You never know where your next big real estate deal will come from. One day you can be trying to get a motivated seller to work with you and the next you are negotiating a bank owned property. How successful you are in negotiating your deal to acceptance makes all the difference.
It is not enough to get a seller to sign a contract. You need to get them to see things your way and accept your number. Doing this requires you to employ a handful of simple negotiating tricks and tactics. Most of these are common sense once you think about them but are easily lost in the heat of negotiation. Getting an extra deal or two a year or not overpaying for even one property has a huge impact on your business bottom line. Here are five tips on dealing with any type of seller and winning your negotiation.
- Build rapport. You would be surprised at just how much relationships matter in real estate. People have a tendency to work with people they like much more frequently than people they don’t. Regardless of the seller the first thing you should do is build a rapport. This is easier with traditional sellers, but regardless of the scenario you need to make an attempt. Something as simple as asking a question about their day or being nice on your introductory email sets the tone for the rest of your dialogue. Building a rapport will help give you the benefit of the doubt if you need something later in the transaction. Alone, it won’t help you secure a deal, but it will help keep things moving and may give you the inside track if everything else is equal.
- Stay calm. You never know what the seller is going through. If the seller is dealing with a divorce, foreclosure, short sale or bankruptcy they have been on edge for at least the past several months. A basic question on the property or their situation may set them in the wrong direction. It is important to keep this in mind and try to stay calm throughout the process. A seller may question your motives with the property or how much you stand to make. They may verbally take shots at you and your offer. The reality is that nothing they say is usually personally. They are not pleased with their current situation and need someone to take it out on. If you can withstand the barrage and even offer a work of kindness or sympathy, you will gain favor with them. This is also the case with a real estate agent or attorney representing the seller. Their job is to get the most for their client and will try to rattle you to get what they want. As hard as it may be, you need to remember the big picture and stay calm with whatever comes your way.
- Present facts. The best offers are those based on facts. Regardless of how low it may be, if you can back it up with data you have a good shot at acceptance. Few sellers want to hear the reality on their property. This is the case whether you are talking to a loss mitigation department or a distressed seller. They all think their asset is worth much more than it really is. The key is to show them data and present your argument. Start with the comparable sales in the area. It is hard to argue with real data. Next, give them a true snapshot of their property. If possible, have a list of repairs needed along with a cost associated with them. By showing the property in the true light along with the risks you are taking you instantly diminish their view of the property. The key is to do this in a way that doesn’t not insult or infuriate the seller. Instead of going for the knockout punch, a constant series of jabs is a much better strategy.
- Wording is important. You need to be as delicate as possible every step of negotiation. Never let your emotions get the best of you and say something you regret. There is almost always a better way of saying something you really want to say. Instead of there is no possible way we can go any higher you should counter “given our data and view of the property it wouldn’t make sense for us to increase our offer.” There are dozens of little phrases that soften the blow for the seller, but still get your point across. Instead of typing out a harsh text or email, you should wait a minute and consider the wording.
- Know when to walk. In every negotiation there should be a point where you are willing to walk away. If you don’t have this number in mind prior to starting you can get caught up and left disappointed. In the big picture a few extra bucks to secure a property you really want isn’t a huge deal. However, it doesn’t always work this way. A few thousand leads to ten thousand and before long there is no turning back. If you take the time to run the numbers and do your diligence you should be willing to stick with it. Sometimes walking away is the best negotiating move you can make.
The best negotiations are the ones where both parties leave happy. Use these five tips to get the best of as many negotiations as possible.