Negotiating RV Park deals is an art. And a science. And if you’re not competent in this skill, you’re never going to realize your full potential. The good news is there are some basic laws of negotiating, and much that you can to do stay in practice. In this RV Park mastery podcast we’re going to review what’s new about negotiating, and check in on what tips can make you a better negotiator.
Episode 30: An Update On The Art of Negotiating Transcript
Buy low and sell high. We all know that old maxim, but how do you derive the actual price of the RV park you're looking at buying? This is Frank Rolfe, the RV Park Mastery Podcast. We're going to revisit the concept of the art of negotiating, and update you on where things lie today regarding the ability to negotiate RV parks correctly.
Let's start off with the basics. Number one, always let the seller throw out the price. Why? Because often they don't know what it should be. You have no chance of that luck out if you throw out the price, because you probably know what it should be. You've been reading u p on RV parks, you know how to derive a price from the CAP rate, but mom and pop they may have no clue. They may have not revisited the idea of what things are priced at since 1965. I've had situations where people throw out prices where the decimal point was wrong. So as a result, wait, let them throw out the price.
Number two, once they throw out the price you've got to start low. The whole point of negotiating is you start low and work your way up. If you throw out a price which is exactly what you want to pay, you will never hit it. Any seller is going to counter your price, so start low so you give them the ability to beat you in the negotiation to feel like they've succeeded in getting that higher price.
Always try and hedge to the middle between what you throw out and what they throw out. Let's just look at this as a case study example. If I want to buy the RV park for $500,000 and they throw out a price of $700,000, I'm going to throw out a price of $400,000, they throw out $600,000 and then we split the difference at $500,000. See how it works? So you're always trying to split the difference basically between your price and their price. Sometimes you can go back and forth, and back and forth, and back and forth four or five times. But you'll notice the way negotiation works, it's always like a ping pong ball, bounces one side to the other but always lands somewhere in the middle.
Also, know the most you'll pay for the RV park before you really get in the discussion. Do some initial modeling, guessing at what you think it's worth. Because when you send out the vibe as to you won't pay more than X, typically one party or the other then rushes forward to that solid price. So if you said, "I can't pay more than $500,000," and he still wanted $600,000 when he realizes you won't budge he'll then retreat back to $500,000 or something close to that. Now if you want to see how negotiation works in real life, there are two shows on television - still on television - that you can watch, both new episodes and reruns. Those shows are Pawn Stars and America Pickers. Both are on the History Channel. Basically, if you watch both shows all they are about is negotiating. That really is the only reason I think most people would want to watch them, is just to learn how to negotiate, unless you're interested in historical items.
On Pawn Stars, people bring things into the pawn shop and they want to sell them at a high price. The Pawn Stars, they want to buy it at a low price so they can then resell it at a profit. Someone might bring in, oh I don't know an autograph for some celebrity and say they want $1,000 for it. The Pawn Star guys offer the guy $400, he counters at $600, they end up at $500 because they know they can resell it for $600 or $700 or $800. You also see on Pawn Stars they frequently bring in an expert to give them the value. That's smart. They want to know what they're paying for. In this case of the RV park, you're going to have to be the expert. You're going to have to k now how to value an RV park correctly.
American Pickers is a little different. You've got two guys. They're out on the road, Frank and Mike, and they're going around to people mostly it seems like people in barns, that's the typical episode, sometimes a warehouse. People who have amassed large amounts of old antiques. They sift through all those antiques, find things they think are of value they can sell in their store, and then they're right back to negotiating again. They'll throw out a price, the other person will throw out a price that's higher, and then ultimately they'll derive the price that both people agree to if it's possible, and they'll buy the item. They'll even show you on the screen on the show what they think the item actually is worth. They don't show you what the profit is based on what they're paying versus what they believe they can re-sell it for.
