Real Estate Negotiation Skills to Make the Most of Every Deal
Real estate negotiation skills are fundamental to all successful investing. Negotiating is an art, since every deal and every person involved is unique.
A skilled negotiator is persistent, but realistic knowing when it’s worth moving forward and when it’s wise to walk away. If you carefully evaluate a potential purchase or sale from the front end, the odds of negotiating a successful transaction are already in your favor. Determine a ballpark range of what you can feasibly pay or take for a property. Then keep your options open as the deal unfolds.
Use Your Negotiation Skills from the Start
Effective real estate negotiation skills begin with the homework you do long before you get to the closing table. First, find out if the deal is a good one for you. Determine the Fair Market Value (FMV) of the house by researching comparable properties in the area. Then establish a comfortable price range in which you can accept or make an offer for a worthwhile profit.
Stay objective in your analysis. Early into the deal is the best time to walk away from a purchase if it’s not right. There are plenty of other deals in the market. Ask plenty of questions to be as informed as possible.
Look at the Big Picture
Look beyond the hard numbers of the transaction. Discover what motivates the seller. How you structure your offer can depend upon the needs and problems of the seller. How fast does the property need to be sold? A seller, who needs to sell in a hurry or unload a house that’s been on the market too long, is more likely to see value in a lower offer.
When considering offers, think in terms of current market trends. But even then, stay flexible. For instance, even in an up market, getting top dollar isn’t always the most important thing or even realistic. Look for hidden values in the deal, while keeping your options open. Maybe the seller will throw in some furnishings or agree to finance directly. Maybe upon closer inspection you realize the house for sale has more amenities than other comparable homes in the neighborhood. Sometimes real estate negotiation skills are less about winning the best bid and more about finding the benefits in creative solutions. When you fix and flip houses for a living, you learn what works, but every deal is always a little different.
Offer What Works
Keeping your options open frees you up to find what works. Part of real estate negotiating skills is the capability of offering creative financing. A seller will appreciate a buyer who offers more than one purchasing solution. You might offer the option to pay more for a property with seller financing vs. paying a little less through a conventional loan.
Another way to keep a deal moving forward is to focus on all the points, which you and the other party agree creating momentum to overcome the smaller disagreements.
Be clear, flexible, objective and creative and watch how your negotiating skills close more deals to everyone’s benefit.
• Real estate negotiation skills are an art, requiring close attention to details and creative problem solving since every deal and person involved is unique.
• Know when to negotiate and when to walk away from a deal.
• How well you evaluate a property early in the deal will set you up for smoother negotiations.
• Ask lots of questions and keep your emotional attachment to a property out of your decisions.
• Know what motivates the seller or buyer beyond the price and know how fast the house needs to sell.
• Consider agreeing to pay less for a house by taking extras, like furniture or other amenities.
• Keep your options open utilize creative financing to offer more choices to make a deal happen.