350 Tom Zeeb VideoThe Art & Science of Real Estate Negotiation

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Hello, enlightened investors. Welcome back to Real Estate Investing Abundance. I'm your host, Dr. Allen Lomax. What a delight to be back with you again today as we take a look at the art and science of real estate negotiation. With us today is Tom Zeeb, and he in 2001 was broke as a joke. A near-death experience while whitewater rafting pushed him to find a new way to break free of his 9-to-5 job. His first deal almost took him under as well, but real estate investing saved him in the end, both personally and financially. Hundreds of deals later, he is happy to share the same negotiation, marketing, and business techniques that set him free so we can do the same. Simple, structured, and step by step. So Tom, take us into the show. And share a memorable experience that helped you to be who you are today.

Hi, Alan. Thanks for having me. Yeah, memorable experience. I suppose it's all those, all those near drownings. In a weird way, the first one, you know, a physical drowning underwater. But then after that drowning financially, from just being stuck in a day job with no investments, no real estate, no idea of anything other than trading my time for money. The drowning underwater definitely changed me. It was a Rafting trip. It was basically escapism. I was trying to get away from the misery of the life that I had built for myself at that point. And I, you know, just got away on a trip spending money I didn't have, burning up the rest of my vacation time from my job. And as we're going down the river, this is the Ganges River in India, I couldn't stay on the raft through a very difficult rapid and I went flying off the raft and I was sucked under the water. And for that, whatever, minute or so that I was down and you have no idea what's gonna happen and you think you should come up, you wanna come up, you can't imagine it's all over. And I kind of changed internally is the way I look at it. 'Cause I was, I got angry more than anything else. I wasn't happy with anything I'd done. I wanted something different. I just didn't have any clue how. And then that's when things started to change for me, which I obviously surfaced. And then realized I was drowning financially and I was drowning in the job and I was drowning. Everything was drowning. And I said, I gotta come out of this somehow.

Well, it's interesting how different experiences like that can change us almost in an instant. Of course, those internal changes are one thing and then making the actual day-to-day and life changes are quite a different thing and probably take time and effort and energy. But the realizations often come in flashes like that to many of us. Well, Tom, what is the first thing that stops people from getting more deals?

Themselves. Literally, it's flat out their lack of any implementation. Alan, it's nice to want something. We all want something, right? We all want it to be easy. We all want to be successful. But to actually put that ounce of effort in to make it happen and to do that, I'm not saying it's all the work in the world, but to do the work that's needed. Too many people have turned work into a 4-letter word and they don't seem to wanna do any of it. And then, but then they wonder why, why they haven't been successful. So the number one thing that I've seen stop people is literally their absolute lack of any sort of work at implementing the steps of the process they need to take to Can you tell us a little bit about your journey from the insight to actually learning how to take action?

And you had mentioned that your first endeavors ended in a drowning experience as well. How did you eventually come to a point in place where you stopped drowning and actually started succeeding?

Yeah, that was after more drownings in deals this time, you know, having no idea what I was doing. I said, well, you know, everyone says, well, hey, real estate's the way forward, just buy rental properties. So I ran out and bought a 6-unit building as my very first deal. I didn't even own my own house at the time and I bought a 6-unit building in landlord-friendly New York City because, hey, it doesn't get— I mean, One colossally stupid decision after another on my part. None of those tenants were paying. So I was now the proud owner of 6 units that I was paying for with nobody paying me. And like I said, now my financial drowning was getting worse and worse. It wasn't until, I guess, that disaster as well. When I came out of that, I said, all right, there's got to be a better way. How can I do this? What can I get into? And I started— I kept marketing for deals. I found something that was closer to home. I was living in Washington, D.C. at the time. And I, I, I kept my marketing out there, found rundown, dilapidated properties. I got one under contract. This time I managed to sell the contract on the property, not actually purchase the property itself. I was thinking I was going to rehab it. Instead, another investor offered to take it off my hands, which I didn't even know was possible. I wound up selling my contract to this person and making $20,000. $2,819.66. I can't forget that number. It's easier to say $23,000, but I made almost $23,000 simply assigning a contract. And I said, that's it. This might be the way. This will get me out of trouble fast if I focus and keep at this.

Well, interesting. How can solid negotiating make a huge difference in our businesses right now?

