Nothing can make or break your deal more than improper negotiation. You can do the greatest analysis and have terrific operational skills but you’ll never own a storage property if you can’t agree to a price the seller will sign the contract at. So what are the main skill sets required to be a great negotiator?
Have the seller name the price
You never know what the seller is looking for – it may be ridiculously low. So you always want the seller to name the initial price. If they refuse to name it and want you to, instead ask them “what’s the tax assessor say it’s worth?” to start the conversation, since tax assessments are notoriously lower than real value. Over the past 30 years we’ve had sellers throw out some crazy low prices, and that opportunity would have been lost if we’d been the one to initially offer an amount.
Always offer lower than you want to pay
No matter what you think a property’s worth, it’s essential that you never offer that amount. The rules of negotiation are simple: you throw out a price, the seller counters with a higher one, and hopefully at the end of that tennis-styled back and forth you get a price that works. But in no case does the seller ever say “I’ll take it” to your first offer. So you have to start much lower than where you want to end up. How much lower? Typically start off at least 10% to 20% lower than your target. Remember that you can always go up in a negotiation, but you can never go down.
Have a “walk-away” price in mind
Effective negotiators have a firm price in mind that they will not exceed – and they have that going into the negotiation process. We call this the “walk-away” price and that needs to be etched in stone for you. As long as you have a ceiling to your negotiations, you will display this ceiling has been reached with body language and other subliminal cues and the seller will react to this. You’ll see this on every episode of Pawn Stars and American Pickers – the moment when the buyer or seller say “that’s my best offer or I quit” and the other party has to make the hard decision to accept it or not because they know there’s no room left for negotiation.
Be win/win and not win/lose in approach
Self-storage negotiation works best when it is “consultative” in nature – which means that the buyer and seller work as a team. We call this “win/win” deal making, as it means that both the buyer and seller are happy with the final price. This is in opposition to “win/lose” approaches in which one of the parties is unhappy with the outcome. Look at the seller not as an enemy but a friend: you want to get a good price and they do, too. Why can’t both of you? There really is no reason.
Negotiation is an important skill and most of the books at Barnes and Noble on the topic are not accurate or truthful. Follow these steps and you’ll become a much more successful negotiator and be able to get the prices you want on storage properties in an amiable manner.