Posted by randyOH on April 20, 2007 at 11:18:56:
Thanks for sharing your ideas.
Negotiating Skills/Tips - Posted by Larry S.
Posted by Larry S. on April 17, 2007 at 15:12:18:
Good afternoon! I’d like to ask for some help from a seasoned investor and negotiator. What are a few techniques that you use to overcome objections when you are negotiating to either take over a house subject to, or purchase it for 50% on the dollar? I’m finally getting my marketing campaign going and would like a few tips on negotiating. Actually, what are your three or four most common objections and how do you successfully overcome them to close the deal. I appreciate any insight you can give me! Sincerely, Larry S. Riverview, FL
Positioning Trumps Skill - Posted by Jimmy
Posted by Jimmy on April 19, 2007 at 07:48:56:
I think the key to dealmaking is understanding when you have leverage and bargaining power, and when you don’t. If I were to put my house on the market, and you sent in the best negotiator on the planet, I guarantee you this guy will not get me to come off my price. The skill level is meaningless when the other side is knowledgeable and not in any form of distress.
I always want to be in situations where I have leverage. Here are my favorite two:
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I like to buy major rehab projects, and I like to buy them all-cash. This puts me in the driver’s seat almost every time. there are very few buyers out there who want to take on the projects I want.
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when I sell, I like to seller-finance with minimal downstroke required. no credit checks. I always get my terms and my price. the buyers are not positioned to negotiate.
Re: Negotiating Skills/Tips - Posted by Joe Kaiser
Posted by Joe Kaiser on April 18, 2007 at 09:02:43:
Larry,
Negotiating is a process best avoided, unless you are that seasoned
investor.
The best way to avoid negotiation is to INVESTOR UP?. That is, to have
THE conversation early on in the process that addresses the issue of
profit and at the same time gets the seller’s stamp of approval.
Once the seller has agreed that you’re an investor who must have room
to make an immediate and significant profit, everything else you need
to accomplish falls into place.
It must, because he’s acknowledged that your profit is a given and the
rest just becomes a natural part of a plan that makes it happen.
So rather than having to argue over things like price or showing or
marketing or just about everything else, by having him “okay” your
game plan and make you the promise of a profit, all those issues are
instantly addressed and accepted.
Now, they all just make sense.
I’m an investor . . . I can only move forward if I can make a profit . . . is
that okay?
Once he says, “yes,” you’re positioned perfectly to get it done. Any
other way and you’re arguing over each and every nit, and that ain’t
good.
Investor Up!
Joe
Re: Negotiating Skills/Tips - Posted by Todd (AZ)
Posted by Todd (AZ) on April 17, 2007 at 23:02:13:
Larry,
The key to successful negotiations is being able to support your position with logic and cold hard facts. I rarely have objections to subject-to’s, I just present them as if they are no big deal, but I do give them all the facts. If you are hesitant and act like you are apprehensive they will accept, they will sense that.
When wanting a house at a low price, if you just want it for 50% of the dollar simply so you can be a greedy rich investor, you won’t get far. Present facts. I had a small deal I was working couple years ago, house was worth about $85K fixed up. Owner insisted on a price of $25K. He said you could easily fix it up for about $5K. So rather than argue pointlessly, I asked him if I could have some contractors give me repair estimates. The estimates came in about around $25K (of course my people would do it for about $15K … shhhhhh). Once I presented hard facts shooting down his thinking, we settled on a purchase price of $5K. I was into it fixed up for about $20K total, and it’s worth $85K. Not bad. But I didn’t argue it, I just presented logic and facts. Hard to argue cold hard facts. Otherwise, you are just debating opinion.
Todd (AZ)
Re: Negotiating Skills/Tips - Posted by ken
Posted by ken on April 17, 2007 at 18:48:55:
The most important thing to remember is you do not need any specific house.Be willing to walk from any deal and that alone will allow you to do a better job.Also do not waste time on sellers who are not motivated or in a position to do what you want.
INVESTOR UP? I thought… - Posted by Jason (AL)
Posted by Jason (AL) on April 19, 2007 at 12:28:26:
…you gave that up and was a “dealmaker”.
At least that’s what you’ve been known to state.
Re: Negotiating Skills/Tips - Posted by randyOH
Posted by randyOH on April 18, 2007 at 11:24:44:
Joe: I’m an investor . . . I can only move forward if I can make a profit . . . is
that okay?
Seller: Well, I don’t know. I guess it depends on how much of a profit you need to make. So how much profit are we talking?
Joe: ?
Re: Negotiating Skills/Tips - Posted by Larry S.
Posted by Larry S. on April 17, 2007 at 21:55:39:
Ken, Thanks for the insightful words. I will definitely heed them.
Re: Negotiating Skills/Tips - Posted by Joe Kaiser
Posted by Joe Kaiser on April 18, 2007 at 13:13:51:
What’s fair?
Re: Negotiating Skills/Tips - Posted by randyOH
Posted by randyOH on April 18, 2007 at 13:53:56:
Joe: I’m an investor . . . I can only move forward if I can make a profit . . . is
that okay?
Seller: Well, I don’t know. I guess it depends on how much of a profit you need to make. So how much profit are we talking?
Joe: What’s fair?
Seller: I don’t know, you tell me.
Joe: ?
Re: Negotiating Skills/Tips - Posted by Joe Kaiser
Posted by Joe Kaiser on April 18, 2007 at 22:42:23:
“What do you figure the property is worth?”
Re: Negotiating Skills/Tips - Posted by LeonNC
Posted by LeonNC on April 18, 2007 at 15:13:39:
I had an economics professor that was famous for saying “well, that depends.” I’ve been using that one for a long time. You could then name a dozen things that your profit would “depend” on, if you wanted to.
Re: Negotiating Skills/Tips - Posted by randyOH
Posted by randyOH on April 18, 2007 at 22:49:04:
I don’t know, make me an offer.
Re: Negotiating Skills/Tips - Posted by Joe Kaiser
Posted by Joe Kaiser on April 19, 2007 at 22:58:11:
It likely wouldn’t play out that way since there’s a reason I’m sitting at
his kitchen table, and it’s not because I like pretty houses.
But, I would never make an offer the way you may think offers are
made. More likely, I’d tell the “low ball offer” story, which goes
something like this . . .
"Bob, at this point I don’t know enough about your property to make
you a realistic offer, but if you want me to pluck a number out of the
air, I’ll be more than happy to. I have to warn you, though, since I have
no idea what you’re looking for, it’ll be a low ball offer.
Would you like me to low ball you, or would you rather we put our
heads together and figure out a number that works for both of us?"
Something like that, anyway.
Joe
Re: Negotiating Skills/Tips - Posted by Levi
Posted by Levi on April 19, 2007 at 13:14:47:
At this point I say “next!”