As I've grown older, I've come to the conclusion that often the most valuable profit that money can generates is TIME. Being financially able to retire early can give you extra years to pursue your muse. Think of being able to take months off to enjoy leisurely recreation instead of trying to cram everything into a short vacation. Or all the days and hours that can be salvaged by hiring others to do jobs you can't or don't want to do. Financial success is what buys this time.
If profit can be denoted as time, so can expense. Prior to engaging others in a transaction, you should set your own time limits. How much time should you spend haggling over minor points or writing endless counter-offers to wring the last dime out of the deal? How should you delay buying something you need, waiting for prices to drop? How soon must you conclude negotiations and close the deal?
Time can be used as a powerful negotiating tool when either party in a transaction must meet some kind of deadline; so you should guard against revealing your own time deadline. In the Paris negotiations leading to the cessation of the war in Viet Nam, the negotiators from Viet Nam took out a 2-year lease on their living quarters. Americans rented a hotel by the day? What kind of message did that send? You may recall that while the American public continued to clamor for an end to the conflict, the other side spent about 3 months negotiating the shape of the conference table to be used during the negotiation process. Time and political pressure caused us to eventually 'give away the farm' to end the negotiations.
At house-buying level, early on I say: 'If I bought your house for cash right now, where would you sleep tonight?' This leads to a practical discussion as to future plans and time frames. I first heard this question when I was selling my home preparatory to being transferred. I placed an advertisement 60 days prior to my departure date expecting to have plenty of time to arrange for temporary lodgings. When I was asked that question on the first day that the ad appeared, I found myself frantically trying to negotiate a two month stay in a motel with a separate room rented to hold my furniture in order to sell to the cash buyer.
I ask this question to force the seller to confront the dilemma of where he's going to live next and how much cash is going to be required in order to vacate the premises. If he has a short time horizon, thousands of dollars can be peeled off the asking price simply by pointing out that it could take months to sell if your current purchase offer were to be passed up. An offer of cash combined with a quick closing can be a powerfully motivating tool to get the seller to accede to special prices and terms. On the other hand, by insisting on a quick closing as a condition of the cash sale, other concessions can be extracted to improve profits.
This can have an unexpected fall out. As a commission agent, I earned a fee by being able to time the closing of the sale of one house to coincide with the purchase of a replacement. In fact, on one occasion, the same moving truck was used to move a seller out and a buyer in to the same house. I also discovered that by always having a decent rental property into which a seller could move on a short term temporary basis, I could use low rents and immediate occupancy as an inducement to get a seller to accept more 'creative' proposals.
Over the years, I've made a number of quick deals at below market prices by offering to allow the sellers to lease the premises back for a number of months at a negotiated rent until they found a home they wanted to move into. One family remained behind at a rent set $300 below market value for the first year. The second and following 13 years, they paid market rents, using the sale proceeds to pay up his back taxes and debts. When they left they sent me a thank you note. Think of being able to buy a house at a price significantly below market, then having the premises rented for the next 14 years with no vacancy and no maintenance.