Okay. What I've noticed over the years, and this is like 20, well, I mean, I don't know, quite a ways, probably 22, 23 years in now. I've noticed that one of the big things that people trip on at the beginning is they don't have any negotiation savvy or any negotiation skills, probably because it's not taught in school. I find it to be the number one most critical skill in business, maybe tied for first place with marketing. And yet nobody knows negotiation. A lot of people think they do, but they just think of haggling or arguing about price. There's an elegance to negotiation done right. There's an art and a science to it. And when you get good at it, that's when you get more people saying yes to you. They stop saying no and they start saying yes. And that makes all the difference in the world. It's gonna improve the number of deals that you get. It's also gonna improve each and every deal in terms of improving the profitability. Because you're getting a better deal because you're following a structured way of negotiating to get the best deal possible.

Well, can you give us some tips on how we can start negotiating better?

Yeah, absolutely. In fact, I'll give you 3 things that everybody can use right now. So, you know, you're listening, pay attention to these and then practice them. That's all I ask. Just try them and see how well they wind up working for you because What's beautiful about negotiation is I'm going to teach you kind of the science side of it, like the technical reason why these 3, some of them are a little bit weird, but why do they work from a scientific perspective? And then as you practice and just use them, it'll become more of an art. That's why I call it the art and the science of negotiation. So tip number 1, Allen, is flinching. Every time you hear a number, no matter what that number is, I want you to kind of act like you were attacked by that number or shocked by that number and make sure the person knows it. So Even if they're not looking at you, they can probably hear that there's some surprise in your voice. So, Allen, if I ask you to say a number, just, just say a number.

100,000.

Whoa, 100,000. Yikes. Now you're smiling, you know, and how do you feel when I react that way to your number?

Well, I feel like a couple of things that I have in some way, shape, or form offended you. And then on the other hand, if I really want this deal to go through, I have got the idea that I'm going to have to do some, some work on my price there, either come down or add something to the package or do something, do something different.

Absolutely. You're questioning your own number. What's, what's interesting is I just said say a number, right? And not a price or price of a house or car or a boat or salary or anything. It's just a number. And yet the response you have, the way you felt, which I'm sure many of the listeners felt, is that's hyper predictable in people. They always have that type of reaction. So the key then, if you want to negotiate well, is to flinch every time you hear a number because you're putting that thinking into their head. They're going, okay, it's not good enough. Whatever that number was, it's not good enough. Too high, too low, whatever. They know it's just not acceptable to you and it starts the process of softening them up a little bit. That's why that's my first tip. The second one is called bracketing. Now, I'm gonna ask you a question again, Allen. Where do we tend to meet?

Well, we hope to meet in the middle, generally speaking. And we feel, I, you know, I think oftentimes we feel like we're being taken advantage of in negotiations. And so we feel like we're ending up on the narrow side of it rather than in the middle. Correct.

So you don't want to feel like someone's rode roughshod over you and taking it all for them, like you say, leaving you on the narrow side of the field. So the fairest spot to meet is in the middle because it just feels right. I mean, you gave up half, I gave up half, we met in the middle. It feels better to people. So we all know that, we all feel that. So what I want you to do, since I always want people to have a win-win experience with you when negotiating, I don't want them to feel like they lost. I want them to feel like they won. And yet you and I are still going to win. So the best way of doing that is to make sure we meet in the middle. Well, well, then the question is, well, where is the middle? And does the middle work? Well, what bracketing does, my second tip here is yes, it works because we engineer the middle. To be exactly where we need the middle to be. So if I'm, I'm just going to throw some random numbers out here. Let's say we've got to be at $150,000. And I ask you, how much are you asking? You say $200,000. Well, I need to be at $150,000. So if you're at $200,000, to meet in the middle, I got to make $150,000, which is my target. I got to make that the middle. So I'm going to start down. You're $50,000 above. I'm going to start $50,000 below. That way when we finish, because things tend to work towards the middle, we get to that middle and now you feel like you won. But I'm gonna modify that slightly with my, with my third tip for everybody. I, I wouldn't offer $100,000 in that case because I don't like plain, even boring numbers. I would offer not $100,000. I would offer you $103,579. Because now you hear that number and you think, $103,579, how'd he come up with that? There must be some scientific thinking. He must have a spreadsheet. He must know what he's doing. There must be a calculation to it. Where quite honestly, all my offers end in $579 at the beginning. I like those numbers. You can use any numbers you want, by the way. It doesn't have to be $579. I mean, you know, I just make it something specific, not an even number. Make it something unique. Because it gives your, it gives your offer some gravitas. It gives your offer some oomph. It feels like it was really thought through. Now, we know it's not, right? It's a technique, but it's a technique to get the ball rolling. So you're, you're not expecting anyone to say yes, because if they say yes to your first offer, you didn't offer low enough. So we don't want them to say yes. We know they're going to say no. We want them to say no, but, and start to move the price higher because we're trying to converge in on that middle point. Which in this example is the $150,000.

