RV Park Mastery: Episode 57

Consultative Vs. Adversarial Deal Making

Many RV park buyers do themselves a disservice by reading books from the “self-help” section of Barnes & Noble related to “how to negotiate”. These books dwell on the negotiation style known as “win/lose”. But there’s a much more effective style that you should adopt that will allow you to forge great deals much easier and often with added benefits like seller financing and this model is called “win/win”. One is consultative in nature and the other adversarial. In this RV Park Mastery podcast we’re going to review these two very different styles and explain why one is clearly superior.

Episode 57: Consultative Vs. Adversarial Deal Making Transcript

Consultative versus adversarial deal-making, two very different styles. One that we feel works very well and one not so well. This is Frank Rolfe, the RV Park Mastery podcast, we're gonna talk about two different ways to try and forge deals with RV Park sellers. Now, you may have gotten down to Barnes & Noble bookstore at some point and gone through the self-help section looking for better ways to learn how to negotiate. Because all of us as Americans never feel truly secure in our negotiation abilities. Now, when you go to other countries, you'll see they're much better at it. They negotiate over everything, they barter for things at the grocery store, they barter for basic things, in America, we all take for granted that you can't barter over. I don't think for one minute I can go down to Hertz Rental Car, when they say that car will be $98 a day, I can't say, I'll give you $65. However, you will find in life many things are negotiable, and a lot of those books will try and bring forth in your brain the idea that you can in fact negotiate, but it's not just all about negotiation itself.

Sure, many things can be negotiated, you can negotiate the price of Jewellery at Neiman Marcus, you can negotiate just about anything. Even though people think you can't, well, you really can, because really, in today's world, and particularly today's world, we're all fighting over the issues of products and pricing based on availability and delays and all kinds of things. But there's two different camps on how to get to that price that works for you. One, consultative, also known as win-win deal-making, and the other adversarial known as win-lose deal-making. Now, what does win-win deal making mean? It means that at the end, at closing, both buyer and seller are happy. But win-lose means at closing, only one party is happy and typically it's the buyer. So typically the buyer in a win-lose format takes advantage of the seller to try and get the price reduced, but does so in ways that aren't really fair.

Classic example would be, you tell someone you're gonna buy their RV Park, you tell them you completed diligence, everything is looking great, and then on the day of closing, you call them up and say, You know what, I've changed my mind now, I don't wanna buy it anymore, but I might buy it if you let me have it for half that price. You know that the seller at this point has already assumed it will close. You've already made all kinds of arrangements. They may have bought another house to move into. They've told all their friends that they're selling, and now you have them over a barrel. And even though you might not get half off, you might get some discount to the price, so that's typical win-lose deal-making by comparison. Now, that sounds all kinds of good, Hey, yeah, well, the win-lose guy did better than the win-win guy, 'cause he got that last minute price concession.

But here's the problem, it doesn't work in real life. When you read those books at Barnes & Noble and other bookstores on negotiation, it's always implied in those that the seller is in a position of weakness or you try and place them into that position of weakness. It'll tell you stories about, if you go to buy a used car or a new car, show up on the last day of the month, show up late in the afternoon on the last day of the month, because they know that the salesman has a certain quota that they have to meet and now, you're taking advantage of the fact that the salesperson has not met their quota, and now they're desperate to make the sale. And as the time is ticking down to the last day of the month and the last minutes of that day, they will become truly desperate and they'll push the price even lower than they normally would, because they really want to hit it.

And/or the sales manager may do so 'cause he wants to sell X number of vehicles a month to get his bonus, so he once again, maybe willing to discount the price more than he normally would or should. The problem is that's based on the idea that the seller is inherently weak, but what do you do when the seller is inherently strong? That makes it a little more difficult. It's been our experience that RV Park owners are traditionally well-off, they rarely have any debt. They typically have a low cost of living, which they can easily afford, and if they don't like you, if they feel you're trying to take advantage of them, they won't do anything with you any further. So win-lose negotiating for RV Park simply doesn't work. You cannot push rich people around. So that's the problem when you try and do that adversarial relationship.

