that put money in investing in their own homes, in their own lifestyle, and they deserve a better break. And what happens? They can get wiped out because of the greed of the banking industry. Really a tragedy, but this happened. Now, as far as Donald is concerned, let's go back a bit because everybody wants to know, well, how did you get involved with Donald? And I got involved with Donald, and he was 27 years old and he walked into my office. I had a 120-man law firm, and I'd done some work for his father who was a good builder. And Donald came in and said, George, I have this great idea. I would like to take the Commodore Hotel, which is derelict and in bankruptcy, owned by the Pennsylvania Railroad, and I would like to turn it into a first-class hotel. And I would get the City of New York basically to give me a lease where I don't have to pay any rent, any taxes. I'll pay them a share of the profits. And I'll get the State of New York to give me the right of condemnation so so I can get rid of the people and things I don't need, and I'll get a bank to give me the money to build a hotel. What do you think? So I gotta put it in perspective. At that particular time in the '70s, the city of New York was one step away from total bankruptcy, and they're about to foreclose their bonds and what have you, but one step away. Many buildings were under foreclosure, including the Chrysler Building, 100 Park, and others. The railroad that owned the property was bankruptcy. They owed the city $15 million. They weren't paying it in taxes. The city needed the money desperately. The city had never made a lease for just profits, and the state of New York at this didn't have any money for condemnation. So Donald having this idea, says, "What do you think?" I don't remember my exact words, but I think it was something like, "Donald, whatever you're smoking or drinking, give it up." I said, "Do you have any idea, any idea how difficult this is going to be to do?" He says, "I know it would be difficult, but would you do it?" So I asked him the right question. "If I do, will you pay my fee?" He said, "Sure." I said, "Okay, let's go, we'll do it." So the first thing he did was he went to the bank to see whether or not they would be interested in making a loan. "No, we don't want to make any loans on hotels. Trump, what do you know about running a hotel?" He says, "Nothing." They said, "Well, find somebody who knows the hotel and we'll talk again." End of story. So now he started off and we went first to the railroad. And he went, spoke to Victor Palmieri, he says, "I'd like to buy the Commodore Hotel site at a fair price, would you sell it?" Palmieri says, "Of course." Now goes to the city of New York and said, "If I can get the railroad to pay you the $15 million they owe you, would you give me a fair lease on the Commodore Hotel?" Says, of course. Went to the state, would you give me the right of condemnation to get rid of the people I don't need, the things I don't need? They said, well, we don't have any money. He said, okay, I'll pay it. So now, basically, it's all set, except he doesn't have a hotel operator. So he now goes to Hyatt, and he says to Hyatt, I have a deal with the railroad to buy the property, I have a deal with the railroad to give money to the city, and the city will give me a lease where they only get a share of profits. And I've got the state to agree to take condemnation to do it. And I have a bank that will give me the money, but I need a real hotel operator. Would you be interested? Hyatt, of course, says, sure. At this point, he's got the biggest load of Swiss cheese you ever saw in your life. We don't have anything. But he has talked, and talked, and a personality, and he's gonna persevere. And now he goes to the railroad and he says, "Good, I'd like to buy the property." They said, "Well, $25 million." He says, "No." He says, "Not for that piece of property, it's not worth it. I'll give you $10." And they finally agree on $12, and the railroad says, "Why should I take the $12?" Donald says, "Well, look, we have an opportunity to revitalize this city." the city of New York Park Avenue and 42nd Street. And you own a lot of property on Park Avenue as a railroad. This will make your properties much more valuable. And Palmieri says, okay, we'll do it. He says, Donald says, okay, but you gotta take the money I give you, the $12 million, and give it to the city. The railroad says, I don't have to pay the city taxes. Donald says, no, but this is good for the city and we wanna improve the city. So therefore, go ahead. And Palmieri says, okay. Okay, we now go to the city. Now you have to convince the city to take a lease where they will own the property and all they get is a share of the profits, which they had never done before, of course. And now basically have to convince them, of course the carrot is I'm gonna give them $12 million. So at this time, occupancy rates in hotels in New York was 23%. 23%, and he's gonna build a hotel. So now, I went to the accountants, and I said, how does it show up if, what kind of profits can we give to the city if we have 23% occupancy? And they look, and they worked out the numbers. They said, if you have 23% occupancy, the city will have to pay you. They're not gonna see anything. So I said, oh no, at what point does the city start to get some real money? They said, well, if you had 60% occupancy, the city will show real money. So I said, okay, I want you to run numbers for me. 60% occupancy, 75% occupancy. You remember when I talked about the aura of legitimacy? Yeah, now I go before the City of New York and I have this proposal that they're going to make a deal and they get a share of the profits. And I put the 75% up and shows the city is going to make a fortune. And the numbers look great until somebody from the back of the room says, 75% occupancy, that's very high. And I said, "You know, you're right. Let's