How Empathy Will Help You Win at Negotiations

This is the 4th post in a series on negotiations with an Expert Community Resource strategy – Here is Part 1.

If you’re a long-term investor, you’re probably pretty comfortable. Your bills are paid, and you’re focused on completing your plan for wealth.

Do you know how it feels to be desperate?

Can you imagine being so anxious you can’t sleep because you’re tossing and turning wondering how you’d dig yourself out of the huge mess you’re in?

Do you know what it’s like to cry when losing your family’s house?

Empathetic people can easily relate to the emotions of others. They know how other people feel just by observing their body language and behavior.

Empathy is a critical skill for successful sales and negotiation.

Ever watched a jerk try to pick up a confident woman at a bar?

It’s pretty funny, and a little sad.

He’ll throw out a bunch of cheesy lines that puff up his ego, without even realizing that his over-confident macho posturing is totally turning her off.

He has very little empathy, so he can’t see how everything great he says about himself makes her think even less of him.

Lots of people suffer from the same mistake in real estate negotiations. They spend too much time thinking about themselves and their needs.

If they simply spent a little more time listening and trying to understand the situation, they’d get way better results.

This story of getting a deal with empathy illustrates the point:

Two young bankers are buying their fifth building.

They made an initial offer on a 6-unit building in a great area that’s listed for just under $3 million. It’s close to positive cash flow with a 25% down payment, but it will severely stretch their reserves to almost nothing if they put down the cash.
They offer $2.4m and their offer is rejected. They’re not given a reason, just a brush-off from the listing broker.

Many investors would give up.

After a few phone calls, they finally convince the broker and the seller to meet face-to-face to discuss the offer.

It wasn’t easy and took a bit of persuasion, but they asked good questions and helped convey that their offer was sincere and wasn’t just an attempt to “scrape the bottom of the barrel for a deal”, like the broker first thought when he saw their offer.

During the process of working toward that appointment, they learned that the seller is a widow whose husband bought the building as a present when they were first married. After he’d died she decided to sell the building to pay off other debts, but she was very concerned about her family’s long-term financial stability.

With a little conversation with their mentors and some advisors, they realized that her husband’s death and thoughts of her own looming mortality were probably creating huge amounts of stress for the poor widow during a very difficult time.

When the buyers offered to buy the broker and the seller lunch at one of the nicest restaurants in town to discuss their offer, they agreed.

The buyers were smart and did a little research before the meeting into the possibility of purchasing term life insurance for the widow.

But when they got to the restaurant, they didn’t bring up business right away.

Instead they took the advice of a wise mentor who told them to stop thinking business and transactions, and take an hour to get to know the people behind the building before proposing any offers.

During the process of asking the widow some questions about the building, she opened up and told them with tears in her eyes the story of how her husband had purchased the building to provide for her family, and how she wasn’t sure how she would leave her children anything when she passed away.

Without going into too much detail at the restaurant, they described how it could be possible for them to not only pay her the list price she was asking, but to also include a life insurance policy and a trust that they would fund as a part of the transaction, with her children as beneficiaries.

By carefully looking at the terms and working with a very flexible bank (where they already had established relationships and loans), they were able to structure a somewhat complicated transaction that met everyone’s needs.

They were able to stagger the acquisition of the building so that (in effect) their down payment became an option to purchase the building in 3-7 years (when the market had appreciated enough to make her asking price more realistic), while giving them the lease to start aggressively managing the building and making improvements.

As a part of the transaction, a good chunk of their option fee bought a sizeable life insurance policy right away.

That insurance policy was enough to help the widow feel comfortable knowing that her family’s needs would be met in the future, even without owning the building.

In addition, the buyers assumed some of the widow’s past debts and renegotiated the terms with the lenders.

That took an enormous chunk of the financial pressure off of her, and the consistent rental income without the hassle of managing the property was a huge relief to her.

In fact, throughout the transaction she became incredibly fond of the young men for their patience and referred them to friends of hers who also had buildings to sell.

By structuring similar deals that took a few more hours of patient hand holding and explanation, the investors were able to build high net wealth for themselves by acquiring buildings at a significant discount (when compared with normal terms) while feeling great about the service they were providing to the sellers.

Here are some powerful tips to increase your results by using empathy throughout a negotiation:

Always ask good questions, and listen to the answers. If you feel impatient, remind yourself that the information you’re hearing could make you thousands of dollars, and push yourself to ask better questions.

When something isn’t clear, use phrases like:

  • “Just out of curiosity, why do you feel that way?”,
  • “Will you tell me more about that?”
  • “Please help me understand, I’m sorry that I don’t know what you mean.”

Remember that adding time into negotiations will often improve results. Most people lose a lot of money by being impatient without ever realizing it.

When you need more time, use non-committal responses to turn things around:

  • “Let me think about that”
  • “How interesting, I’d love to learn more”
  • “Wow! That must have been [tough, challenging, difficult] for you”

Make educated guesses to demonstrate your understanding of the situation:

  • “You must be feeling [upset, hurt, angry, frustrated] right now”
  • “It must be so difficult to be in your situation”
  • “You are so [brave, strong, patient, determined] to make it through this, I’m really impressed with you”

Bottom line: if you dig deep and take the time to understand the people involved in every transaction, you’ll get incredible results.

Note: although the story involved is fictional, it is based on many real events but does not reflect upon any real person, living or dead.

Coming up next… Ways to use empathy and the Expert Community Resource strategy to grow your investment portfolio.

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About reibrain

Hey, my name is Trevor and I'm the founder of The REI Brain and editor/contributor. I started investing in real es.tate when I was 21... and love entrepreneurship, the internet, and real estate. My main focus today is growing my companies, systemizing my businesses so I can work less and make more, and spend more time with my family. Learn more about me at

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