Negotiation the basics and the details

Hey guys, it's Ian here. And I'm not in a car. I could pretend to drive like a bus driver through the big turns. But no, I'm in Melbourne. I'm actually sitting in the park having lunch. Christine's finishing her lunch over there and.

It'S nice, it's actually nice to walk through the park and see that people are sitting in there in their suits at lunchtime and just no phone, no earplugs in, nothing. Just watching out, looking at the green and basically doing stillness, which is another word for meditation. So just sitting still and thinking about nothing. So I've got negotiation here and I know that Neil from wa, who's one of our team members for the High Res program, wanted to hear a bit around negotiation, having just gone through a process of negotiating a deal and getting to the point where that didn't happen. And so let me start with this point. There are going to be some negotiations and maybe a lot of negotiations where you're not going to win. It just is a fact that you're going to get.

Thanks, Chris. It's a fact that you're just not going to be able to get a negotiation that's going to be successful. Because for a negotiation, two parties have to agree upon something. And I'll say up front, when I was doing tape as a student, my coach, my coach, my teacher came into business class and he said a negotiation is where two people get together and compromise, where both parties lose. And that's not how negotiation works. Negotiation, ultimately, you've heard it time and time again. The cliche is that it's a win, win situation and it really is that situation. So let me talk a little bit about the makeup of negotiation and the thought patterns behind negotiation and what people are thinking about during negotiations.

Essentially, negotiation is something that you need to do to build rapport between you and the person that you're talking to so that ultimately you come up with an agreement. Now, negotiations are not about getting the power position. It's not about being trampled over the top of. It's about actually agreeing to something that both of you are going to benefit from. And if you ever agree on something and you walk away from that with an uneasy feeling, then you've been had. Or if you walk away from that and it's an awkward feeling, it could be that you've overpowered someone. And whilst you might think you've been successful, it's not been. So let me give you some basics around negotiation. Let's talk about NLP or Neuro Linguistic programming, it's really quite a specific tool that you should be using on your daily life, regardless of whether you're negotiating, just talking to people, it's a very useful tool. And I'll give you some examples, because NLP is around building rapport. There are practitioners out there that use NLP for a negative consequential outcome to benefit them, but negative for other people. And if people are doing that, they really should have a good look at themselves because it's the wrong way to go about it. So when we talk about nlp, there's some really simple things that you look at on how you can language and how you can build rapport. One of them is called the mimic. So the mimic is where you put yourself in a situation where whatever the person on the other side does, you do the same of as far as body language is concerned. So, for example, in the last few days we've had meetings across Sydney and Melbourne. And in all of those meetings, especially in Christina, working with couples, we mimic the couple on the other side. So I noticed at one point in recent meetings where one guy leaned forward and put his hands on the table in front of him. So I did exactly the same thing. When they leaned back in their chair, I leaned back in the chair. At one point, he actually put his arms around the back of the chair just to get comfortable and, and put himself in that position. And I did exactly the same thing. If his head moved one way, if he moved his head to the left, I move my head to the right, and that there becomes an unconscious action that you do. So what I'm about to talk about, you might say, oh, geez, I've got all these things to remember to negotiate, but how am I going to remember it? I'm just going to not listen to the person. And.

You can get to the point where that happens. Christine's just sent me a message to say it's mirroring. Mimicking and mirroring are the same thing, darling. And so when you, when you do that, that's one part of it. You might use words according to who they are and who they want to be. And you can always put things in the positive. So when you're using nlp, you're always putting things in a way that makes it a positive outcome. So instead of I don't like, I don't like that part of the negotiation because it's going to do this to me, what you need to do is do what they call matching and pacing. So matching and pacing is repeating essentially what was just said to you and then moving on to your point, and I'll give you a really great example that I like to use is when I was in TAFE New South Wales.

I managed to secure with the rest of the team $6.4 million worth of funding to completely transfer the existing concrete structure building into a really useful learning tool for all the areas. And being in the plumbing department, we had some fairly old teachers, teachers that actually had taught me and I had become the head teacher. And so one of the negotiations that we had had with the government for the funding was that we had to reduce the amount of.

