Negotiations

Always look to solve problems in your negotiations with a Seller. There are no no-win scenarios.

Let the other party speak first.  They always ask you for the first number, always try to have them give the number first.

They have to sell more than you have to buy.  Don't be eager, you'll get into bad deals. Check your ego at the door.  People's situations change.  Present the offers every 30 days.  90 days from now they may be more interested.  

Here are real estate investor Chris McClatchy's suggestions on negotiating a price and terms: Lock in agreed terms, only change countered terms.  Inch towards method...closer to your term than their term.  Except for interest, you counter up on price....rolling the interest into purchase price.  Increase your offer on the price no more than twice.  Then perhaps offer a hybrid model= Where interest is calculated at the end after so many years.  Then negotiate the rate last...1%, 2%.  

The rental revenue has to support the payments.  Making some progress on negotiation and keep getting closer slowly.  If you have details to work out, indicate how much you are looking forward to getting the deal done.  

Some good verbiage: "I understand that you want to make a profit on your original investment and that is reasonable.  The only way I can justify it is if you are willing to take some of the payments over time.  That is why two of the offers were structured that way."

"As investors you understand that I'll need to see the inside to make a higher cash offer."

"Based on your counteroffer that would put me in a negative cash flow situation and that just doesn't make good business sense."

"We may have a little room to move if we are close on the deal.  I have taken into account some of your concerns."

Acknowledge your Seller's concerns, and inch towards a solution. Always keep the door open.

Happy New Year! Happy Investing!

Real Estate Negotiation

A win-win negotiation is a deal that satisfies both sides. It is the best way to approach negotiating a real estate transaction.

Some Do's in Negotiating:

· Determine goals. Decide on your objectives. Know your bottom line.

· Anticipate the desires of your opponent. Think collegial – envision the person as your partner in the deal.

· Analyze the assets. What do both of you bring to the table?

· Evaluate options. That means for both of you.

· Assess the power you bring into the discussion, and that of the other person.

· Anticipate the obvious consequences.

· Pay attention to detail. Try to put the other person’s needs first. In that way, the person feels as though you’re listening. Show empathy to the other person’s concerns and problems.

· Stay calm, no matter what. You’ll keep the emotional advantage. Focus on issues, not personalities.

Some Don'ts in Negotiating

· Don’t signal the person that you’re done negotiating by using the phrase, “I think we’re close.” You’ll be giving away your power – the person will believe you’re exhausted and that you put a higher priority on getting an agreement instead of achieving your actual goals.

- Don’t get into a bidding war. Brand yourself so that you’re the only party the person should deal with.

- Don’t negotiate against yourself. If you make an offer, wait for the response. Be careful in using the phrase, “Why don’t you throw out a number?” Usually, the first amount mentioned by a seller is the amount that’s ultimately agreed upon.

· Don’t establish at the beginning that you’re the final decision-maker. If you need time to think you'll get more wiggle room if you indicate there’s another person with whom you must speak. Always defer to a higher power.

· Don’t be afraid to ask for what you want – be specific about what you want and don’t want.



Use these techniques, and get the best possible outcome for both buyer and seller!


Happy investing!


Thanks to Bernita McKinnion for her help in compiling this blog post.