Real Estate Investing Negotiating Tip
One of my mentoring Clients is negotiating a deal and asked me how to handle a situation that actually comes up quite frequently: the seller wants some time to think about it.
I thought you may benefit from the answer as well.
Here is the scenario:
My Client just made an offer to the homeowner that was well below market and below what the seller thought he could get. My Client did a great job of reviewing the benefits of working with him: no fees; no commissions; no repairs required (and this house needs a lot); no inspections; no financing contingencies; no closing costs; no termite letter; closing is flexible and can be quick or delayed – whichever is best for the seller.
My Client went on to discuss that if he wants to get market value for the house, he is going to have to pay to have all of the repairs done to the house – and that will all be money out-of-pocket, with no guarantee when the sale will occur.
He’ll have to pay a realtor commission; and pay closing costs for the buyer. And it still could take months for him to find a qualified buyer.
The seller then said what I love: Could you come up $10,000?
That means he is seriously considering the offer and even resigned to the low-ball price. He didn’t demand the $10,000 which means he is not committed to getting that price.
My Client responded perfectly stating that he may be able to sharpen his pencil a little, but it won’t be anywhere near the $10,000.
The homeowner was smart. He didn’t move forward, but rather said that the offer was considerably less than he had hoped, but that he needs to move on, so give him 2-3 weeks to think about it.
Oooff. That hurts. Come on… who needs 2-3 weeks to think about it? He wants the extra time so he can call other people and get more offers.
When this happens to you, realize that the seller is trying to keep you on the hook while he is looking for other offers.
If you apply too much pressure, you’ll spook the seller and the deal will be lost.
What you need is a subtle sense of urgency – a deadline that could “pop” at any moment.
This is what I advised my Client to respond…
Sure, I understand, this is a big decision and you have to give it some thought. I don’t want to pressure you. I just want you to understand that I need to buy a house here soon. I’m ready to buy yours; however, since you are not ready I will have to keep looking.
I’m not saying that I won’t still buy your house when you call, I just want you to understand that if I find another house and they are ready to go, I might not be able to buy yours.
So try to make a decision as quickly as possible because I would hate for you to be counting on me to buy your house only to discover I am no longer in the market.
Let’s look at why this works:
- The door is kept open – we’re still interested in buying the house.
- We’ve allowed the seller time to think about the offer without strong-arming him for an immediate answer.
- We created an undefined deadline which could occur at any time after which, the offer would no longer be available.
- The seller has a risk in not making a quick decision. If he wait too long, there may be no decision to make.
I’ve had sellers thank me for letting them know; and then ask me if I could give them just a day or two to make a final decision. They have a sense of urgency to act.
Use this tip in your negotiating and you’ll close even more deals.