Posted by Dr. Craig Whisler CA NV on September 22, 2003 at 15:58:30:
…in my post above.
Posted by Dr. Craig Whisler CA NV on September 22, 2003 at 15:58:30:
…in my post above.
Negociating Help - Posted by Tim Lazaro
Posted by Tim Lazaro on September 21, 2003 at 15:18:51:
Thursday I responded to an ad in the classifieds. A 1987 14x70 MH for $4,500. In this area I would say an 87 is worth
over $7000. I went to see the seller - she told me she is closing on a house on the 30th and it is priced for a quick sell. It was nice. Some work had to be done putting down linoleum - minor things. I asked about the air conditioners and she said they would stay.
I told her I wanted my wife to see it and made an appointment for Saturday. Went to see it yesterday and now the seller says she wants $300 for the AC’s and she is taking the washer and drier.
My wife found some other items (all minor). I looked at my wife and we left saying that we would think about it. Since all of a sudden we had an additional $1000 to replace the AC and the washer and drier.
On the way home we decided to offer them $3,500. I called three hours later and offered the seller $3,800 if she left the two air conditioners. She accepted the offer gracefully and said she would talk to her husband about it. It’s now Sunday about 30 hours after that offer no response.
I know I must have made some classic mistakes. I feel like visiting the seller tomorrow and raising my offer. I feel that I can easily sell the MH for $8,000.
Any advice would be appreciated.
Re: Negociating Help - Posted by Phil Pelletier
Posted by Phil Pelletier on September 24, 2003 at 02:32:00:
You are making a classic mistake. A mistake many young mobile flippers make when they start hunting for deals. You are visualizing your sell price and imagining ALL THAT PROFIT slipping away if you don’t do that deal, thus creating HUGE motivation for you to BUY the home, rather than letting the HUGE motivation she has to SELL the home benefit you with a good sell price. The difference is subtle but important. Think of it this way: As someone who has just been enlightened to the tremendous potential of mobile cashflow investing, you must accept the fact that you can create that same profit spread by purchasing any one of a dozen homes in your area (in most cases). Really, you can, many times over. If you don’t get that deal, there will be another. Really there will be one.
She, on the other hand, is facing what I call a HARD DECK. She has until the 30th to dump that place. She has only ONE mobile, and she MUST SELL it, NOW. The math is HEAVILY in your favor. There are many more mobiles for you to buy versus cash buyers for her to sell her home to by the 30th. You are in a 10 to 1 advantage, mobile inventory versus buyer inventory.
Doc said that negotiation is all about nerve. The one who shows their motivation first gets the short end of the deal every time.
I recently offered a bank $2500 for a 1982 24x52 doublewide home. They countered with “OK but you pay last month’s rent”. HA! Not likely. I sniffed motivation and then called them back and told them I would have to pay tons of extra money to move that particular home, and would they accept $1500 for the home, but did not mention last month’s rent? They said no. I cancelled my offer, but not before I had my wife fax in an offer for $1000 that included LAST MONTH’S $440 RENT. They accepted the $1000 offer plus a separate check for $440 for the rent reimbursement. I am sending them two cashier’s checks tomorrow (in my lovely wife’s name, of course). The moral is this: They showed HUGE motivation to sell that home by accepting my offer and asking for last month’s rent in the deal. They were scared of another rent payment (they have held this place for almost three years at $440/month). The longer I putzed around with my deal, the closer October’s rent payment loomed. THAT was their motivation. AVOID RENT. When “the other offer” came in making them whole for September’s rent AND avoiding October’s rent, they jumped. REALLY stupid, but banks account for rent payments in a different column than the sale of the home. Thus, their true motivation was revealed and they suffered for it.
I would wait until they call you. And when they do, you blast them with “Hey, you never called back so I assumed you were not interested, so I spent MOST of my available cash (MOST is the “window” word) on another home today”. A “window word” (my term) is a word that lets someone know that they are still in the running for a piece of the deal, but the full previous offer price is out of the question. If you say “I spent ALL of my available cash on a home today” you are no longer a viable buyer, and they will hang up, rather than beg you to “go get more cash”. The word MOST allows them a “window” of opportunity to ask “How much cash do you have left?”. You are now in CONTROL again. “I think we have about $2300 left…will we get the AC units for that?”
