Garage Sale Negotiations

My homeowner’s association holds a community garage sale twice a year, in March and in October. Each garage sale, I focus on practicing some sales skill and then record an episode of The Crushing Debt Podcast based on that practiced skill. I decided to create this blog post based on some of those podcast episodes.

Garage sales are very easy place and a very safe environment to practice your negotiation skills. Whether you’re sitting in the driveway and people are coming up to buy your stuff or whether you’re walking the neighborhood looking to buy other people’s stuff, garage sales are a very safe place to practice your negotiation skills because you’re dealing with items that are typically worth a few cents, up to a couple of dollars. Skills rehearsed at garage sale negotiations are good practice for when you do have to negotiate away tens of thousand dollars of debt, or negotiate short sales, or negotiate in the context of complex litigation or mediation.

Presentation

What I noticed at a previous garage is the importance of presentation. To translate this to negotiations, if you’re trying to advance your opinion, what you believe to be the correct outcome in a certain situation, how is your presentation?

I’ll give you the example that spawned the idea for this blog: we had one of those foam mats that you put down, where each piece fits together like a puzzle and because this matt was made for kids, it had all the letters A to Z and all the numbers 0 to 9. You can lay it all out and make different shapes out of it, you can use it to spell out words, etc. My kids outgrew it, and so I put all the pieces in some garbage bags just to keep it all together. I had the garbage bags out at the garage sale and nobody would buy it. A few people asked how much; I tried to charge $5 with no luck.  No one bought the garbage bag of letters and tiles.

I ended up finding the bag specifically for the tiles and so I took them all out of the garbage bags and I spread them out in the driveway, making sure that all the numbers and all the letters had all the different pieces and parts and that that I had a complete set. Then I very carefully broke it all down and put it neatly back in the original bag. About 10 to 15 minutes later somebody walked by and asked how much, to which I replied $5 and they paid for it on the spot without haggling.

When the tiles were in garbage bags they didn’t sell, but as soon as I put the tiles back in the original packaging, once I presented it in such a way that it looked clean and with all the pieces and parts, it sold right away!

To analogies this to debt negotiation or debt settlement, how are you presenting your position to the creditor? How are you presenting your case to the judge, the opposing side, the mediator, or the jury? If you fail to present your best position, if you ignore the reasons why you have leverage, then you don’t have a very good chance of negotiating.

One case I recently settled that I talked about in an episode of the Crushing Debt Podcast, I presented the case in such a way that I showed the creditor that if they tried to pursue my client, we were going to sue them for violations of debt collection law – the case settled immediately thereafter.

I’ve said many many times on the podcast, “negotiation is not poker.” I’m not trying to bluff the creditors (maybe once in a while a bluff is the best strategy). I’m presenting the hand that I have in the best possible light and if the creditor decides to test that, then fine. Otherwise I’m going to present the facts in the best possible light for my client and in such a way that typically gets my client a resolution.

When negotiating a short sale or a loan modification I was skeptical that the bank representative actually read the hardship letter.  I thought they placed those letters in the file simply to prove to the investor that they asked about the hardship. Now, however, I think they actually do read those hardship letters so when you’re putting together a hardship letter for a short sale or loan modification, really put some thought into your hardship. What are you trying to present to the bank as your as your hardship? Typically the bank wants to see that you have a loss of income or an increase in expense or both. Those can be caused by the death of a loved one, spouse or someone else contributing to the household income; maybe you have a severe illness like heart issues, or cancer; divorce such that a two-income household becomes two one-income households. What is your hardship? What are you presenting to the bank so that they will approve this short sale or this loan modification?

A hardship is not that your house dropped in value because to the extent it dropped in value for you it dropped in value for the bank as well. Interestingly I was talking to a bank representative years ago right as we were on the cusp of the short sale explosion. At that time I didn’t have any kids and so I asked the bank representative whether getting pregnant with triplets while living in a 2-bedroom, 2-bath, 1-car garage, 1,000 square foot house would create a hardship? There’s no way five people, especially three babies, are going to fit comfortably in a two-bedroom house. What do we do in a situation where we outgrow the size of our house. The bank representative looked at me and said that the decision to have kids would be our voluntary decision and does not constitute a hardship!

So how are you presenting the hardship to your lender? One thing I do when I work with a short sale or loan modification client is help them draft their hardship letter. I do have a form of hardship letter that I will send them and it has all the different criteria, including some things that are hardships and some things that are not hardships. I’ll review the letter myself and with the client before we submit it to the bank to make sure that it presents a truthful and accurate picture, but also represents a hardship to the lender. If you’re reading this blog and you want a copy of that form, please email me – Shawn@YesnerLaw.com, and use “Hardship Letter” as the subject line.

Organization

One other aspect of presentation is organization. At the garage sale, instead of having all the baby stuff in one place and all the mancave stuff in another place, I started to mix it up and and mingle some of the items for sale. If people were interested in baby stuff, they had to go through all the different items in the driveway to find all the different baby stuff that we had out and that increased sales a little bit. So when you’re selling something or when you’re trying to advance a position or advance a theory of yours, are you presenting it in such a way that you are laser lightening / hyper focused on what it is you’re trying to do, which is good in some situations, or are you mixing in red herrings in the negotiation? Will the appearance of disorganization turn off some people and is that okay?