Stormen that were working within the area. And you can imagine that the older people and teachers weren't quite happy with that. So when I went into the meeting to, you know, we organized a staff meeting to let them know what was going on and of course we told them that we're getting $6.4 million of funding, we're going to have new workshops, new teaching areas, the building is going to actually being a living sustainability teaching resource and we're getting new areas for our tool and workshop and we are having to get down to two Stormen down from three Stormen. So you can imagine all hell broke loose. And so. Hola, Nurso un como.

So you can imagine, you can imagine in the whole grasp of concept that I've just told a 60, 65 year old, 70 year old teacher that was still teaching because they were great at teaching, that we've now downsized the amount of people that are going to be helping with tools and, and, etc. So one of them came out and said, said.

You know, we've worked hard for the last 30 years, we've fought in the trenches to get the standards that we've got today. And what you're doing is completely breaking down the standards. So if I said no, that's not true, what we're doing is we're actually doing such and such and such. That's not going to do anything for you. So essentially the matching and pacing part of it is.

Trying to think of his name. He actually taught me Paul. I said, paul, I completely understand where you're coming from. Having you on our staff and being here for the last 30 or 40 years, having taught me, having got me to the position I'm in today, and for you, having fought for the conditions that we've all got, is an extremely important thing for all of us as staff members. We wouldn't have what we have today if it wasn't for the work that everyone had done in the last 30 years to get us here. And I completely understand that you see that there's a safety risk to the component of the fact of having one less storman. What I have managed to do is put myself in a position where I've negotiated some extra capacity within how we store our tools, how we've got our extra machinery to make sure that the safety and standards the students do not drop. And I've also made an indication to the staff and management that if there's any incidents whatsoever that we need to re evaluate the amount of storming we need. So you can imagine from that comment that they automatically, he automatically went, well, how am I going to argue with that? He's actually agreed with everything I've said. He's actually said that we can review the point at the back end if there's a problem and in the meantime we're going to have a better outcome. And if you notice when I worded that sentence, I didn't use words that shut down any part of the conversation. So those words would be a classic one is but. And a classic one is however. So as soon as you say a sentence and put but and however in what that means is the first part of the sentence that you just said or the sentence that someone else just said. As soon as you say the word but, you've essentially just wiped out any meaning and not listen to the other side of it. So give me give you an example.

If I went to the same thing I said, yeah, I heard what you said Paul. But as soon as I said but, it would have wiped up any position for me to actually build rapport. I would be breaking down rapport with Paul at that position in time. So always understand use of the word and and if are very important. So in our nlp, the ability to negotiate and put the ands and the ifs in are really, really important. So for example, if we're negotiating on a deal and I'll bring up the red herring in a second negotiating and dealing, we say okay, so if I include. So if someone came back to me and said yeah, but I'll say okay, so if what you're saying, if we included a 30 day settlement and we had the ability to have another 30 days from there to ensure that we've got finance and we had something else, would that suit you? Because if it does, it would be great for us. You can negotiate like this all the time. So you can say with your kids if you have and you give them a reward. So you say if you're quiet. And if you walk around the shopping center with me and you do a really good job at that and make sure that there's no screaming, no noises.

I will give you a.

Vegan ice cream. So you're conditioning the person or conditioning whoever into position at the end. At the end, the red herring. The red herring in negotiation is putting an amount of importance on something that really does have. Doesn't have any importance into your negotiation. And the fact in a negotiation is that when you give up something on one side, they want to make sure that they gain.

You know, I say this as your generalization, but Asians, if you offer something to Asians, the expectation from them automatically, straight away is that you actually haven't given your best price. It's actually built into their genes that that's the way they are. And you might laugh about that, but it's the fact. Right, so how much for cash is a wog thing? Right? So as soon as you say to something, to a wog, and I am ethnic, well, I'm Australian born, my parents are ethnic. As soon as you say that, they say, how much for cash? It's ingrained. So you're giving something up. So when you put a red herring in, what you do is you, thanks, Coral. What you do is essentially put yourself in a position where you're going to give up something that they feel like they've achieved. So agents. I said agents, not Asians. So when, for example, there's a negotiation a few years ago where I said, look, we need. It's extremely, extremely important for me to say to you that we really, really need a 90 day settlement. We've got a property somewhere else that's settling in 90 days time and we need that to be able to work that for you. Now, that's one of the conditions, but that's really important to me as far as the price is concerned. I'm going to offer you $527,000 and I got to make sure that I've got vacant possession and I also want the approval subject to council approval. So we'll go unconditional as soon as we've got council approval. Now, I need to. I need to express to you that the 90 days is really important to us. So effectively what I did was I put this big, big chunk of importance into something that wasn't really important to us, because to me, the 90 days wasn't important. It was actually the council approval was the important part for me. So I made this huge thing around the 90 days we ended up going to 60 days, but it was subject to the council approval anyway and it ended up going over the 60 so it didn't really matter. And so in those scenarios I actually feel like you're giving something up. They feel like, okay, well he's willing to work, work at the party. Now let's talk about.