Nail’em. What ever you agree to, get your azz over there and CLOSE the deal and GET the Title!
You make money when you BUY mobiles, not when you SELL.
It was longwinded, but, once again, brilliant. It’s all about me.
Sign the deal - Posted by John Smith, IV
Posted by John Smith, IV on September 24, 2003 at 24:26:23:
If she already accepted the offer, where you made a mistake was in closing the deal.
You should have said one or a combination of the following:
1- Ok, can I fax you the contract now?
2- Can I drop by and sign the contract and give you my deposit?
3- Can I call you tomorrow to see if your husband said yes?
You never end the conversation without knowing when it is that you will talk again, or without agreeing to what is the next step.
You snake, you. - Posted by Dr. Craig Whisler CA NV
Posted by Dr. Craig Whisler CA NV on September 21, 2003 at 16:24:41:
While I’m no expert on negotiation, I’d say you have a perfect score. You did EVERYTHING right.
The sellers were a little surprised that your offer was so good so they started to test you to see how much more they could increase YOUR offer by removing things after they had your price. Good technique for them, to get away with chiseling a little ONTO your purchase price without directly going back on the deal after she tentatively accepted it.
Wait her out. What she is probably doing eright now is saying to her husband, “that guy was too anxious, I bet we could have gotten another thousand dollars from him”. They are waiting for you to blink first (and get anxious and call first to raise your offer). When you break radio silence they probably are going to hit you with an attempted price increase. Don’t call them. Wait until they call you.
If they attempt to jack you up as I suspect they will, just say, “I’m not sure we even want it anymore”. “We have looked at a couple of other places and though I like yours, my wife wants one of the other ones, now what did you say about your price”? That will cool their berries immediately. You will be taking CONTROL of the negotiations and negotiating from a position of STRENGTH, by showing them that you have other options and they probably don’t.
The one who blinks first loses. Don’t call them. You KNOW they have a tight time deadline. You don’t. THAT IS ANOTHER STRENGTH OF YOUR NEGOTIATING POSITION. You are not it a hurry and you know they are. Play it for all its worth. Let them come to you on your terms.
You won’t get every deal. You don’t want to. You only want the good ones. You have already negotiated a very good deal. Stand firm and don’t blink. Don’t raise your price even a dime. If you do it even once, it will show them that you lack the resolve to say NO to price increases.
Finally, to put them under more pressure (further putting you in a position of negotiating from a position of strength), mention that you still have two more places to look at this MONTH. This will show the seller that you have more time than she does. Its a classic squeeze play but this time You are the Boa Constrictor. You snake, you.
Re: Negotiating Help - Posted by Tonyh-VA/NC
Posted by Tonyh-VA/NC on September 21, 2003 at 15:54:48:
You recognize that you made mistakes. That is the first step. Re-reading Lonnie’s book will help a great deal.
To salvage this deal, I would suggest you show up with a “forgone conclusion” type of mentality. Show up with the forms written out for the amount you agreed upon over the phone. Include the appliances etc. that you wanted. Just act as if this is already a done deal and you are simply walking through the paperwork.
Give them a couple of bucks to tie up the contract and the remainder when the home is vacant (walk through it again), you have the title and the keys.
If this deal doesn’t work out, don’t sweat it. There are many, many more. Keep the vantage point of “I don’t have to buy, but you have to sell.” This will place you in a position of strength that will give you confidence and them a reality check.
Leaving $3200 lying around! - Posted by Gavin Wilkinson
Posted by Gavin Wilkinson on September 22, 2003 at 14:24:06:
Dr. Whisler must be a rich man, with many deals under his belt. Apparently he can afford to leave $3200 sitting around.
IF what you say is true and the home is worth $7000, close the deal. Write up a contract, or use whatever contract you were going to use. Find out where to get ahold of this seller and go to her and get her to take your deposit. CLOSE THE DEAL.