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And finally, be sure to subscribe so you don't miss a single one of our upcoming episodes. Well, good, good suggestions there. Even with all of that, I mean, if we move towards the middle, How do we really decide that we really need to move forward with the deal? Because we may have gotten to the middle and it really still isn't a good deal.

Well, that's some of the planning I'd like to have people think about at the beginning. When you're framing out your negotiation and figuring out where you want to go with it, your middle's got to be the point that actually would work for you. You'll be happy if you get them to the middle. It's not going to be 100% of the time that you're going to get them there. But I want you to, if you do, you're gonna say yes with no hesitation. You're gonna be happy you got them there and accepted. So at the beginning, you're figuring out the deal, what would work for you, and you set that middle to be where it is gonna work for you so that you won't have any difficulties. Like you're not gonna really wanna turn the deal down. You're gonna be happy you got them to where they need to be to make it work for you.

So how do we get to that point that even before we go into negotiations, we know that, yeah, this is How do you get them to the point where they recognize that as well? No, how do you know that before you go into even the negotiations? How do you know this is the deal for you?

Sure. I'm gonna analyze the market first. So kind of like I deal primarily in real estate, so I have the address, I'm gonna know what the value of that property is. So I know if it makes sense, I know what I could do with it. It's also some of that overlaps slightly back into the marketing. If I'm marketing for the right types of people, then the only people that I'm gonna be dealing with are people that are already a little bit lukewarm coming in from getting my marketing down right. So there's kind of 2 ways that I deal with that.

Well, how do—

I mean, there's a lot of fear in conjunction with negotiations. How do we overcome that fear to actually get started?

Practice. You want to overcome the fear? Let's get your feet wet. Let's just dip your toe in the water first with some practice. Let's do some— let's do some practice that doesn't matter what the outcome is. I want to take that— I want to take the outcome pressure off of you, the result pressure off of you. I just want you to practice for the sake of practicing. In real estate, that's pretty easy. There's a lot of people trying to sell property for sale by owner. Call them. They want to be called. That's why they're advertising online or in the newspaper. You know, they're putting their number out there. They want to be contacted. So call them and start the process of getting used to talking to them, getting used to making them an offer, implementing these techniques that I just taught you and watching what happens. It's okay if it doesn't go anywhere. I want, like I say, I want to take all that outcome pressure off and just get the practice. Because what will happen, like anything else, when you practice it more and more and more, it starts to become second nature. You start to not feel fear and intimidation about it anymore. And honestly, folks, do it, do it 10 times and watch what happens to you internally. You're going to be, you're going to be much more confident and calmly confident on the phone with people.

Well, you've mentioned marketing several times here, and it certainly is a critical part of any successful business, but certainly it is critical to a real estate investment business. And of course, marketing is a whole topic in and of itself. But can you, in just a nutshell, can you tell us why it is that campaigns generally die and what it is that we can do to avoid our campaigns just dying on the vine?

Yeah, it's interesting. I think the number one reason campaigns don't make it is usually because they're never started. A lot of people seem to think that just talking about marketing is marketing or planning to market is marketing or planning to plan to plan to someday maybe do some marketing is marketing. It's not. The only thing that's marketing is actually doing marketing. So The first point of failure is the fact that most people don't do anything at all. The, the second point of failure is a total lack of any repetition. We have to face it, marketing takes repetition. There's TV commercials, you sing along with the song by heart, right? And it's not because you heard it one time, it's because you heard it so many times, you're getting so sick and tired of hearing it, but that's drilled it into your head. It's that level of repetition. And yet when I find when people come in the business, specifically the real estate business, they maybe send one round of mailers out one time. They send one round of postcards, one round of letters. There's no repetition. Well, you know, that's just blind luck if you got one. The secret, if there's a quote unquote secret to marketing, is to repeat the process. It's gotta have a repetition cycle on things.

Well, when do you determine that you just have a failed marketing plan? You say you send out 10 rounds of postcards and no results.

10 rounds, no results. I would maybe depending on if those were proper rounds, I would look at it and say, okay, what needs to be tweaked here? Is it the message? So the message is what I say to the people, but maybe it's the people themselves. So that's the market. Is it— are these truly motivated sellers? Are these really the people I'm after? I would start kind of at that endgame and work my way backwards. Am I hitting the right people? And if the answer is yes, then what am I saying to them? The message— I want to make sure I have the message-to-market match correct. So in real estate for motivated sellers, I deal with a lot of tired landlords, absentee owners, people inheriting properties in probate. Tired landlords who have kicked tenants out, you know, from nonpayment of rent, maybe divorce. There's all different sorts of things that can occur. Well, each of those categories, I need to talk to them a little bit differently. Like, I can't send the same message to a tired landlord from eviction that I send to the person that just got divorced. And I can't send that person the same message that I send to an out-of-state absentee owner, because, you know, the message needs to match the market. It's their particular itch I need to be scratching. They have particular buttons I need to push and the next, the other person may have different buttons. And so I can't use a generic message. I've got to keep it focused on that. That's usually what breaks down in people's marketing is that they don't have that message to market match right and/or they're not repeating it enough.

