Effective negotiation is critical in real estate deals, whether you’re a wholesaler, flipper, or investor. Getting the best outcome doesn’t just come down to price—it’s about finding creative ways to make both sides feel like they’ve won. One particularly interesting tactic is the Hairy Arm Principle, which allows you to steer negotiations while giving the other party a sense of victory. Let’s break down what this strategy is, why it works, and how you can use it to win in real estate.
Why Naming Your Techniques Matters
Most people already employ some level of intuition when negotiating. You might instinctively shift your offer terms or add extras to sweeten the deal. But when you assign a name, like “Hairy Arm,” to a tactic, you switch from accidental success to purposeful action.
This shift allows you to intentionally reapply a successful move across your deals, leading to better results. By understanding the reasons behind your wins, you can replicate them instead of relying on luck.
What is the Hairy Arm Principle?
The Hairy Arm technique is a simple yet effective strategy. It involves including a negotiable but non-essential item in your offer—something you’re perfectly willing to give up.
Imagine this: you’re in a real estate deal. The seller wants a better deal, but you’ve outlined your terms and said you’ll only pay half the closing costs. The “half-closing-costs” provision is your Hairy Arm. When they push back and ask you to cover 100%, you “reluctantly” concede. In return, you secure better terms elsewhere, like a reduced price or a longer option period.
By removing the “Hairy Arm,” you let the other party feel they’ve achieved a win, even though it doesn’t affect your overall goals.
Why the Hairy Arm Works
This strategy works because of basic human psychology, particularly an idea called reciprocity. Humans feel compelled to return favors or concessions, even if they didn’t ask for them. When you give something up during negotiations, the other party often feels obligated to make a trade or meet you halfway.
An example of reciprocity is the Hari Krishna movement in the 1970s. They would hand people free flowers, prompting a sense of obligation to engage in conversation or donate. Similarly, by offering a concession, even one you’re comfortable giving up, the other side will likely feel compelled to reciprocate.
How to Plan Your Negotiation Strategy with a Whiteboard
Success in negotiation always starts with preparation. A powerful method is whiteboarding your strategy so you can visualize what you’re trying to achieve. If you don’t have a whiteboard, even taped-up paper on the wall will work.
Step 1: Outline What You Have to Offer
Make a full list of all negotiable items in your deal. Don’t just think about price. In real estate, terms are just as important. Here are some examples you might consider:
- Price of the property.
- Amount of the deposit.
- Who pays closing costs.
- Length of the option period.
- Interest rates or financing terms (if applicable).
Step 2: Write Down Your Dream Scenario
For each item, draft your best-case outcome. This is what you’d get in an ideal situation. Example: You ideally only want to pay half the closing costs.
Step 3: Predict the Seller’s Dream Scenario
Think about what the seller might want. What’s their ideal result? For instance, they might hope you’ll cover all closing costs or shorten the option period.
Step 4: Compare and Find the Middle Ground
Now, compare your dream scenario to theirs. Identify points where there’s overlap or room to negotiate. Highlight where you’re firm and where you’re flexible.
Building Creative Real Estate Deals
Negotiation isn’t about always meeting in the middle. It’s about using creativity to find solutions that work for both sides. Here’s how to craft a strategy that works:
Offer Wins for Them
Identify what the other party sees as a “win.” For instance, many sellers focus on price and who covers closing costs. Publicly concede points you’re comfortable with (e.g., closing costs), but ask for something else in return (e.g., more favorable terms).
Structure Your Concessions
When offering concessions, plan them ahead of time. Let’s say you list 50% closing cost coverage in your contract. You know you’re fine with paying 100%, but by making this negotiable, you’ve set up an “arm” to remove.
Adapting the Hairy Arm for Wholesaling
Wholesalers often work with fewer moving parts—essentially, you’re selling a contract. Here’s where the Hairy Arm can still work:
- Deposit Amounts: If a buyer feels uneasy about your asking deposit, you can offer to reduce it slightly while adjusting other deal points (e.g., asking for a quicker close).
However, with fewer variables to negotiate, rapport and trust-building take on a more dominant role in wholesaling deals.
The Role of Trust and Reputation
In real estate, trust is everything. Many negotiations fail simply because one party doesn’t feel they can rely on the other. Always ensure the other side sees you as reputable and credible.
One way to do this is by referencing community opinions. Social platforms like local Facebook groups are great places to check on reputations. Ask for reviews of buyers and sellers. A trustworthy reputation makes negotiation smoother and more predictable.
Mistakes to Avoid with the Hairy Arm
The Hairy Arm principle isn’t foolproof. Used incorrectly, it can backfire. Keep these points in mind:
- Don’t Use Unrealistic Arms
Never include items in your negotiation that are impractical or not genuine. For instance, offering unrealistic seller financing terms could erode trust.
- Ensure It’s Subtle
The Hairy Arm works best when it doesn’t seem overly deliberate. You want it to feel like a genuine compromise, not a contrived tactic.
Applying These Techniques Beyond Real Estate
The beauty of these strategies is their versatility. Negotiation tactics like the Hairy Arm and reciprocity don’t just apply to real estate. They’re universal.
- Car Sales: Use a Hairy Arm by initially asking for additional features (like free add-ons) that you’re willing to give up later.
- Business Deals: Negotiate payment terms by including extras that can be removed to gain the terms you want.
- Everyday Scenarios: You can even apply this to personal situations like booking a vacation or haggling prices.
Practice Makes Perfect
Negotiation isn’t something you master overnight. It takes practice, preparation, and creativity. By planning in advance—through strategies like whiteboarding or listing items—you’ll walk into negotiations more confident and more prepared.
Want to become a stronger negotiator? Focus on understanding the principles behind your strategies. From reciprocity to Hairy Arms, these principles aren’t just tricks—they’re tools for meaningful, effective discussions that create real value for everyone involved.
