Real Estate Investing

Do you know what the highest paid job in the world is? 

 

Not only can everyone apply, but everyone can do it… 

 

The answer is: A Negotiator.

 

Now I’m not talking about the negotiator who gets the bad guy to release the roomful of hostages, this is so much easier than that.

  

I am talking about negotiating the best deal possible in real estate investing.

Look at it this way: If you can negotiate with someone and save $5,000 in 30 minutes, that’s equal to a wage of $10,000 per hour.

So do you want to apply for the position?

 

If you are serious about Real Estate Investing, knowing exactly how to negotiate is critical information for you, especially if you are new to investing.

  

Before I get into the details of how to negotiate and how I’ve been able to save tens of thousands of dollars on some deals, I’d like to mention that there have been times when I thought the seller’s asking price was worth paying, because of how much more I could see the property was worth.

 

 If the deal is a good one, why jeopardise losing the opportunity to someone else? The key is to know beforehand that there is sufficient profit for you in the deal. If not, there is no point in paying the asking price. You are better off either negotiating a lower price, or walking away from the deal completely.

 

 So let me walk you through a typical scene when you have found THE house…

 

 When you make an offer on a property, unless it is a full-price offer, it probably won’t be accepted on the first offer. The seller will most likely counter.

 

 So you need to consider a few points:

 

 • Keep your emotions in check… When you are negotiating you are trying to get to a price that you both agree on. You’ll want to start as low as possible and have the seller come down for every little amount you move up.

 

 The idea is to get the seller to come down in bigger amounts than you are moving up, and gradually decrease the size of your increases.

  

To do this, I always work the agents and the seller, and I never let the agent know what I am doing, or what my strategy is. I have noticed that what most people do is to keep splitting the difference.

 

 Most sellers in my experience will do 2 counter offers, or maybe even 3, but no more than that usually.

 

 

 

Generally by this time, the seller is worn down. They are usually satisfied that they have negotiated hard, and gotten the best price from me.

  

But what if the seller won’t give me anything on the counter offer?

If the seller doesn’t feel that my initial offer is worth countering, and the sales price is too high to make money on the deal, I quite often choose to walk away. If they don’t drop their price, then the deal is simply not for me.

 

If it could be a good deal, I might wait a week or so and make a second higher offer after speaking with the agent and finding out how the sale of that property is coming along, and what other interest it is getting from other buyers.

 

That gives me a clearer understanding of what the competition is doing.

 

• Timing is crucial when negotiating. If you respond with another offer immediately upon hearing back from the Seller on each of their counter-offers, they are in control. They have all the incentive in the world to keep dealing with you, because the negotiating is not causing them any stress.

 

What type of anxiety do you want the seller to feel?

That they will lose the deal if they keep monkeying around!

If you know that the property won’t be sold out from underneath you, then take your time getting back to the seller. I always leave it at least 24 hours before getting back to them. Explain to the agent that you need to think about this long and hard, for you (or any other investor) to go as high as what is being asked.

 

Tell the agents “At that price I might be better off looking at other properties” and ask them to fax you a list of properties currently available in the area. Explain to the agent that you would still like to complete the deal, if only the owner would bend a little. The seller and even the agent will be scared that the deal could be lost, and hopefully bend.

 

Remember, regardless of who the agent is working for legally, they are really just working for themselves. If they feel that the seller is more likely to cave in than you, they will encourage the seller to consider and perhaps accept your offer.

 

After all, the agent wants to get paid. $10,000 difference on the sale price is big to you and the seller, but to the agent, this wouldn’t make much difference in percentage terms off their commission. So for the sake of a few hundred dollars, they would rather see the deal completed.

 

To your success,

Jules Dawson