Saturday, 10 Dec 2022

How To Trade In The Real Estate Market (And In Life)

trading can cause discomfort for many people. While some see it as a challenge and see opportunities in trading, most feel a combination of uncertainty, fear, and anxiety when it comes to sitting at the table to negotiate.

Thankfully,  trading is a learned skill, not magic. With some planning and methodology, you can get away with a fair result and avoid a lot of stress.

Bargaining for positions

Most people think of real estate trading as a battle for positions. What does that mean? One person wants to pay R $ 600,000 for a property, the other is selling for R $ 750,000. The owner wants R $ 3,000 to rent while the lessee wants to pay R $ 2,100.

Both sides use the possible means available to move the final number as close as possible to their position.

When trading for positions people do things they shouldn’t be doing.

The other party can be stronger and use their power to try to intimidate you into submission. Maybe they play with your emotions and force you to choose between getting what you want or preserving the relationship. Maybe they decide to make one last offer or get up from the table and stop trading. In any case, they spend almost all of their time talking about their positions rather than the reasons behind their positions.

In the real estate sector, money is often a key issue. And since the value of the property or the price of rent are straightforward terms, most people assume that all real estate deals must be positional. After all, numbers don’t lie, do they? Does more to you mean less to me?

The myth of position tradings is just that: real estate tradings are and should be based on the parties’ position. This narrative has already caused many bad deals and damaged relationships.

Why does bargaining for positions hurt people?

Bargaining for positions has many disadvantages. First, it hurts relationships. Often, to get more than you want, you end up neglecting important things like respect and empathy.

Negotiators who negotiate for bargains typically find themselves making threats, taking tough positions, attacking the other party, disregarding the opinions of others, and generally sacrificing relationships for the sake of subjective gains. Or if they are less comfortable with the terms of the agreement, they accept bad agreements just to save the relationship with the other party.

Second, bargaining for positions does not create ideal results. Instead of dealing with the real interests of each side, you generate agreements that don’t please anyone. If the outcome does not address the interests behind the positions, you lose.

Also, it is inefficient and can take a long time. When both sides mark each other’s territory, make threats, leave the table and use other positional bargaining tricks, real estate trading can drag on indefinitely. With interest-based trading and mutual gains, you’re more likely to get a better deal faster.

Bargaining for positions is stressful and expensive. It is impossible to know which movement is right, and saying the wrong thing at the wrong time can end the trading. Being nice doesn’t fix things either.

The more people are involved in trading, the process is more exhausting. When 5 different people debate only for positions, conversations fail almost instantly.

What is the alternative?

The alternative is interest-based trading. This style of trading allows you to achieve mutual gains in an agreement without having to be an expert. It helps you to eliminate stress, frustration, and other emotions from the equation and allows you to focus to produce results based on the merits of the issue. It helps you to succeed even if the other party is more powerful.

What are some of the principles of trading for positions and how does it apply to the real estate sector?

First, disconnect people from the problem. When you are trading about the price of the property or the value of the rent, it is normal to feel it. After all, our home has sentimental value. They are memories, photographs, bags, clothes, kitchen. The houses keep a little of everything. They are important. Not counting the monetary value. Therefore, the first step is to see in the other a buyer or seller with a pain that is his.

There are no soulless and heartless people or people who just want to take their money. The person sitting in front of you is a complete individual and each of them comes with a series of needs, goals, pressures, and fears.  If you choose to ignore the person the trading will likely fail.

Unlink the person from the problem

Understand that in any trading, there are two types of interest: primary and secondary interests. Primary trading concerns the basic elements of a real estate trading, such as the sale price of the property or rent, the duration of the contract, payment methods, etc.

These are the reasons why you sit at the table to negotiate. And the secondary elements? They are focused on interpersonal relationships. These are much less understood and are often ignored. However, thinking about the relationship is crucial, because real estate deals don’t happen in a bubble. You may need to use this contact again.

That way, work to understand the other. Separating the person from the problem is crucial to a good relationship. Start seeing the other party as a  partner instead of an opponent. Work together to solve the problem and create a win-win solution.