Negotiating techniques might not be all that appealing to you when you are just getting started with real estate investing. You might even think they are too pushy or showy. Maybe you even have a bad taste in your mouth about them.
Here’s the thing: the best way to navigate a negotiation is to make it feel like it’s barely even happening in the first place. We want our sellers at ease, connected, and focused on what matters most to them: selling.
The 3 Most Effective Negotiating Techniques for New Real Estate Investors
Not all investment opportunities are created equal. But it is possible to take the same strategy and methods along with you to every single seller you meet. These are the three most effective negotiating techniques to keep in mind overall, no matter what the deal. Become a master at these and you’re that much closer to your overall investment goals!
Be Prepared to Make Multiple Offers.
It may seem a little intimidating, but there are many different ways to get paid as an investor. And, we want your seller to receive a good deal, too. When you are meeting with a seller you want to be prepared to make three or so separate offers to cover your bases for what they might prefer. This is one of the best negotiating techniques to use. It establishes a foundation of trust with the seller that says, “I’m here to work with you, not against you.”
The first offer is always a lower priced cash offer.
Usually this is the least appealing because it is always less than what the seller hopes to make. But, it’s still a valid offer, and usually means they get their money sooner. The outcome is that they will get out of the house quickly and be able to move on. But, it will not give them the most bang for their buck.
The other two offers are usually some variation of a lease option. This is where you commit to taking over their monthly payments at a pre-agreed price with the right to sublet the property to a renter. You can make this agreement to be as short as a few years to over a decade, whatever is best for you and the seller. Ultimately, you want to have a few variations of this to present to your seller to free you from having to come up with hard cash right away, AND allow both of you to make money with the transaction.
Agree with the seller.
Another important key to effective negotiating techniques is to really agree with the seller. You need to have your heart in the right place, to truly help them get what they want with the transaction. If you are in this all for yourself, your seller is going to smell you from a mile away and you will lose the deal before you even get started. But, if you are here to help the seller, and you lead with that, phew, you are going to go far!
Remember what I said about bringing multiple offers. That initial cash offer is going to be quite low, and usually much lower than your seller wants to hear. Agree with them.
I know, Jim. It is a low offer, but it is the best that I can do with cash. I do have some other options that we can consider, but if it is quick and fast you need, this is the best I can do on a cash basis.”
Honor your seller and respect the fact that they are invested in this property in one way or another. You want to connect with them on a personal level so that they know you want them to also benefit from the agreement. When you first meet, do NOT jump right into your offers and start shooting down their hopes of making a buck. You have to take some time to get to know them, hear their situation. This is exactly what my questionnaire is for and what I talked about in 12 Crucial Questions to Ask When Buying a House for Investing.
Make sure you learn about your seller so you know why they are looking to sell in the first place.
Be a person, not an investor. Connect with them as another human being with a story that they get to be part of. Remember, “You’ll always catch more flies with honey than with vinegar.” Agree with whatever they say, because ultimately you truly don’t know any better yet! You have barely even checked out the property so always agree with the seller’s perspective and thoughts on their property initially.
Focus on the Sore Spot
For one reason or another, your seller needs to get out of this property. You need to discover their reason and make sure it remains THE reason for them to work with you. Negotiating techniques can only do so much if the focus of the issue is not kept center stage.
Does the seller want to retire and move to Florida to enjoy the sunshine and rainbows? Is a new baby coming and they need a bigger house? Did they inherit this house and just absolutely want it gone? Whatever the issue might be, you need to uncover it (and you do this with the crucial questions).
Then, once you get down to the numbers, this information will become a key to your negotiating techniques. While you make your offers, you will remind your seller that they have an issue and you only want to help them to get a solution for their problem. You want to find a way for them to get down to Florida without this house holding them up. Or, get into a bigger house before the baby arrives.
Help them to remember they want to get rid of this property. And that not being responsible for it is in their best interest, period.
This needs to be done with tact and gentility. Don’t even think about spitting their issue out at them to control them. Be a person. Remember, you need to agree with your seller. Ultimately, your negotiating techniques will help to provide a path for both you and the seller to strike a deal and find a middle ground where everyone wins.
Lay the Foundation and Build, Build, Build
I know you are just getting started, but negotiating techniques don’t have to be intimidating or scary. The most important part about being a real estate investor is people, not properties. Take care of the people and the deals will work themselves out. Put to practice these three critical negotiating techniques to get a jumpstart as an investor. Soon enough you will be a negotiating champ!
You Don’t Have to Know Everything to Get Started…
But, it always helps to keep learning. These tips are just a selection of the enormous amount of teaching I provide in my premier course First Deal Done Fast. This course is going to blow your mind. Not only do I cover my tried and true negotiating techniques, but I go into so many different areas you probably don’t even know exist.
The course is entirely self-paced, and you will connect with fellow early investors who are just as serious to start making money and changing their lives. If you, too, are ready to change your life, click here to get started today.
What are you most afraid of when it comes to negotiating? Tell me your concerns and fears by leaving a comment below.