If somebody made me an offer on something I was selling, and I was not very happy with the deal, but was going to accept it, I would stall and see if anything (anybody) else showed up. I just did this. I was ok with an offer someone made, but I didn’t quite like the seller. So I waited around, and lo and behold, a better buyer appeared! Your seller is ok with your offer, but is hoping a better buyer appears. If you don’t care about the deal, let it sit. If you think this is a good deal close it immmediatly!!
Maybe Tim is right. - Posted by Dr. Craig Whisler CA NV
Posted by Dr. Craig Whisler CA NV on September 22, 2003 at 15:56:32:
If this is the only deal you have going maybe Tim is right and you should call back and close the deal right away. Better a $3,200 profit than nothing at all. Just be sure you are welcome to work in this park before signing to buy it.
I would not necessarily recommend calling them back to raise your offer though, at least not right away. I’d, just call them back and say you are about to close on another mobile home and you wanted to know what their very lowest price is before going ahead with the other deal. If the seller does not have any other cash buyers in sight this should trigger her to get real flexible with you and want to close the deal promptly. If she stalls, it is a sign that she may have other buyers in the wings. Negotiation is not a game for the faint of heart, especially when it is YOUR money at stake.The best negotiators have nerves of steel. Negotiation is the highest paid profession in the world. Now you see why.
I still think with the seller’s time pressure, waiting a short while won’t hurt unless you know for sure there are other interested buyers with cash.
Maybe the manager would know this because other potential buyers might be putting in rental applications with the park. Time to get a dozen Krispy Kremes and go visit the PM at about 10:30 AM.
I wouldn’t want to be responsible for you waiting a week to long to call back and losing your only deal.
I usually have 20-30 lowball offers outstanding and any given time. I can afford to wait them out, and tend to lose many deals. I still get lots of deals and the ones I get are usually superdeals. I am old, fat and lazy now and I usually only accept the gravy deals.
If I don’t get a deal for 2-3 weeks and IF I want something to do, I will pick the one I want most and do as Tim suggests.
Its nice to be the seller at an auction where there are many bidders. With 20-30 offers outstanding, I feel kind of like the seller at such an auction. I just wait to see which sellers gets the most desperate first and lowers their prices enough to trigger my Pavlovian buyer response.
Tim is right in one sense. If a $20 bill is for sale for $16 some folks would snap it up immediately. Maybe you should too. Its the ‘better some profit than none’ attitude. I probably would assess the seller’s situation and then decide from day to day weather to wait for the price to drop to $12 or not. But I would offer to bring the cash over in 20 minutes.
I don’t have any trouble finding 2-3 great deals a month this way. If I was willing to pay up to 70 cents on the dollar, I would probably snag 5-6 deals more deals each month. I can barely handle what I am getting now.
Sometimes I do pay more, especially when I am flipping the deals, and getting paid within the week. I will take a much smaller profit if I have another investor waiting with cash for a flipper. I often do them by just signing a contract and selling the contract. That way I don’t have anything but $100 or so invested in the deal as a deposit, and I have next to no work to do. That suits me just fine.
Noone has such nerves of steel that they can hold out for the last buck of price reduction IF they only have ONE deal in play. Its only by having many deals going that you can sleep at night holding out for the absolute best deal possible and feel no loss if you lose 5-6 of them each month.
You can’t get rock bottom prices unless you hold out for them, and are willing to lose some deals with no regrets.
I suspect that that is the real reason that oldtimers who already have all the property they need seem to get the best deals. They can afford to not care if they get the deal or not. This attitude seems to show. I think the sellers pick up on it right away. If they are desperate for money, I think such an attitude frightens them. I want them to be afraid to lose me, not me being afraid to lose them. I just couldn’t do this, to save my life when I was younger. Now it seems normal to me.
In the final analysis, noone can do your thinking for you. You have to make your own decision based on your own circumstances. Noone else can know your circumstances as well as you. Probably noone can make as good a decision for you as you can make for yourself, for that reason.
Pay attention to Tim. He sees this situation from a different, but valid, perspective, than I do. Maybe your situation is closer to his than it is to mine.