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Show Summary
In this conversation, Tim Burrell, a seasoned real estate broker, shares his extensive experience in real estate negotiation, emphasizing the importance of empathy, understanding pain points, and building rapport. He discusses various negotiation techniques, including the ‘Anchor and the Flinch,’ and highlights the significance of trust in seller financing. Tim also provides insights into the emotional aspects of negotiation and how they can influence outcomes, making a case for collaborative rather than confrontational approaches.
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Investor Fuel Show Transcript:
Tim Burrell (00:00)
Negotiating is a collaborative effort to solve a puzzle. To solve the puzzle, you need to find out what the other person needs. To find that out, you need empathy after you do some research. So the best illustration I can give on that is the Harvard Project on Negotiation gives an award every year for the best negotiation in the world. And then they interview the person who receives the award and ask him what the most important feature he’s got in his negotiating talent.Dylan Silver (00:11)
Yeah. ⁓Tim Burrell (00:28)
The answer, the vast majority of the time is empathy.Dylan Silver (02:03)
Hey folks, welcome back to the show. Today’s guest, Tim Burrell, is a broker in North Carolina, writes books and teaches courses on how to negotiate better as a real estate agent or real estate operator. Tim, welcome to the show.Tim Burrell (02:20)
Thank you, happy to be here.Dylan Silver (02:22)
It’s great to have you on here and I’m a realtor myself so I understand how sorely needed the negotiation aspect of the business is but before we get into that I do want to ask how you got started in real estate.Tim Burrell (02:36)
Basically, I grew up in it. My mother was a realtor. My father was a general contractor and a builder. And so I started out in that process. Now, I did go to law school. I became a litigator for a number of years. Did real estate litigation, environmental cases mostly. My most famous case went to the California Supreme Court, established the requirement that environmental impact reports be done on virtually all projects in California.One of the great ironies is once I decided to go back to the family’s construction business, the thing that darn near killed us was the requirement that you do environmental impact reports on all these projects. So whatever you do as a child will frequently come back to bite you. But yeah, so I got into the real estate business with my family. We needed to buy and sell properties. Somebody needed to do that. I became a realtor, found out I did it at least moderately well. So I’ve been doing that for…
45 years now, 30 years now in Raleigh, North Carolina, previously 15 years in Palos Verdes outside of Los Angeles.
Dylan Silver (03:35)
So at that point in time, Los Angeles real estate had to be really in its heyday. I mean, it was the absolute golden era I can think of of California. Was it unique selling real estate in California at that period of time? Was there a buzz in there?Tim Burrell (03:52)
It was actually delightful. Now, California goes through cycles and you will have all sorts of cycles where things are absolutely fabulous and then you’ll have crashes and then you’ll have a huge upswing. And so California is very exciting to try and be a realtor because you have to stay ahead of it. For example, when it went down, I was one of the first people to learn how to do short sales before banks evenrealize You call up a banker and tell him, look, we’re gonna do a short sale. He said, no, no, no, no, that’s a solemn obligation, more solemn than your marriage vows. You have to pay the full thing. No, we’re gonna give you as much as we can. Anyway, so yeah, it was interesting to do cycles. For a while, I had a real estate team in Palos Verdes with my daughter and another team out here in Raleigh with my group.
And I would fly back and forth. And it was very interesting, the difference between how business was done in California and how business was done out here. So the transitions, I sold a lot of real estate in the Dallas airport at the layover.
Dylan Silver (05:37)
Yeah, we had talked about that because I’m I lived in DFW and I was in San Antonio prior to living in Denton, which was north, north DFW. Texas is another beast entirely. So you’ve got some experience at least making deals happen in a couple of different areas of the country.Tim Burrell (05:56)
Well, I was only physically sitting in Texas. I was selling real estate in California and Raleigh, but technology wasn’t as great back then. This is 2003, 2004. And so you’d have to get your laptop up, load it in. My wife would drag me on the plane. Look, they’re closing the door. Okay, fine. But yeah, now I do a lot of investing. I do a lot of…know, fixing and flipping, buying and holding, occasionally a wholesale, things of that nature. And that, to me, real estate investing is a fascinating part. You know, a lot of realtors really should get into the investing part as opposed to just helping everybody else. You need to help yourself.