The negotiation with being able to negotiate to, with agents and agents. Agents, I said, I'm sure not. Asians are.

Are always going to be difficult on the comparison of a normal negotiation anywhere else. So when we talk to agents, they're always the most interested. Part of an agent is to get a price and to get it in a point where they're going to get their payment up front as soon as they can. Because they get paid on commission usually, obviously always on settlement of the sale, but not always. For example, Christine and I are very proud on the fact that out of all the property deals we've done, not once ever have we ever had a standard settlement contract. There's always been some condition of some sort somewhere in the deal. So when we talk about the agent and we're saying to the agent we want a 12 month settlement automatically, what you see is the agent ticking over and going, I'm not going to get my money, I'm not going to get my money, I'm not going to get my money. And they would much rather negotiate at a lower price with someone down the road and get their money earlier. So you have to think about sitting on the fence and looking at both sides and saying, okay, well if the agent's objection is going to be I'm not going to get paid, how can I make that work? So you might say, okay.

I'll tell you how we normally approach it. I will normally say to the agent, okay, so we're in a position where we need a 12 month settlement and we'd like it to be 12 months long. However, I've been in this game for a long time and I realize that from the perspective of a real estate agent, you get paid from the commission on time of settlement and the last thing you want to do is actually wait 12 months for this to settle. So I tell you what I'd like to do. I'd like to offer the position for us to have that 12 month settlement, but I would also want to pay you the amount of money that you deserve upfront and that will just come off the purchase price at the back end. Or you might decide in a couple of deals we've actually paid half of the upfront cost and then done the 12 settlement, 12 month settlement. So that's one of the big things. Agents are going to lie through the skin of their teeth. Sometimes not all of them, but some of them will. And for me, I previously was a black and white person, so as soon as an agent gave me bullshit, I would shut them down and shout them out. Now what I would be doing is breaking rapport. I would be stopping the ability for myself to negotiate even further. So effectively, what you need to do is love them with all the kindness in the world. Don't be a hater, just accept that that's what they're going to be like. Because as soon as you shut the door on a negotiation, you've effectively called bluff and that's the end of the deal. So I'm not a fan of people that negotiate and say this offer is only open for the next two hours or two days because as soon as the two days are over, you've effectively shut yourself out of the deal. Never ever put an end to a negotiation. We've been negotiating on some deals for four or five years now, effectively. Will we get there? Possibly on some and some of them, no. We missed out on a deal last year and.

I wouldn't have paid the money that the person that came in and bought it for paid. However I still got there. There's only really three deals in the last 10 years that I really am disappointed with myself that my ego got in the way of the negotiation. Don't be cute in your negotiation. Don't go looking for that extra bit just so you can win. All right. Now in the end, if you're going to pay 2, 3, 4, $5,000 extra for a deal, don't shut that out simply because in 10 years time, five grand is going to make a little lick of difference. Not a single center difference. Like seriously, if they're hanging out for five grand, just accept it and get it going on. Right? And the same can be said when you're selling, selling properties. If you hold out for too much money, usually your first offer is your best offer. And I know that because we've learnt the hard way that if the market's going to offer you something on the first day, it's usually going to be within spitting distance of saying okay, so I think, I'm not sure what negotiation Neil was talking about that he required some feedback on, but I presume it's around the rentrepreneur, which is what? Which is part of high res. And that is where you go and you take someone else's property and Karina just dropped in, just in the speck of time, the star rentrepreneur student that we've got in high res. And from that retrepreneur, Neil's obviously doing a few of them. And when you're negotiating a property for a rentrepreneur, you're essentially saying to the other side, I want to rent your property, with your property, I'm going to do some work on it, I'm going to be paying for it. I want a one year lease with an extension for another two years and I'm going to fit it out and furnish it and I'm going to do this to it. You're completely open now in most parts. The real estate agent's going to say no. Now I've got some figures on this.

