When you find yourself in what seems like an epic struggle to get a real estate contract finalized there are some negotiation techniques that may help you push that deal across the finish line. These techniques will vary depending on the type of person and investor you are and the specific type of transaction you are trying to close. Here are some useful negotiation techniques you should use regularly.
Show the reasoning behind your offer
Everything you do in real estate has to be justified. You can’t make a below listing offer and expect a seller to accept it without an explanation. For example, if you are making an offer on a property that is distressed, don’t just tell the seller it’s distressed. Provide them with a detailed list of what is wrong with the property and how much you expect it to cost you to rehab.
Also factor in the increased expense you will incur while holding the property and it’s carrying costs while the repairs are being made. Let the seller see how you came to your offer and they will be more willing to work with you.
Make them an offer they can’t refuse
This is also known as the “every possible answer is yes” scenario. To do this a seller gives several options to a buyer making it extremely difficult for the buyer to say no. For example offer the buyer a discounted price but quick closing, a higher price but a much longer escrow period, a higher price but multiple seller concessions to help with closing costs, etc.
By doing this you are giving the buyer the illusion that they are in control of the negotiation but in reality you are giving them a set of choices, any of which are satisfactory to you and leaves them with very few reasons to say no.
Don’t push it
If you give the impression to a seller that they absolutely have to give you an answer right this second or you will never talk to them about the deal again, odds are they are going to tell you no thanks. No one wants to feel pressured into making a decision. It also leads to mistrust as the seller wonders why you need an answer right now. The better option is to make your offer to the seller and if they are very hesitant then tell them to think it over for a day and you will get back to them.
Now granted there are times this will not work because the seller will think about it and say no. Or maybe they talk it over with their friends and decide to decline. But these are sellers that were going to end up looking to back out of the deal anyway if you pressured them into a fast contract signing. Let them take the time to think it out and you’ll know when they do say yes that it’s real.
Knowledge Is Power
If you are willing to take the time to educate sellers about the real estate process it shows them that you are willing to share your expertise and guidance throughout the negotiating process and eventual closing of the deal. Sellers are more likely to work with buyers that are open, honest, and upfront with them about what they are getting into.
A buyer who is eager to educate their seller on what they can expect when it comes to closing the deal is going to establish a level of trust with that seller and have an easier time negotiating terms.
All about them
This is the opposite approach to the showing the reasoning behind your offer technique.
Daniel Doran is a 20+ year veteran in the real estate industry. He is a previous owner of a law firm, mortgage and title company. Daniel has also written several books on mortgage modification, short sales and real estate investing. He currently specializes in Commercial Finance and Real Estate Development and is a graduate of Manhattanville College and Brooklyn Law School. You can contact Dan at Buildings By Owner.