Dylan Silver (06:33)
You know, it’s interesting because I had falsely assumed prior to becoming a realtor that realtors just were going to be natural investors that you’re selling homes, you know you’re going to be thinking about buying homes, you’re going to be thinking about how you do this for yourself and multiple homes. But I’ve now seen that not to be the case. And in some cases, realtors don’t even necessarily like dealing with investors because they know that they’re going to have to speak a different lingo. And then alsoYou might be dealing with some level of a different type of buyer. I do want to ask you though, you mentioned short sales before it was really even known that that was a thing. Did your legal background help you with that kind of negotiating but also understanding the limits of what was possible?
Tim Burrell (07:19)
Frankly, legal background was somewhat good. The biggest thing that helped was the negotiating talent. I got to be very well known for short sales. In North Carolina, I was the guy that taught the class to teach other realtors how to do short sales, and I wrote a book on it. The thing that worked out very nicely from that standpoint is I got to be a national speaker on short sales. So then I got to be on panels with people that were the heads of the loss mitigation department.And one of my better stories is one of the paralegals on a sail ahead. She was very diligent. She’s there working in the dark with a migraine trying to get this short sail to close because she’s so devoted to doing her work. And this less than wonderful person at Bank of America is telling her that she has to do something that’s physically impossible on the HUD, on the closing statement.
I happen to have the cell phone number for the assistance for the head of loss mitigation for Bank of America. I made one phone call. That guy was then reassigned. We then had things straightened out. got worked out. Negotiating and persistence is really the trick. Back then, I wrote a different book on negotiating, is called Create a Great Deal.
as the art of real estate negotiating. And this would be very valuable to investors. The thing that I’ve just recently written is called the AI negotiator. That one is how to use artificial intelligence to improve your negotiating ability. Simple illustration, Um you know for you and I to chat, we need to start off on the right foot. And one of the things that AI can do for you
is I have a super prompt that I use to check out everybody before I talk with them. So my best illustration is that commercial by All State where there’s a family that is there getting all ready for a UNC Chapel Hill game, all the UNC garb, and the young lady is having her boyfriend come over and he shows up at the front door in a Duke jersey and they literally slam the door on him. There’s a whole lot of realtors that start their negotiations in the same manner.
So before you start negotiating, do your homework, do your research, find out who it is. Well, this is really important for investors. Do that same level of research because you’re going to be sitting down at the kitchen table with somebody and you need to know how to not spit on their shoes. So if you can start off on the right foot, one of my biggest concepts is first connect, then convince.
So if you can connect to the other person, find out something you have in common, find out some way you can establish some trust and credibility, that’s when your investor negotiations are going to go much, much better. And this is, to me, is very important that we spread the word and we get people to negotiate collaboratively as opposed to confrontationally, and you’ll do a whole lot better.
Dylan Silver (10:36)
Now, is there some component of this, Tim, that is genetic? You know is there some, are there some people who have higher tolerance for confrontation, for potential stressful conversations that might do better you know in this role or roles at more extreme? I’m forgetting the name of the author, but there was a book about split the difference.Tim Burrell (11:03)
winning through intimidation.Dylan Silver (11:05)
never split the difference. It was about FBI hostage negotiation.Tim Burrell (11:08)
Well,actually his is not confrontational. That’s Chris Voss. It’s an exceptionally good book. Very good book. And one of the biggest points he has in there is empathy. And the other big point he has in there is prepare. Do your preparation before you get started. But empathy, the best illustration on empathy, and you ask about genetic, not necessarily, but what you need to have is an understanding of the other person. Most people think that negotiation is take, take, take. It’s not.
Dylan Silver (11:13)
Yeah, Chris VossTim Burrell (11:35)
Negotiating is a collaborative effort to solve a puzzle. To solve the puzzle, you need to find out what the other person needs. To find that out, you need empathy after you do some research. So the best illustration I can give on that is the Harvard Project on Negotiation gives an award every year for the best negotiation in the world. And then they interview the person who receives the award and ask him what the most important feature he’s got in his negotiating talent.Dylan Silver (11:46)
Yeah. ⁓Tim Burrell (12:03)
The answer, the vast majority of the time is empathy.So if you’re wanting to learn anything out of this presentation and you’re an investor, understand what the other person is feeling, put yourself in their shoes, find out what it is that they want. And if you can put together a deal that gives them the most essential features of what they want, your deal is going to close. So many people negotiate only on price. Emotion is the trick to negotiating.
