Stuck in a new contract for a home that needs more work than you thought? It’s time to renegotiate your deal!
I talk to a lot of people who get stuck in old mindsets about real estate investing that really think that once a deal is made, nothing can change.
This is just not accurate, so today I want to fill the gap on this questionable space to make sure that you are informed about how to renegotiate to get the best deal possible on your investment property.
How to Renegotiate When You Buy an Investment Home
You may have heard a particular mentality on investing in real estate that I tend to take issue with: Buy low, sell high. And, here’s the issue with it: too many people think that in order to get a deal in place you have to score the lowest deal possible right from the get go.
I’m here to tell you this is not at all true. The reality is that even if you don’t get the absolute lowest deal on the initial agreement, you then have time to do your due diligence.
Due diligence is an expected time frame (30, 60, 90 days, etc) where you need to make sure that the house is in the condition that you were told. You will check up on rental amounts, if applicable, mortgage payments, condition of the house, deferred maintenance, perk tests, and survey, etc.
All of this information is relevant to the amount agreed upon at first.
If there is actually far more work to be done than initially explained, you have the right to renegotiate the agreement.
Now, the form of that renegotiation can be varied. Sometimes it might be more beneficial to have the seller carry the cost for fixing something. Other times you might lower your offer to accommodate for unexpected costs. You could ask for more time before closing, too. This is not at all an exhaustive list, either.
These changes are what bring in addendums and amendments to the initial contract.
Remember, it is normal to renegotiate a deal in real estate, so don’t be afraid to do it!
These kinds of things happen ALL the time! Even when I was working as a real estate agent I remember times when houses were under contract, but an inspection uncovered thousands of dollars of fixes that needed to be done.
As the buyer in that situation, you would have the right to offer to fix maybe one or two things, splitting responsibility with the seller. Or, you might even reduce your offer by the total amount of work to be done to make it even on your end.
Whatever you do, just remember you do not have to be afraid to renegotiate a deal that has been made.
Make those Deals AND Renegotiate as Needed!
Just a few weeks ago I wrote a post about making verbal offers on properties. So, when you’re in the verbal offer stage, definitely just get those offers out there. And, once you come to an agreement and start filling out the contract, get the contracts signed!
Don’t hold off in order to try to score the lowest deal the soonest. You need to be patient with the process.
If you find that your due diligence reveals the need to renegotiate, then you will have every right and opportunity to get a better deal overall. Keep in mind, though, that when you renegotiate it does not always have to be to get a lower deal.
I’ve had sellers where I’ve come back and offered them more money if it suited my overall goal better. It is important to work with sellers, especially when using seller financing, in a way that in mutually beneficial.
I’ve had sellers where I have offered them $5000 up front if they reduced the overall contract by $20,000. Basically, I gave them the option to received $5000 now, or $20,000 in 10/20/30 years (depending on our agreement).
This is why it is so helpful to renegotiate. Just because you have a contract does not mean that you cannot discuss anything further.
All that you are doing is putting options out on the table. Don’t be afraid to renegotiate.
Treat Others in a Way to Build Rapport
You can renegotiate basically every part of the real estate process; sellers, buyers, title company, etc.
The way you treat people during a renegotiation, the more they will recommend you when they have the opportunity.
No one is going to be offended that you have to renegotiate your deal. So, make sure that you are honoring of others and treating them with respect. In real estate, you have to think long-term. You absolutely want to build up a network of people in your area who know who you are and think your name when they have a house they need to get sold.
While the world is getting much smaller today than ever before, common courtesies and kindness will still take you far.
Ready to Jump In?
If you are eager to learn more and get your first deal done, make sure you get a copy of my FREE 10 Steps to Create Passive Income and Build Real Estate. This short little overview will give you the steps you need to do absolutely GREAT in real estate investing. Get yours here.
I know that it might feel daunting to renegotiate a deal you have already started. But, believe me that there is nothing wrong about it. It is just a normal, natural part of this process, and one you definitely want to get used to.