Well, you know what, Coral, what I'm talking about right now is going to give you the perfect opportunity because.

One example that we've done recently. So as far as negotiation is concerned, when we're looking at the rentrepreneur.

We look at options. If you want to go out and do an option strategy, that's where you option someone else's property where you've got very little money but you're going to take control of the property, I believe that you're about a 1 in 100 chance of making a deal come up. When you look at vendor finance, I think you're about a 1 in 1550 chance of making it come off. But when you're looking at rentrepreneurs, I reckon you're 1 in 10. And for Christine and I, it's about a 1 in 3 success rate. So when you get to that point, you really get to understand how you're working and there's going to be objections. So what you need to do in a negotiation is, understand, sit on the fence, what objections are going to come up and when they come up, that you handle them in good rapport, that you don't break rapport poor, and that you NLP them to a point where you can make it work. Now I will talk about micro, micro expressions very quickly. So with the rentrepreneurs, the thing is that I know when an agent, when we say to an agent, we would like to rent this property and we want to have a ability to lease it out to other people under certain circumstances that they're going to say no, no, you can't do that. They'll always come up with this is a commercial lease. No, it's not. And you need to know the Rental Tenancy act to make sure. Or come and join High Res and we'll teach you what you need to tell them. There's a whole bunch of things that we can handle and what we say, objections. Effectively, what you do when you negotiate is handle objections. So for example, we did a deal recently in Brisbane. I didn't do the negotiation actually Rebecca and our office did the negotiation and she rang up and said, look, we want to do this and this and this and this and this is how we're doing it. The first objection will be, no, that doesn't get done. You say, well, actually we've got a lot of experience in this area and we can give you many examples of that. Now if you joined High Res, you would be able to give many examples because we got lots of students doing it. So we got to that hurdle. We then said, well, we want a three year lease, but we want one year an option put in there that's a commercial lease. You go, no, it's not. It's simply a residential lease where we're putting a condition, has a special condition into the lease and we're making that work. Now we could have pushed for a.

First right to purchase the property, but that's complicating things. And essentially if you, you got to think about how complicated you want to make this fee. So for us we simply said, okay, we're going to rent it for three years. In the first six months we can go in there and put another condition in there to say that we want to purchase the property from them. Now essentially what we've done is tied up a property for three years. So for them to sell it, they have to sell it as an investment property, not as an owner occupier because we've got a lease put in place that we're in control of. So.