When you’re dealing with people that are in distress, if you can solve their other emotional problems, then the price will work itself out. For example, a lot of people want to have something where they move with dignity. They don’t have a foreclosure with the sheriffs and the guys with the guns and their children getting you know thrown out of the house and all the neighbors seeing this stuff. If you solve that problem, that’s an important feature that you’ve rescued them. You’ve done something good for them.
And you need to stay though within your own parameters of what works for you financially. know, we investors solve a lot of people’s problems. We have a whole lot of properties. We provide affordable housing. We do a tremendous amount of service to the United States. And if you can negotiate better, you’re going to get more deals put together.
Dylan Silver (13:20)
Do you think it’s, I’ve heard this so much Tim, that it’s critical to dig in the conversation until you can find a significant pain point, that people aren’t motivated to act unless driven by pain, or do you think if you’re just getting along, maybe it feels more surface level, that that’s a fair way to negotiate?Tim Burrell (13:40)
And you can call it a pain point. What you really need to find is what their issue is. A lot of people, start and somebody gives you a position, my price is this. And that’s nice. What you want is to find the underlying motivation, why? And so you can phrase it as a pain point because frequently it is a pain point. It’s a problem that needs to be solved. But what you need to do is to find that reason why and then work with it.So that once you solve that reason why they’re doing what they’re doing, then the deal comes together, the puzzle pieces fall. There’s a wonderful phrase in negotiating, it’s called the ketchup effect. You can sit there and shake that ketchup bottle and nothing comes out. And all of a sudden something breaks them. So there is your analogy to understand how you can work with somebody else to, and you can phrase it a pain point because frequently it is.
Dylan Silver (15:03)
Bye.Tim Burrell (15:11)
Or you can phrase it as motivation, issue, understanding, but don’t just stop on the surface, you know, of, this is your position, that number is it. Discuss things, find out more about what it is they really want. But one of my best illustrations, and since you’re a realtor, you know you cannot do this now, but this was close to 40 years ago. I’ve been a realtor for 45 years and life was different then. ⁓ We had a…Dylan Silver (15:32)
Yeah.Tim Burrell (15:34)
situation where I represented a buyer, went into a house, he really liked it. I called up the agent to present an offer. He said, well, we verbally accepted something else. And I told him, have you signed anything? No. Great. Well, I’ll make an offer. Well, you’re talking about a little bit over a million dollars. And so I made an offer, $50,000 over the asking price. Got it submitted before they’d signed anything. They turned us down. No counter offer. Nothing. When it closed, it closed for $50,000 less than what I’d offered. And I called him up and said, so what happened?And he said, well, the other buyer sent a picture of the family in. The woman who was selling the property grew up in that house. Her mother had just died. Her father passed away. She had a delightful childhood. Her biggest issue is she wanted somebody to have that same delightful childhood in that house. One of the daughters in that picture was a spitting image of her. She wanted that kid to have her house and that feeling of having that kid have that house was worth $50,000 to her. So now,
Once again, you cannot do that in modern real estate that violates all kinds of fair housing rules. So don’t even think of that, but it’s an excellent illustration of how most negotiations are done and made on emotion.
The vast majority of us make emotional decisions and then rationalize them later. If you can find the emotion that’s involved with the people, if you can discuss their emotion, get connected with them, have some empathy, work with them, establish connection, establish trust, you’re gonna put deals together. If instead you’re gonna be hostile and confrontational and stomp out the room, occasionally you’ll get us home. I can’t say, a blind squirrel occasionally finds a nut.
Dylan Silver (17:08)
So sellersare not able, and I understand they can’t discriminate based on who their buyer is, but are there, and I could be wrong here in this. I’m a Texas licensed realtor. I was under the impression that there’s certain situations that like writing a letter and describing your buyer could sway the seller.
