Author: Mike Lautensack
Source: ezinearticles.com
Negotiating is one of the greatest assets that you can possess as a real estate investor. Good negotiating skills are an asset and can be applied in almost every aspect of life. However we will discuss the effectiveness of this trait within the real estate context.
The basic element of good negotiation is timing and proper selection of words. Below are some suggestions for negotiating discounts from sellers and getting the price you want.
Never Suggest the Price
There is an old saying regarding negotiations: Whoever names the first number, loses. The phrase holds true in almost every business including real estate. What you must always do is to get the seller of the house or property, to let you know how much he wants. The reason is simple. If the seller has a benchmark of $100,000, and you offer him $110,000, He will never disclose the amount for which he would have gladly agreed if you had negotiated with him. This way you will lose $10,000 without even knowing it.
The above rule can apply to an inexperienced seller but if you come across a skilled seller, he will not be willing to divulge the amount before you give him a number. In that case you follow a different approach.
Ask What the Property is Worth
In case your seller is as experienced as you are, you can arrive at a near figure by asking his opinion about the prevalent prices of such properties in the vicinity. The seller will be obliged to reveal a figure. That figure will give you a starting point. Once you have a number, you can start negotiating it and try your best to bring it down.
Do Background Check on the Seller
The most important aspect of good negotiating is to think like the seller. A little background check on the seller may reveal whether he needs to sell urgently or not. If the seller can stall the sale, he will more probably gauge a few buyers before finalizing the sale. But if he needs to sell urgently, he will be more willing to make concessions. In the later case you can also suggest that the price is too much for you and thus you cannot purchase the property. In that case he will be compelled to lower the price.
Always Try To Deal in Cash
You will get real edge in the negotiating process if you are paying the amount in cash. There is a saying in business circles: Cash is King. If you are willing to pay the price of a property in cash, the seller will be more than willing to cut the deal immediately since he will be getting the whole amount immediately. Also, during your negotiations, keep reminding the seller that, since you are paying the amount in cash, you are entitled to some concessions.
The idea behind the above exercise is to get the seller to give you discounts, which means that the final agreed price is agreeable to both of you. Always be fair in your deals. Do not try to bring the price below a reasonable level just because you know that the seller is in a jam and will be willing to sell the property for peanuts. Be fair in all your dealing. A great deal is one in which every party gains something.
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Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.