If the number one attribute of a successful investor is persistence, and the second main attribute is creative thinking, then the third must surely be communication.
Now by communication I don’t necessarily mean talking, although that is a part of it. In my opinion, more important than being able to express what you mean is the ability to be able to listen and understand what others mean. This is what is sometimes called ‘active listening’, and this is the key element of all ‘real’ communication.
So what is active listening?
Let’s face it, most people, if they bother listening at all, do so only to be able to put across their own point of view. Often they won’t even wait for the other person to finish talking - they are straight in, interrupting. This isn’t even ‘passive listening’, it’s just not listening.
Even if they manage to restrain themselves, are they really listening or just waiting a little more patiently before making their point? Their ears may hear the sounds of words, but it’s doubtful if their brains register what the words mean.
So the first step is listening to the words. Obvious you might say. But what isn’t so obvious is that often we have our own vocabulary. Often we have meanings attached to certain words or phrases which are peculiar to us. We can say the same word or phrase as someone else but mean something completely different.
Usually these subtle variations in meaning reflect our different attitudes, or our different perceptions. The cliché “the glass is half full” is good news to an optimistic person, and a disaster to the pessimist.
So active listening isn’t just about hearing the words, and not even just about hearing the words and understanding what they mean to us, it’s about hearing the words and understanding what they mean to the person who is speaking them.
From an early age, our view of things is determined by our own experiences, and we tend to look at all future experiences in that context. This means that in practice it is often emotion, rather than logic, which is the prime driver of what we do, think, feel, and, most importantly, hear. We stick our own emotions, expectations and meanings on the words spoken to us.
Tony Robbins, the American self-made millionaire and personal development guru, describes this as having filters; we ‘filter’ everything through our own world view and attribute our meaning to them. No two people are alike and no personal experiences are alike, and so we all have different ‘filters’. This means two people can look at a situation and see two different possibilities or outcomes. One may see an opportunity, another may see a problem. And this applies equally to words and how we give and receive them.
To be truly active in listening we need to be able to:
- Try to switch off our own viewpoint – in other words stop using our filters. In fact use none at all if possible.
- Try to be empathetic – in other words try to understand where the other person is coming from. How did they get their filters? What is their background? What are their motivations? What are their fears? What do they really need, either from you or from the situation?
- Understanding the “sub-text” of what the other person is trying to tell us (whether consciously or unconsciously) is a skill all serious property investors need to nurture. Not just for the obvious situations such as negotiating deals, but in dealing with tenants, estate agents, managing agents, in fact anyone we come across in a normal day’s business. The more you are able to use ‘active listening’ the more empathetic you will be, the better you will be able to relate to people, the better you’ll interact with them. Be under no illusions: property is a people business; the better you understand and get on with people, the better and more profitable your business will be.
So how do we know what someone really means? How do we know what the sub-text is? In other words, how do we translate their words into language? More than that, how do we know whether their words actually reflect what they are trying to say to us?
Quite often it simply comes down to asking the right questions. In the context of being a successful property investor, a lot of the questions we need to be asking seem obvious. For example, “why are you selling?” The answer might be “to raise cash” or “to release capital” and we might take that at face value.
Less experienced investors might stop there, but active listening is like peeling away the layers of an onion. By asking more and more questions, and going deeper each time, we can uncover what is really being communicated.
It might seem pushy to ask, in response to the answer just given, “what do you want the money for?” A vendor might feel threatened and clam up. But a seemingly innocent question such as “are you going to buy more properties?” might induce a response which gives a new level of understanding.
“No, I’m going to live in Spain, but need to liquidate my assets first”
Let’s go deeper – “fantastic, when are you moving?”
“I’m meant to be going in a month”
“You’re not sure if you’ll make it?”
“I wanted to have had everything sorted here first”
A few questions and an interested attitude and suddenly the perspective has changed; rather than just being another potential purchaser you are in a position to be able to solve this person’s problems and help their dreams come true. And in return, perhaps you can negotiate a bargain price for a guaranteed quick sale. Of course, the key question you’re asking at the moment is “Does this type of thing happen in real life?” In my experience, yes, very definitely, but only when you are prepared just to push that little bit to dig a little deeper.
Here are a couple of situations I have been in where by just listening and asking, I have uncovered some seriously good property deals.
I went to view a flat in a two-storey property which comprised a flat on each floor. I was viewing the ground floor flat, which had recently been put up for sale. Now I have to confess I had no intention of buying, I was there purely out of interest. I own some flats nearby, and I wanted to compare them with this flat to get an idea of how much they were worth. Obviously I didn’t tell the estate agent the reason for my visit and he assumed I was a potential owner-occupier because he said “The first floor flat might be coming on the market soon if this one doesn’t suit you”.
My preference is always to buy pairs of flats in the area I buy in; usually this allows me to purchase the freehold, and it makes financing easier and I get better terms.
So let’s dig deeper. “Really, is that owned by the same vendor?
“So do you think they’d sell the pair together?” “I doubt it.” “Still, there’s no harm in me asking you to ask the question?”
“No, I’ll give him a ring when I get back to the office.” In later dialogue with the vendor through the estate agent it transpired that for personal reasons the vendor needed to sell quickly. The estate agent evidently hadn’t “actively listened” to his client’s needs and had suggested selling both flats separately to get a higher price. But what the vendor really needed was speed and certainty. By asking the right questions we were able to strike a mutually beneficial bargain.
Three months later I owned the freehold interest of both flats, and had bought them at a discount to the true market value.
Another example: I agreed terms to buy modern one- bedroom ground floor flat near my home town. Actually, as a preface to this story, I had inspected the upstairs flat and had noticed that the grass in the back garden badly needed cutting. “The back garden is with the ground floor flat but the lady there has died” the owner of the first floor flat told me. This put me on alert that there could be a deal to be done, and when a ‘for sale’ sign appeared I was straight in with a request to view.
I assumed, wrongly as it turned out, that the deceased lady was the owner and that this would be an executor sale. She had actually been the tenant, and I later found out that it was the landlord who was selling.
Although I managed to agree what I felt to be a good price, the negotiation was straightforward and there were no special angles that I was able to make a play of. As the day set for completion approached, the estate agents were getting increasingly twitchy about the cooker, a bed and the three- piece suit, which I had seen during my inspection but not really taken any notice of. These weren’t part of the sale, and the vendor was anxious to agree a price; the estate agents told me she was worried she might have to arrange for the flat to be cleared if I didn’t want them and time was running out.
My initial inclination was to lie low; if I said nothing she might just leave them and I’d get them for nothing. Anyway, I’d just completed on another property, and to be honest I didn’t really have time to think about them, let alone go back and have a look. Reluctantly I gave the estate agent permission to pass on my mobile number, and suggested the vendor could call me direct if she wanted to.
Now am I glad I did? A few hours later the vendor called. We instantly had a good rapport and we soon sorted out a price for the bits and pieces she wanted to leave. I couldn’t help but ask “why are you selling?”
“My mother’s very ill” she explained “and I haven’t got the time to look after her and manage this property.”
I expressed my sincere sympathy. “Do you have any other properties?” I asked. This is a question always worth asking. This time was no exception.
“Yes” she replied “three others “I’ll be marketing them soon.”
We started talking and it was soon clear that these properties would perfectly suit my portfolio, and that she would sell them to me at a discount, just to be shot of them quickly without the hassle of marketing them through an estate agent.
Her main concern was looking after her mother. Anything else was a distraction she could do without during a very difficult period of her life. She needed to get rid of them, now.
It just goes to show, there’s never any harm in asking.