My point is to understand how you’re presenting your position and what your presentation looks like to your target audience. Is your submission of documents to the lender or to your opposition neat and organized? Does the information “flow” from one point to the next? Does the order of the documents make sense? Are they clear or easy to read? How “thick” or voluminous is the package? My first boss asked if our submission passed the “weight” test.  All of these are aspects of presentation and organization that you should keep in mind while negotiating.

I remember a family member getting married a while back and the big inside joke that my sister and I had at the wedding was, “but look at the presentation the food!” As much fun we had at the wedding, what I remember to this day was the “presentation.”

Patience

I think patience is something that very few of us seem to have these days. We live in a world where everything is on-demand: this blog, the Crushing Debt Podcast, Netflix, Disney+, YouTube, Facebook … how many times do you refresh your social media feed so that you can get the latest content, news, gossip, etc. You can go on the internet (where everything is true) and find anything you want with by pressing a few keys – instead of typing in the entire search term, Google and the other search engines will take the first part of your query and try to fill in the rest!

But what I think that does in terms of negotiation and negotiating with your creditors specifically is that it cuts out patience which can be a huge negotiation tool for you. Sometimes no news is good news. Sometimes I’ll make a settlement offer to a creditor and immediately the client will call, email or text message to ask about the settlement response. Sometimes, I want to let the lender or opposing counsel stew a little bit. Sometimes I want them to think that there might be a bankruptcy around the corner because we haven’t talked in such a long time. Sometimes I want them to think there’s no more money available because we haven’t talked in a long time. I think the old saying is true – absence makes the heart grow fonder. The creditors know that the longer that we wait to get some settlement put in place the less assets there are to fund that settlement, so the longer that you wait to hear from me the lower that settlement offer becomes.

Patience in terms of the lawsuit itself is very similar. Many times clients hire me because they’re being sued by a creditor and they need me to file right away file! Sometimes that’s not the best strategy either because if my job is to position the creditor for settlement, then one way that I need to do that is to “play the game” within the litigation and fight the litigation. For example, if I have a deadline to file something next week why would I want to file it today and give the creditor that much more time to prepare a response? The Florida Bar is going to say I have to push my cases expeditiously but at the same time if a rule of Civil Procedure that says I have to respond within 20 days, then why would I want to respond on day 2 when I can take a little bit of time formulate a better answer or a better response. I think it is better representation of the client to slow down, relax, take my time, show some patience, put together the pleading that I want to put together, review it make sure it has no errors or other issues, and then release it before the deadline. I am not suggesting that I would do anything intentionally to interfere with a deadline because I often have other clients that have me doing projects. However, in terms of litigation, I think patience is a really good thing in terms of negotiation and how we deal with the creditor.

Conclusion

How did this lesson occur to me in terms of my own garage sale? The garage sale starts at 8 o’clock in the morning and ends at 1 o’clock in the afternoon. Typically right around 7:30 – 7:45 A.M. I start setting up our driveway. After I set up, I get my breakfast and my coffee and wait for people to drive by my house. Many people saw the stuff that was out and they simply kept going. I don’t think I made my first sale until about 10:15 or 10:30, and when I made that first sale it was a $1.00 item. Despite that, my kids were having fun playing with the neighbors’ kids and everybody was having a good time – the whole community was out at the garage sale!

Around 11 o’clock my wife wanted me to pack up and I said we need to have some patience because we get a jolt at the beginning of the sale and then a jolt of people at the end. I think I had made five or ten dollars worth of sales by 11:00 and right before I started packing up we had somebody come by and buy a bigger ticket item and buy a bunch of other sales. I started the day at 8 o’clock with zero dollars, I had one or two dollars by about 10 o’clock in the morning by the time we ended at about 12:45, I made $40! Not my best garage sale but I didn’t have to put a lot of stuff back in the garage (most of what we didn’t sell went to Goodwill for a possible tax deduction) and we made a couple bucks that would buy lunch or dinner that day. However, if I had packed up the garage sale at 9 o’clock, I wouldn’t have made that first sale. If I packed up the garage sale at 11 o’clock I wouldn’t have made that last sale. Without patience I wouldn’t have made the sales.

From a real estate investor perspective how it does this apply? You may not get that deal that you first wanted but if you have some patience another deal will come along!

From a debt negotiation perspective, you don’t want to rush into Court before you’re prepared, possibly giving you a worse resolution with the creditor than if you waited.

For more information on Debt Negotiation, Real Estate Investment, or Sales Skills, please contact us to schedule a free initial consultation to discuss your options at 813-774-5737 or email me directly at shawn@yesnerlaw.com. Please also subscribe to the Crushing Debt Podcast on Apple Podcasts, Spotify, and other podcast players, including Amazon Echo (“Alexa”) for more free information about these topics. It is free to subscribe to the show on your podcast player, so you don’t miss each new episode as it is released every Thursday.

Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast, author of Crushing Debt: 9 Strategies to Avoid Financial Bullies (available on Amazon.com) and founder of Yesner Law, P.L., a Tampa Bay based consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Tampa, Westchase, Citrus Park, Odessa, Oldsmar, Palm Harbor, Clearwater, Countryside, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay Area.