Now, on the consultative side, however, magical things can happen. When you approach every deal with the dream, the understanding that the seller is to be just as happy at closing as you are, then the seller becomes very comfortable with you. And because they're comfortable with you, great things can occur, such as them carrying financing for you, such as them helping you post-sale to make sure you get off on the right foot. Such as them even proposing they stay on as the manager after the sale, if that works for you. So, all of those things that don't work and win-lose, work with extra dividends in win-win. So if we all agree the win-win is by far the superior model, how do you engage in win-win? And what do we call it consultative? 

Well, have you ever done anything where you get a third party to help you? A good example, of course, would be your real estate broker, if you were to go and try and buy or sell a property, they're gonna try and work with you to make sure that you have a good ending. So if you go to the seller and say, Look I wanna get you the best price for your RV Park, now that throws them off base, 'cause they're used to that adversarial relationship, because they've also read those books at Barnes & Noble, they've also got through real life and they know how things work. But when you go to them and say on the front end, I want this to be a win-win deal, I want you to be happy, and here's what I feel the fair price of your property would be, it throws them off base. And it gets them to thinking, Oh wow, this is a different way to do things. And when they start thinking about win-win suddenly they're also thinking win-win.

If you're not trying to con them or lie to them, well, then they're gonna try and not con or lie to you. When you do things in a consultive manner it also makes life just so much easier. When you act as though you work for the seller and you let them know that, they're much more approachable, there's no awkward silences. There's no... None of that issues that happen with win-lose where both people are trying to fill each other out, kind of like having the tiger and the lion in the caves at the same time at the circus. Have you ever read about that when you have the lion and the tiger in the cage. The reason lion tamer can do their job is, the lion and tiger are so afraid of each other that they don't pay attention to the lion tamer, he whips his whip and runs around, but they don't even care. They're just only focused on their adversary. That doesn't make for a very good and healthy relationship, it's is very, very awkward.

But when you're consultative, that means you're the friend of the seller, and in most deals, the seller reciprocates, it is your friend too. And it's a whole lot easier doing business with your friend than it is your enemy. Also, if you wanna get a really good price from the seller and such things as sell or financing, you'll need to bond. We talk about this all the time, the importance of bonding and buying RV Parks. Bonding means that the seller looks at you as someone they like and wanna help. Often older people, because most RV Park sellers are in fact older, they wanna believe that life is more than just about the money, they like to help people that they feel are worthy of their help. And if you are in a win-lose format, if you're at adversarial, then they can't bond with you, it's impossible. Therefore, they're not going to give you their best price and they're certainly not gonna carry the financing for someone that they don't like. However, if they do like you, then wonderful things then can occur.

We bought many properties for zero down, 12 of them, and I bought properties for almost zero down. My very first property I about Glen Haven mobile home in RV Park, I bought that for $400,000 with only $10,000 down. There was only 2.5% down. Why? Because I bonded with the seller. The seller was my friend, and I was the seller's friend, and as a result, he gave me a deal that was kind of like a brother-in-law deal he wouldn't normally give to somebody else, because he wanted me to succeed, and that's the best way to do deal-making, is when everybody works together to make sure that everyone is happy.

Now, if you can call on any of the sellers from your past deals, you have them write a letter of recommendation to you, then you're already a win-win negotiator. Because that's the ultimate test. If the seller is willing to say, Yes, I did business with this person, and it was wonderful, and it was great, and I'd do it again in a minute. Well, then you've succeeded, but that's not the case. If you've been doing nothing but win-lose deal-making in your past then I would urge you to acknowledge the error of your ways and stop doing that immediately. It's very, very hard to ever be a successful RV Park buyer, if you have that adversarial mindset. So if you really wanna do well in this industry, the key is you must be consultative, you must be win-win.

And here's the great news, it's the easiest way to go. To me, it's much easier being friendly than it is to be unfriendly. It's much less stress when you're only telling the truth and working with the seller, then when you don't operate in that manner. So the bottom line to it all is consultative win-win deal-making is just by far superior. If you wanna do well in the RV Park industry, I hardly recommend you take that approach, effective immediately. This is Frank Rolfe with the RV Park Mastery podcast. I hope you enjoyed this. Talk to you again soon.