Once again, you have to be knowledgeable on the price obviously, but you also have to do the dance. You have to know exactly how the back and forth works on negotiating to put it all together. Now, you can watch these shows almost every night because you'll find either Pawn Stars or American Pickers on some time on the History Channel almost daily. And of course if you're a higher tech person, you can set up to watch the episodes as much as you want. I think they're great aid to people negotiating because they show you the real life mechanics of how negotiation works. Now once you understand the basics and once you've also seen how it works in real life, the next thing you do is obviously to practice it.
Now, maybe practicing on an RV park is a little too dangerous for you. You don't want to blow that deal, so here's some other ways you can practice in anticipation of going back and forth on an RV park. Go to an estate sale or a garage sale. These are emporiums of negotiation. See an item that interests you, throw out a price, always low. They'll counter with a price that's high or it may already have a tag. You'll find they're infinitely negotiable at estate sales and garage sales. They just want to get everything out of there by typically Sunday night, and they're wheeling and dealing. So if you see something there you like that's marked $20, you can go up to them and say, "I'll give you $7," and they'll say, "I need to get at least $15," and you can say, "How about $12?" and they'll say, "How about $13?" So you can get real good, real life experience there.
You can also get real good life experience at farmer's markets. Again, very negotiable. How much for that basket of tomatoes? $10, I'll give you $6. How about $8? So farmer's market, once again, most prices are very negotiable. Farmer's markets are also interesting because at the end of the day on the final day they have to get everything out of there. It's going to rot if they take it home. You can get some amazing deals and also just learn a lot about human nature. Negotiate on the final day of a farmer's market is probably the most interesting, because it's more life or death for the farmer as far as what happens with his product.
Also, just try negotiating on everything else that happens in your life. You can negotiate cars. You can negotiate appliances. You can negotiate all forms of services. Now, some things you can't negotiate. You can't negotiate your power bill typically. Can't negotiate your property tax too much. But there isn't most in America that you can't negotiate. Now why don't people do it more often? Well, people just don't like to negotiate. In our country, we're not really built around negotiate. A lot of foreign countries, negotiation is an active part of life. Everything is haggled to the umpteenth degree. Here in America, for whatever reason, we just don't seem to like that so people typically will go by the price marked. But yet again, in most places I have found, even places you think you can't negotiate, you can negotiate. I've negotiated prices on things, for example, at Neiman Marcus. You think the price is set in stone but oh, it's not. Things like precious jewels, larger items, they want to get those out of the store. They have a built in profit and they can go down a little bit on the price and still have that profit. Bottom line is negotiation is a skill that will go well beyond RV park purchasing. There's any number of useful applications to it, all of which will make you lots of money. Every dollar you pay less for an item is another dollar you saved in your pocket. You can just get $5 off on that item at the old garage sale, well that $5 might buy you a tasty lunch at Arby's.
So the bottom line is we as Americans need to be negotiating more. We need to practice more. Which brings me to the updates. What has changed in negotiating? Well, the bottom line is not a lot. It's an old skill. It goes way back to the early days of America, so not much has changed there but yes things have changed in a post COVID world. Businesses are more desperate; things seem to be more negotiable in both directions. A lot of people are using up charges on items that have been slowed down because of COVID delivery or shortages of parts. Things like refrigerators now people at appliance stores are going to try and negotiate that price up from what the list thing is on the tag because they don't have enough of them. So really a good disaster has now caused us to get more skilled at negotiating. People who are used to the skill, they will do well. People who are not used to the skill will not. The bottom line to it all is negotiating your RV park is a very, very important skill. Think about how much money is in play. If you buy that RV park for $700,000 that was marked originally at $900,000 you saved $200,000, that is gigantic. As a result, there's every reason in the world you should practice negotiating constantly.
Don't spare, don't hold back. Learn the art of negotiating. Practice it frequently in your daily life. Use those skills in everything you do, and particularly when you look at buying an RV park. There's so much to be gained by mastering this most basic, simple skill that most Americans completely overlook. This is Frank Rolfe, the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.