Well, in terms of overall business, what are the 3 major screw-ups that can knock us out of business?

Now, first one ties back to what we just talked about, marketing. Specific first major screw up is no marketing. I don't know how people expect a business to just magically occur, any kind of business. They just think it's, you just hang out a shingle and business starts to flow in. That doesn't happen. You have to have some marketing and that's not necessarily just a random post on social media. That's, it takes a little bit more than that. You gotta have some proper marketing. I would say the second thing that messes people up is their weak negotiation skills. They're not converting any leads they are getting. They're not converting them into people saying yes to them or buying what they're selling or selling them their property. That's not happening because they don't have a structured process to bring people from saying no to saying yes. And I would say the third thing is they're not prepared to deliver on their promise. So if they get somebody to say yes to them, they don't know what to do then. And that's a problem, not just because they could drop the ball when they get it. I'm gonna make the argument that that's a problem because they don't even make the effort to get the ball because that would, because then they, it's like if there's 8 bridges to cross to do your deal, but you're scared of bridge number 6 because you don't know what's happening at bridge number 6. Therefore, even though you're standing back at the beginning and you haven't even crossed the first bridge yet, which is marketing, You don't do anything because you're afraid of bridge number 6. And so when you're not prepared to deliver on what you say you want to deliver on, a lot of times you clam up at the beginning and you don't do the marketing and you never get a chance to negotiate. So the whole thing is, it's like a self-fulfilling prophecy that doesn't work. You're dooming yourself to being stuck in failure.

Well, Tom, tell our audience what you have to offer and how they can get in touch with you.

Fantastic. I would like to offer people more training on both marketing and negotiation to get things moving. The easiest way of doing that is to go to my website. It's tomzieb.com. And then if they put in a /dealflow, you'll be able to get my Deal Flow Maximizer, which helps get you through your next 5 deals, whether those are your first 5 deals or your next 5 deals. It'll talk about these kinds of processes. So that's an instantly downloadable gift for everyone. It's tomzieb.com/dealflow. Zieb is Z as in zebra, E-E-B as in boy.

Well, excellent. Well, one last question, Tom, and that is, why do you think goal setting is cheesy and what should we do instead of goal setting?

Yeah, that's interesting. I always think of New Year's Eve and New Year's Day. Everyone's making these great resolutions. They're gonna, they're gonna Change the world and make it all happen. And I don't know, by the, I don't know, second week of January, end of January, certainly by February, nobody's talking about it anymore. It's like the buzz wore off and it's all over. And that's because goal setting, when it's just this giant pie in the sky level, I have a goal, that's not a goal, that's a daydream. So you need to learn to separate your goals from your daydreams. It's okay to dream. But now let's put a, a process in place, a set of steps to get there. So I like to see people do much smaller goals. I think most people's goals are too big at the beginning, and that's a problem. And I know that that might sound a little weird because aren't you supposed to dream big? I actually want you dreaming small. What small little change can you make right away? Because then you would actually do it. If, if I don't set the, if I set the bar so high that you can't get over that wall, that's a problem. But if I put the bar right on the ground and it's basically just like, stepping over a cord on the ground. There's no reason you wouldn't do it. And when you keep repeating that process, you take your bigger goal, break them down into tasks and make those tasks very doable and very manageable. You'll step over those all day long. And in the process of doing that, you're going to create a habit. And next thing you know, you'll be a lot closer to what your overall goal was. So it's not that I mind having a daydream or a big goal, I just think if you just, if the goal's too big, you kind of back in your mind know you can't achieve it. Break it down into its component parts and then watch what happens. You'll actually get yourself moving. And once you're moving, you'll actually get to the finish line.

Makes total sense. I mean, because we see that all the time, people setting these big goals and aspirations and all kinds of coaches out there telling you, you have to have your goals and you have to have your big line. But I'm like you, that has never really worked for me. But I can do a task. And if I— and I just say, well, I am going to do this task and get that task done, then I can go on to others. So it makes total sense to me. That certainly is what has been working for me. It's great to have you, Tom. Thanks for sharing your wisdom and expertise.

Thank you, Alan. Appreciate it.

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