Tim Burrell (17:31)
Yes, but you have to write it very carefully because you can’t violate fair housing. For example, you just say, I’d love to see my daughter come downstairs for Christmas and see the Christmas tree. Two violations. One, you’re talking about having a family and two, you’re talking about being Christian. And so you know but if you write the letter dealing with the property,and talking about how you love the property and how you’re really going to take good care of the property and how you respect what they’ve done and those, then you can. So once again, emotion can sway the day. There’s a lot of realtors that won’t even accept these letters just because they’re worried that they might cross the line. I accept them. I I occasionally send them back when people say, and I don’t want to get into big trouble, but it is perfectly appropriate.
Dylan Silver (18:16)
Is them being military,is, my client is a veteran, is that a conflict there? Because I feel like that’s a very common thing that I’ve heard. Hey, if you’re military, you can write in a letter.
Tim Burrell (18:26)
I don’t think of any of those. Seven protected classes. I don’t think that issue is anything having to do with a protected class.Dylan Silver (18:32)
Okay, so I want to pivot back here, Tim, to the idea of finding a connection. And I want to speak specifically about investors who are looking for either distressed properties or some type of creative offer that they can offer a seller. One situation that I’ve now been finding repeatedly personally isfolks who are looking for seller financing. So investors who are looking for seller financing. Do you have any experience writing these type of offers or representing folks who are looking for seller financing?
Tim Burrell (19:02)
Mm-hmm.yeah, I’ve done a large number of myself. And one of your biggest things there is exactly what you’re saying. You have to have a large connection with that person in that they have to trust that I’m going to make the payments. And they have to also trust that I know what I’m going to do because they are taking their opportunity to buy something else and eliminating it. Now, these people that are in financial distress with all kinds of missed payments and they’re facing a foreclosure, it’s going to be a while before they can buy something else anyway.
But you know in a situation where you are gonna take over their financing, they have to really feel, you start off the conversation with something you have in common. The kids both play soccer, anything of that nature. You happen to go to similar schools, you grew up in certain area, anything that you can find to make that connection and then build on that connection and build on that feeling of trust. Because as a…
a different teacher that says that rapport is the tube through which the truth passes. And you know if you can have good rapport with somebody else, they will tell you the truth.
And the truth is absolutely essential for putting a deal together, not only on my side, I got to tell them what works for me. I’m not going to sit here and rescue them, pull them out of the quicksand and jump in the quicksand myself. It’s got to be something that is safe and good for me and it’s also needs to be good for them. So I had one where the woman and I sat down, actually the foreclosure say was happening just as we sat down.
Dylan Silver (20:34)
Well.Tim Burrell (20:35)
And I sat there and told her that the best thing for her to do was to call her dad and have her cure all the back payments and stop this foreclosure. And once again, honesty and doing what’s right for the other person is critically important. She picked that up and said, no, I won’t do that. I’ve done that too many times. But what that did was to establish my credibility with her. So what we did after that is I took the property subject to her financing. I paid up all the back items.got the foreclosures stopped, then I took the whole property over with my own financing. Her trick was she wanted to move with some dignity, but also she was a hoarder. And we had a tremendous amount of stuff in that property. She could never move out in a period of time after a foreclosure. And she had three cats.
The place was so in the sanitarium, I got my moving company in there and they walked in the door and they came back out. I’ve known the guy who ran the moving company since he started. He used to be on the first truck. Now he’s got dozens of trucks. And I called him up and said, look, I need your help. He says, we’re not going in there. You know So the problem I saw for her was somebody moving her with some dignity and stopping the foreclosure. So once you find out what the, what you call them pain points and they frequently are painful.
Dylan Silver (21:22)
Yeah, I’ve seen them.Tim Burrell (21:50)
But once you find out the true motivation and you solve the true problem, then you do the thing. And on your point of taking it subject to, first of all, you have to establish trust. But secondly, you really have to know how to do subject to so that the lender doesn’t get into the middle of things and call the loan due. VA loans are still assumable, but other loans have a due on sale clause. So when you sell the property, it’s due on sale andVirtually no lender. Well, every now and then you talk a lender and allowing the assumption. The vast majority of people just do the subject to and proceed without having the lender involved, but that’ll be a completely different discussion.
Dylan Silver (22:30)
Right, right.I want to ask you specifically about, this is a really granular question, Tim, about how you know when it’s right to go from rapport building to talking numbers. Is there are there cues that you frequently reference? Is it different with everybody? Is there like a time duration? If you know it’s a larger deal, do you have to build more rapport? Is there any guidelines that you’ve seen in your experience on how much time you need to spend building rapport?