Give you some numbers, Coral. This is a Brisbane deal. We negotiated on the Brisbane deal so that we had a one year lease with a three, two year option. And on the lease we're paying $400 a week. They're happy, they're comfortable. They're getting three years of $400. It steps up to 420 and then steps up to 440 or something like that for the third year. Now we're comfortable with that because we know we can lift the rents along the way. We spent $10,000 and the $10,000 we spent, we upgraded the house so that it could be 1B compliant. We painted, we do a whole lot of stuff to the house, we put it to the market and we're now renting the house for in different scenarios using high rent strategies for $870. Effectively, in the first year we're making $12,000 by spending 10. So we've got about 120% cash on cash return. And then in the second and third year, we're actually making 12,000, $13,000 every year. Now, you could do multiples of these. Now, in that negotiation, you had to be ready for all the objections that were coming up. So Rebecca would come back to me and say, hey, listen, this is what was said. What do you want me to say? So I'd just say, Rebecca, we'll go back to them and say that we're upgrading the fire and safety requirement of this building, which in Queensland needs to be upgraded by 2025. So essentially they're already done seven years ahead and it's at our cost, not at their cost. Okay, so that's a good thing. Hey, Michael. So I'm in Melbourne. So you can see that there's a number of different ways. Now, micro expressions will do you in every time. And there's two styles of communication where people need to know about. One of them is called affective communication, and the other one is a neutral communicator. Now, if you're a neutral communicator at one end of the scale and you're an effective communicator at another end of the scale scale, you're going to need to learn how to balance those and be able to turn them on and off depending on your negotiation. So for example, there's a couple of different people you'll negotiate with. It's show me yours, show me yours, mine. And they won't allow anything. And they'll sit back with their arms crossed. And remember, having your arms crossed doesn't necessarily mean that they're trying to shut you out. It just might be a comfortable thing. So again, if they cross their arms, you cross your arms too. Just mimic them and build a rapport. So when you're an affective communicator, you are very, very much what we call mind reading. You're looking at signals, you're looking at signs, you're putting all the information together and you're making up a mind read. Now, mind reading can be a problem because you might meet read something wrong. Someone who's a neutral communicator virtually looks at no emotion whatsoever, simply looks at words, at black and white and says, okay, that's what we are now in saying that a neutral communicator can also show signs of expression of emotion and not realize they're showing it. So when I'm going to use Christine as an example, she's right there. She'll look at me in a second. She is a neutral communicator. And I'm at the other end of scale where I'm an affective communicator. So a neutral communicator you'll be talking to, you'll say something to them and they'll just go, what? And then keep on talking. And they won't even think about what their actions just did and what emotions just got incurred by a person on the other side of the table. And an affective communicator will read that and go, holy crap, what just happened there? I've just broken down the whole negotiation by what I see. And they'll start reading into it too much. Now, in a negotiation, you have to try and be neutral as far as not giving anything away. A micro expression is somewhere between 0.25 of a second and a second. And that is where you simply change your facial expression really quickly and it's enough for them to grasp and go, holy crap, what happened? So when you grab onto those, be careful. So a neutral communicator will walk up to someone who's on the floor in a fetal position, sucking their thumb and virtually about to kill themselves. And a neutral communicator will say to them, are you okay? And the person will go, yeah, I'm okay. And they'll go, that's great. Fantastic. See you later. Have a nice day. Right? Or an affected communicator would be very on top of the fact that they're there and that they need some help. So remember this. A neutral communicator will be the type of person that will get up to do a presentation, will be monotone, where everyone will be bored and falling asleep, and they'll get off the stage and go, I nailed that one. Whereas an affective communicator will have different expressions, different abilities to go up and down, different abilities to see when someone's falling asleep, sleep in the crowd. Now, if you're an effective communicator and you see one person falling asleep in the crowd, and you're high affective, what that's going to mean to you is you go, jesus Christ, I'm sorry, boring. And the whole crowd except one person could be like that, and you'll just misread the situation completely. So.

In the end, once the negotiation is Done. Either jot down in writing or send an email confirming what was discussed. And when you write the email, don't say, this is what we agreed upon. Write something openly and always, always, always write an email as an effective communicator. Write it with emotion. I've got a staff member who says, you know, now that I write these emails, that you want me to write them in this way.

I've got a drink.

When you've got. She said, you know, Ian, you're getting me to write these emails in such a way, it feels like I'm sucking up their ass. That's what. That's what she said to me. So effectively, what you're doing when you're writing an email is you're simply saying, okay, you'd be. Always start with, hi, how are you? I hope you're doing well. Just wanted to jot down a couple of points around the negotiation that we've just. Or not the negotiation about what we just spoke about. And to the way that I understand it, please let me know if you. If what I have below is in alignment with what we discussed and what you understood so that we can move forward. And it might have. I'll then put a semicolon and then put dot points and say. And so I did one today. So I simply said, thanks for the. And yesterday we had a meeting. It was a really brilliant meeting, really heartfelt meeting. And. And I seem to be having many of them lately, and I'm. I'm just not. I mean, I'm not sure how to. How to put this in words that are right. However, you know, Christine and I in the last couple of months have. Have come into an alignment with people that is just amazing. And the way that they are and the way that they are behaving and how that's assisting us moving forward as well. And he gave us one piece of information which was really so simple, but something that overlooked, looked, and we talked about.

