Negotiating Tips

Now I am going to attempt to “wrap up” this topic. Not sure how successful that will be. We could literally talk for days about negotiating, but I will get it to where everyone has a little bit of understanding of the topic and let it go from there.

Ok, I walked everyone through they way that I teach my buyers to buy houses. We walked all the way through the process, but now I want to back track a little and talk about some tips/tricks that may have been mentioned but should be expanded upon.

Planting seeds is the first thing that you need to learn about. In the negotiating process you must plant seeds of doubt regarding the seller not taking your offer. So think of all of the negative reasons that a seller would have where keeping the property is concerned and these should be brought up.

Costs: most of the houses that you get a call on are going to need plenty of work, and that means money. One of the main reasons that the sellers will call you will be because they do not have the money to fix the property on their own. I usually even bring that part up from the get go. Just to let them know and be upfront I put it out there that they will make more money if they keep it, fix it, and sell it themselves. Once that is done, we have planted the seed that they will need the cash to fix the house. So this will be in the back of their mind when they get your offer.

Slow Market: we can capitalize on the market conditions and present the fact that it may take a while for them to sell their house. You can quote falling prices in the area, or days on market that you know about. The number one thing to do here is be armed with the facts of what is going on. When that is put out there they will then think hard about how hard it is going to be to sell their house.

Fees: closing costs and commissions fit in here, as does insurance costs. So these are figures that you need to bring up to the sellers so that they are aware of them and will think about them. I like to do this just like a net sheet that a realtor prepares. You can itemize all of the fees that they will see in the process so that they will also be thinking about those fees when they see your offer.

Dealing with contractors: all of us have problems dealing with them, and civilians are no different. They have the problem of finding the contractors that will do the job. Then fight putting up money up front and whether or not they will even show back up (sound familiar). Then what about the time to manage them, bad workmanship, not completing the work, etc. these are all seeds to be planted as well.

Financing: most sellers don’t even realize what is going on around them so you may need to educate them on the financing battles that are going on in the market right now. Let them know that it is now that people don’t want to buy a house, it is that with the recent collapse of the lending companies it is harder and harder to get people financing. Let them know that often times when a house sells and gets to the table to close the financing falls apart. This is a seed that will plant a lot of doubt in the mind of a skeptical seller. Now everyone that wants their house could be the loser that they are scared they are.

All of these things are small by themselves, however, when you put them together, they become a lot of negatives. You must practice your presentation skills so that you work certain things in at certain times in your visit. It must not sound rehearsed but it is almost a script that you have to follow. Once you have done it a few times it starts to become natural to you. You are adding blurbs to your presentation in the middle of building rapport.

Another thing that we must talk about is finding the pain. Part of the rapport building process is to find the pain. Why are they selling you their house? What problem is there in their life that makes them need to sell to you? Also what do they need? Is there something in particular they need to allow them to get out of their house? Usually this is a topic that will help you decide what seed to plant. If they need to go fast then you can mention the time on market in the area and the uncertainty of the financing even if it is sold. This is just like a debate session or playing devil’s advocate. If they are broke then you emphasize the costs of getting the house ready to take to the market.

When talking about of costs and pricing, it is important to note that you may need to allow them the ability to lead the conversation to some extent. A lot of times their pricing that they have in their mind is completely different. The main reason is that you as an investor will get an entirely different pricing from your contractors than what a civilian will get. So allow them to lead you a little bit on pricing and values. You can also allow them to tell you what they think needs to be fixed on their house and they may tell you something that you didn’t know or won’t see on your own. You can also ask them what they think their house will sell for, this may be a lot less than what you think as well.

You should be able to sell yourself/company as well and why it is that they should deal with you as opposed to all those other guys out there. What is unique about you and your company that makes you stand out and makes them want to sell to you instead of someone else. This is where you push your abilities, the financing that you have available, and the network that you have at your fingertips. You can also use this time to explain to them about you and your company and some of the things that you have done. Remember they have to be convinced that you can solve their problem.

I like to be able to talk intelligently about my contract as well. I like for it to be in layman’s terms and be able to paraphrase it for the clients that I meet with. It is important to be able to convey all of the information to the seller, otherwise they will slow the deal down to run it past someone else. I like to put a timing deadline on all of my contracts so that they can’t just hold on to it and shop it to everyone in town and then call me at the end.

So these are some tips for your negotiations for now, I will add more stuff on this later.