Tim Burrell (23:00)
And this is the wonderful reason why people need to read my books, because it’s an art. It is not one, two, three, four. You know if you don’t have a formula that you can sit here and crank the formula every single time. You need to develop an understanding of what the art is, what the issues are, and when to do what, and when not to put your foot right in their mouth, and then you take that foot out and change it put the other one in your mouth. ⁓ So in terms of… ⁓At some stage, it is, you you’re going to get into numbers. Frequently, what I like to do is to see if they will toss out a number first, because on occasion, I can get them to go with a lower figure than even what I was thinking of, which is rare. Now, that will also get us into a different concept called the anchoring effect.
The first number that gets any credibility in a negotiation anchors the negotiation. The Harvard Project on the Negotiating has done a ton of studies on this. If you start with a lower number, you’re going to end up settling on a lower number. And this is why a whole lot of investors throw out a very, very low number. Sometimes that’s dangerous. You go too low, they will throw you out of the house. But the anchoring effect is there, but also I like to have them
give me a number and then I use a very simple technique that I discussed in my first book, the Create a Great Deal book. It’s called a flinch. They give you a number and you’re, ⁓ my, you have to do better than that. And it’s so simple. It’s so easy and it’s not confrontational. Now you can do it New Jersey style, yo, you can’t do that. But if instead you just flinch,
They’re going to toss out a number, they got another number. Well, if you start from that lower number, you’re going to end up at an even lower number. So, you know, see what you can do in terms of, well, why do you want to sell a nice house like this? And, you know, you’re showing some respect for the property that they’ve lived in. And then they come out with a number, you flinch, you come out with a lower number, and then you use some very rational tones. You mentioned Chris Voss’s book. He has a wonderful phrase called the midnight DJ voice.
Dylan Silver (25:13)
Radio FM DJ voice, that’s right.Tim Burrell (25:14)
Exactly.⁓ Very calm, very soothing, very factual, but very friendly. With the radio DJ voice, tell them that the numbers that work for me are this. Now, you’ll see if they flinch. Some of my investor friends say if the number you spit out doesn’t choke you, maybe your number is a little too high. I disagree with that, but I love that image.
But at some stage, you’ll need to come back with your number. If they will set an opening number frequently, they’ll set it a little bit lower than you can. Try to knock that down with a flinch, then anchor with your first offer. If your offer is exceedingly low, do a gentle anchor. Well, from my indications, the properties of the neighborhood are selling at this number. And when they go, you just say, well, I just want to let you know that’s where they’re selling at. Now, we can discuss something more appropriate.
But once again, you’ve got the anchor out there and it has the anchoring effect of getting everybody’s mindset that where you need to be is on a lower range so you can settle on that lower range.
Dylan Silver (26:16)
The Anchor and the Flinch. I’m taking that one to the bank, Tim, The Anchor the Flinch. are coming, have to buy the book. Speaking of which, we are coming up on time here. Where can folks go to learn more about you, maybe reach out to you, or purchase one of your books?Tim Burrell (26:18)
Yep. There you go. Yeah, you didn’t even have to buy the book.But the latest book called The AI Investor, simple way to find that one is go to AIInvestor.ai. Don’t go to .com, go to .ai. There’ll be a page there to explain you more detail on it. It’s also on Amazon. So either way you can get it there. The other one, Create a Great Deal, The Art of Real Estate Negotiating, that one’s also on Amazon. And so you can pick them up there. If they would like to get my super prompt.
the one that I use before I negotiate with anybody, send me an email, [email protected] Once again, [email protected]. You’ve got my name down there so they can get the spelling and put super prompt in this subject line. If you put anything else in the subject line, system won’t know what to do.
But send me that, I will send you the super prompt with no obligation. And you can use that to see what you have in common with the other person and to establish some rapport before you work in there. It is mainly designed for dealing in real estate in a realtor situation, before you go on a listing, before you work with a realtor. But it works very well on an investor situation. You can find out a lot of stuff about them that even their uncles and cousins don’t know.
Dylan Silver (27:50)
Tim, thank you so much for coming on the show here today.Tim Burrell (27:55)
really enjoyed it. A whole bunch of fun. Thanks for having me.
