5 NEGOTIATION TACTICS THAT PROVE YOU'RE NO JOKE
The housing market is jumping with the rise of wages and inflation! So, what are you supposed to do if you are going to compete with all of the other real estate investors out there?
NEGOTIATE YOUR TAIL OFF!
In this competitive market, investors are increasingly struggling to make it work. However, where asking prices are high, it’s often the best negotiator who walks away with the best deals.
Here are 5 negotiation tactics that will give you the upper hand and a competitive edge in your real estate business:
1. DON’T START WITH YOUR HIGHEST BID
You wouldn’t go to the auction and bid your cap offer right out the gate, so why would you put your highest offer on the table first?
It’s good practice to go into a deal knowing your highest bid. BUT you don’t want to start out with it! The first offer is a speaking point for negotiation. You want to have confidence in your offer, so you need to go in knowing your opening and highest bids. If you know these things you can keep the negotiating in your court.
2. DON’T BE AFRAID TO OFFER LOW
You aren’t going to hurt the seller’s feelings by offering lower than what they’ve listed. They may get defensive but that gives you the opening to a discussion. The seller needs to feel like they’re getting something from you and not feel like a pushover. Too many people starting in real estate make the mistake of offering exactly what the seller is asking first. You want to set the groundwork to negotiate and that starts with a little positive conflict.
Once you open negotiation, you can go back-and-forth with the seller and give them the feeling of respect by getting more than your initial offer. If this process is too easy, both of you will leave wondering if you made a mistake or if you could have gotten a better deal!
3. KNOW YOUR REA$ON
Why are you offering that amount (other than it’s lower than what they asked)? Explain why you are making that offer and center it around facts. Look into the comparable market for the area, the current condition of the home, the after-repair value; anything you think is a reasonable example for the offer you’re making. Backing up your numbers gives you credibility and leverage in a negotiation.
“I’m interested in your home, but your asking price seems a little high. The property next-door is larger than this one, but it sold for less. There are also a few safety things that came up through your inspection that need addressed.”
4. PEOPLE SELL TO PEOPLE, NOT ROBOTS!
Don’t make an offer through email! Why? It lets you gauge the seller! You can read into their reactions and see how interested they are. It also lets you build a connection with them, the more personal time you have with them the more trust there is. The more emotionally committed they become with you helps build your reputational capital. No one wants to feel like they’ve been wasting their time, so the more time they spend with you, the more they’ll want the deal to work.
5. OPTIONS = UPPER HAND
Everyone knows that desperation is a losing position. You have to let the seller know that you are interested, but you’re not desperate. You’d like to work out a deal, but if you can’t there are hundreds of other potential deals in the same market. If you start to get resistance in your negotiation you can use this tactic to apply pressure to the seller, especially if they’ve been negotiating with you for a good amount of time.
You don’t want to leave the negotiation table feeling that the deal was too easy. Make sure you always get the last concession. It doesn’t matter how small the final concession is, the important point is that you ask for it. If you go back and forth over price and the seller’s final, unmoving asking price is within your predetermined limit, ask for a seller concession, an inspection contingency, closing on a specific date, or the contract to be signed in purple ink for that matter. Never let the seller think, “That seemed too easy. Maybe I should have priced it higher?” Beyond negotiating the best possible deal, your goal is to make sure the seller feels like they fought hard and won. As long as the seller feels like they won, they will do everything in their power to make sure your deal goes through and settles.
Learn the best negotiation tactics by attending any of our nationwide funding tours in a city near you! Get serious about your real estate investing business and receive a $250,000 pre-approval letter for buying real estate investment properties!
Register at www.fundingtour.com or call us at (800) 341-9918. We’ll help keep you on track to achieve your real estate investing goals.
If you want to make sure you’re a step ahead of the competition when it comes to selling your home check out the education you can receive with the Lee Arnold System of Real Estate, call us at 800-533-1622. If you have a deal and would like to get a quote from a private money, visit www.cogocapital.com