see what it looks like at 60%." So I show him 60%. You know what he said? "That's reasonable." That's reasonable? Again, the power of legitimacy. The numbers were fine. The numbers were fine. It looked good. Yeah, if you got 60% occupancy, it goes great. Meanwhile, you're in a 23% market. So the deal got made. Got finished. Took 2 years to do, and by the time 2 years took, the cycle had changed. Real estate was now good. It turned out to be a fantastic deal, and it did make Donald's reputation. Because if somebody would build something that's bigger, better, or more unusual than anything else. He was the customer, and he did it. For me, I loved it. It was great, even though I lived through 3 corporation councils, 23 drafts of a lease, legal fees. It was wonderful. And it got done, and he got hired as his partner. And the last step was to get the bank to make the loan. They had plenty of bad loans on the books, similar to what you see today. And they didn't want to make the loan. But somehow, between the mayor of the city of New York and the governor of the state of New York, they convinced the bank that if you ever want to do business again in the city, it might be a good idea to make this loan. I was not there. The loan got made, it got done. And to finish the story, a few years ago, Donald sold his half of the Hyatt Hotel in New York for $85 million. So that's the story that really started him off, and since then now you got condominiums. And he of course is a brand. You want to talk marketing, and I do all his marketing or his licensing at this. I mean, we got shirts, we got ties, we got suits, we got vodka, we got water, we have watches, we have jewelry, we have steaks, all the of these things. Why? Because he became a brand. He was known now for luxury. And he's a tremendous builder. And he's also got this tremendous personality. And you can say what you want. The Apprentice didn't hurt him at all. It got him out there in the general public and said, okay, if it's Trump, it's gotta be something very unusual, which it was. And that was his key to success. Now, I said that I was going to show you how to be better negotiators. In a relatively short period of time, understand— well, first of all, I got my book out there. If you buy that, you'll learn a lot about negotiation. And I'm going to give you a little tip now. Next meeting you go into, the next negotiation, just remember this word: POST. P-O-S-T. POST time. P, the people, the personalities that are going to be at this meeting or this negotiation. Who are they? What are they? What do they do? What do they know? What are their strengths, their weaknesses? Now here, you have a lot of opportunity to get information. Go on the internet. Find out as much as you can about the company you're dealing with or the person that you're dealing with. You want to learn about George Ross? Go Google me. Wikipedia, look him up. You'll find out things that might be very helpful. Helpful in relating to me. And the same thing with dealers that you're doing with, companies that you're planning on doing business with, what they have, what's their product, how long have they been in business. All of this information is generally readily available. To the extent that you don't have it, you're dealing with somebody you never dealt with before, speak to somebody who's dealt with that person. Did they have a good relationship buying a car? Whatever it was, get as much information as you can about the people their strengths and their weaknesses. Now, this is both on your side and the other side, as much as you can. That's the P. O. What is the objective of this meeting? What are we trying to achieve? Now, in order for it to be an objective, a true objective, it must be measurable at the end of the meeting. So if I say, well, I'm going in to buy a car, if you're not planning on buying a car, wrong objective. I'm going in to see whether the dealer has anything I might like, that's a good objective, because I can see at the end of the meeting, say yes or no. If I'm going to meet a builder that's planning on building a house, do I want to see if I think I can trust them? Okay, that's a good objective. So the objective at that meeting has to be measurable so at the end of the meeting you say, "I made it," or, "I didn't make it." The S, strategy. What strategy am I going to use in this particular meeting? Am I going to appear to be stupid, smart, a lot of money, little money? What do I want to do? What strategy do I want to employ in order to achieve the result that I'm thinking of achieving? Do I want to go good guy, Good guy, bad guy. Tactics. T is tactics. It's really a branch of the strategy. Now I know the strategy, what is the exact tactic that I want to use? Well, I don't want to appear anxious, so therefore I tell my wife, when we go into the meeting, if I say I like something, you say you're not sure. If you say you think it's too expensive, I'll say no, I think it's reasonable. Whatever it is, but what have we done? We've got a tactic, we've got a game plan. Hey, okay, a game plan is the name of the game. You want to be a good negotiator, go with a game plan. Don't think, don't walk, you just walk in and say, I'll shoot from the hip. Go with a game plan. Now once you start thinking about this, what do you do? You come up with the questions that the other side is going to ask you, or answers that you think they're going to give you to your questions. And now you start filling in the blanks. Well, he's going to say this, and if he says this, I'm going to say that, and therefore we'll end up now with a good negotiating. The more preparation you have in a negotiation, the more successful you will be. That's for sure. Don't be afraid to do it. Do the negotiation, do the preparation, and you'll find out that you're much more successful in all of your endeavors. Devis.

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