He was talking about credit cards and how our kids see us paying for things on credit cards. And from those credit cards, the kids actually never see us paying the credit card off. And we pay our credit cards off before any interest is due all the time. So our kids actually will grow up with this false sense that the credit card that we pay for is a magic plastic wand that pays for things and that it never has to be paid off. So when they get to 18 and CBA has got their claws into their Dolomite Savings Fund, they're in a position now where CBA offers them A credit card at 18 years old. And all of a sudden they take credit card and they do what mum and dad did and pay off and actually never pay back and pay off the credit card. So it was just a really great point. So. So what I did was started the email with, hi, thanks for the meeting yesterday. It was really open. Thank you for letting us know how your business works and how it functions. And I also really want to say from the bottom of my heart, thank you for that really simple point around the credit card. Because with all the information and understanding we have and the teachings that we give around, it's often the little simple bits that make the most that you sometimes miss. I also want to say that we talked about a number of different things, including a presentation. And the way that I understood it from what you suggested was these four points. Bang, bang, bang, bang, bang. And so can you let me know that that was what you understood as well? And if you need to send me a formal contract, please do so. If you do things by word of mouth and handshake, I'm also okay with it. We're in a small industry and if you or I was going. If you or I were not holding positions of integrity, it'll get found out pretty quick. Thank you, Ian. So that is a. Is a story. You're including emotion. You're asking how they are and you're getting into it. Now someone who's a neutral communicator will just read the writing, not really care about it, and get to the points. Affective communicator will actually feel good about it. It'll be rebuilding rapport. And. And we got, you know, if you have a look on my timeline, I've actually posted today a review that someone bought our book and gave us a review on the book because they bought a second one. We're wondering why they bought a second one. We asked and he came out and he's from New Zealand. That's why we're asking why. Why are you asking if you're from New Zealand? And it was really beautiful to read how he'd actually eloquently put in the response to our question. It was really quite lovely. So negotiation in. In its basic make sure you're building rapport the whole time. Never stop a negotiation by shutting it down and by putting a deadline on it or saying or putting an ultimatum in place, that is your death, that's the end of your negotiation. Mimic people so whatever they do do back in return. I do trust the Kiwis. It's Just that we're going to go across and start investigating all the rooming houses and boarding houses in New Zealand that the moment and hopefully get a team over there to help us out from Australia so that we can either teach students in New Zealand or we can take students over from Australia to New Zealand. So mimic people, copy what they do, tilt heads, go around doing what I be a controlled, effective and neutral communicator. So give things away when you have to, but don't give them away when you don't want to. Use the red herring technique. Put something in there that you don't really care about but put a great amount of emphasis on it so that when you give it up you show it as an effective style like ah, that nine months is really important to it. Let I think I can do it. I'm just going to have to balance some things and move things things around and all of a sudden you're in a position there. Yeah, no stamp duty, no capital gains. I think they just brought in capital gains but no stamp duty. Also make sure that you are getting a win win from the situation. We've walked away from negotiations with people where they were going to end up in a worse position, in which case we had negotiated, realised they were going to be in a worse place and we said to them, no, we can't continue to go through here because you're going to be worse off in those cases. We actually worked with them to get themselves into a better position so that they could move forward. And in one case one lady was very sick and was, was essentially had given. Been given a terminal diagnosis and we managed to get them into a better position by looking at what they had to do. And I believe she's still alive. So you know that that's a really great, fantastic outcome for them. And they didn't get their house taken off them, which was great as well. So negotiation important. Remember, don't let your ego get in the way and if you're holding out for that five grand or that little special condition, don't do it. Just fold and go with the flow because otherwise, like me, there's only been three, but there's been three deals in the last 10 years where I've said damn it, my ego got in the way there and all I wanted to do was win. And negotiation is not about winning, it's about making sure that both people walking away happy and feeling good about it and ultimately that's what you want to do. So Neil, I hope that fixed your problem. I hope that actually made sense. And catch me tomorrow. I am flying back. So I'm in Melbourne tonight. I'm at the Pullman on the park and you can come and see me. We've got registration at 6:30 for a 7:00 clock start. I'll be on stage for about two hours and we'll be talking about the unaffordable outcomes we've got at Australia now and how you can help us help the community to bring affordability and housing so people like you, Coral, come back and get into the housing market really, really easy at a lower price point. Now it might take 10 years but it's got to start from somewhere and we've got the start of the movement. And I'll do like all I do in the presentations around the place, I say make sure if you turn up tonight, don't wear your blue skirt and that'll make sense when you turn up tonight. Cheers, guys. See y.