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How to drive decisions
Want to save a truckload of money?
I have a friend who is not a professional negotiator.
We've been friends for a long time and have a lot of trust in each other.
Recently, he was buying his first house and had to make a bunch of decisions:
- What should be the offer price?
- What’s a fair realtor commission?
- What Title company to choose?
Among them, he chose a mortgage broker.
He was sort of OK with his choice, but there were some discomforts.
“Our broker offers a good package and can do work on time, but I’m not very happy with the rate. The one you recommended offers 6%. However, with my broker, it will be close to 7%. We’ll have to pay $3,500 more every year. But this is OK because we plan to refinance after a few years when the interest rate drops.”
Sounds like an OK plan, right?
“What is your timeline for getting your mortgage approved?” I asked.
“In 5 days,” he replied.
It felt like a tight timeline.
“I don’t think we could do anything at this point,” he added, “It’s too late in the game.”
It sounded like the decision had been made, commitments were done, and the game was halfway in.
But it bugged me because, in my mind, I saw my friend sending extra cash to a lender month after month for 30 years straight.
For what purpose?
To make some bank even richer than it is?
What would you say or do if this was your good friend and you cared about him?
Would you let him continue the closing process and complete the mortgage approval on time?
Or would you suggest messing with the regular flow of the process, start bothering people, and risking missing the timelines on the deal?
It’s a challenging decision, isn’t it?
Most people would continue in the same direction because they don’t want to be a pain in the butt for others.
But what is at stake here?
It’s over $126,000 extra in interest payments over 30 years.
One hundred and twenty six thousand dollars extra to pay to some unknown financial institution!
This is the cost of the decision to proceed.
It’s close to what a professional like my friend makes in a year of hard work before any expenses.
Why would people who don’t have much money tend to solve problems by overpaying?
It didn’t look too bad in my friend’s eyes because he said he’d refinance it after a few years.
In his eyes, he’d only lose 9 to 12 thousand over 3-4 years.
He didn’t want to risk losing the deal if the seller didn’t approve the potential delay caused by mortgage approval.
And though it bothered him, he was reluctant to do anything about it.
He probably thought, “$3,500 a year doesn’t sound like a big deal. I’m a professional, and I can make this much. But what if the seller gets offended and refuses to sell? What if the deal will fall apart? It’s the house my wife and I like a lot! Nah, I’m not going to stir the pot. We’ll keep the current lender.”
It didn’t sound like a good story to me.
I was seeing my friend in a better place.
What would you recommend to say to my friend so he would change his mind?
Are we in a negotiation, or is it just a friendly chat?
In negotiation, when you want to influence someone but don’t want to cause a confrontation, you use the approach called “building a vision.”
All our decisions are driven by an emotional vision of the future.
No vision - no decision.
How can you build that vision?
There’s only one way to do it.
Ask a question they won’t be able to answer with a great deal of comfort.
Fast forward, I had a 20-minute conversation with my friend.
The same day, he sent me a message: “I’m switching lenders. The new one has already fixed my rate at 6%. No time to talk now.”
Later, in the same week, the interest rates jumped above 7%.
Good for him making a timely decision!
Later, he told me, “You asked me a good question that made me think. That moved me to switch the lender.”
What was the vision-building question?
This is what my friend recalled to be the one:
“What will you do if the interest rate won’t go down?”
He didn’t recall how I talked to him about everything else.
He only remembered the uncomfortable and focused question that let him see his future with the high mortgage rates, where he is stuck with this house, can’t refinance, and slowly losing money every year.
Guess what? Switching the lender didn’t appear to be too hard!
He did it in a couple of days, saving $126K and an extra $500 on the appraisal.
Not too bad for the effect of one question!
That’s the cost and the value of building a vision.
Of course, you don’t buy and sell houses every day unless you’re a professional realtor.
But how often do you want to make a difference for your family and friends?
This happens every single day.
Want to learn more about building rapport and building a vision?
Join the Masterclass “7 Levels of Nurturing™, a Strategic Approach to Earning Trust for Your Business” to learn more about building vision: https://bit.ly/7lon-mc
- Vlad, your Business Relationships Coach
Free Masterclass “7 Levels of Nurturing™, a Strategic Approach to Earning Trust for Your Business”
Join the LinkedIn Audioroom “Negotiation Essentials for Real Estate Success” to discuss negotiation for Real Estate scenarios: https://bit.ly/negotiation-essentials-for-real-estate-success
If you're a master of negotiation - take a quiz and see where you stand.
https://bit.ly/negotiation-quiz-1
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