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Keep More Cash in Your Pocket with These Four Negotiation Tactics

cash in pocket

“Congratulations, they accepted your offer!”

Those are the sweet words that we all want to hear as investors.

Who hasn’t paced the room, checking their phone 20 times in 5 minutes, unable to focus on any conversation, just waiting for the seller’s counter offer?

Closing the deal and taking possession are exciting moments, but it is the negotiating of the deal that gets your adrenaline racing; The sheer happiness you feel as you jump for joy when the realtor calls with the news you have been waiting for. Or, facing the loss if a competing offer wins.

But, you can win more often – and get the best terms and price for your properties. Here are four ways to help your real estate negotiation:

Negotiation TIP 1: What’s the REAL Reason They Are Selling (Find their motivation)

Typically the more questions you ask, the more you will learn.

Get your realtor to ask some specific questions before you go to the house, and then again after your appointment.

You want to know things like:

  • How long have they owned the house,
  • Have there been recent upgrades,
  • Are there any issues with the house,
  • Why they are selling, and
  • What are the utility costs?

If you are negotiating directly with the seller, asking questions is a good way to build rapport and get information.

While you’re looking at the home, look for signs of seller motivation.

Bring a checklist of structural things you want to look for, and add “seller motivation” to that list. I look for things like 2 or 3 beds in a bedroom- maybe the sellers need more space for the kids. If the walls are bare and there isn’t much furniture, they could be moving out of province or there was possibly a marriage break up. Only two months ago I successfully negotiated an offer at $15,000 under fair market value because I knew, through asking pointed questions, that the sellers were highly motivated. They had already purchased another home and were under pressure to sell their current home.

Negotiation TIP 2: Create a Connection

As a realtor I get to hear the sellers side. I suspect most real estate investors would be surprised to know that one thing a lot of sellers say is “I hope a nice family moves into my house!”.

I’m selling my house right now and I actually feel the same way – someone with kids NEEDS to buy my house so that they can enjoy the play structure that my husband tirelessly put together over Father’s Day weekend 2 years ago!

Selling to a family often ranks higher in people’s minds than money.

Think about that one for a minute.

Sitting with a couple reviewing competing offers earlier this year, the couple was trying to figure out if one of the offers was from a neighbour’s friend. They didn’t even know. They just heard that the friend might be writing an offer and thought that those people should get that chance to buy their home. They were willing to take $10,000 less from those people than a higher offer we had!

Decisions are not always rational! So, what does this mean for you, the investor? When a homeowner sells their home, they are usually confused and disappointed if they see a corporate name on the offer. If that is how your offer will be submitted, I recommend including a letter that talks about you as a person instead of an investor. You may even want to include a picture of your family to really humanize yourself.

If you’re speaking with the seller directly, let them know that you purchase nice homes in good areas to rent to great families. Bring the softer side of the business to the table.

Negotiation Tip 3: Help the Seller Get What They Want (As Long as You Get What You Need)

Too many deals fall apart over the terms in the offer.

I have had clients say: “Can you write in the lawnmower, snow blower, and that pile of firewood beside the fire-pit? Oh, and I really love her china cabinet, I bet she doesn’t want it anyway anymore because it will be heavy to move. Do you remember if there was one freezer or two? I could use an extra freezer. And don’t forget to write in the offer that they take all their junk out of the garage.”

When the list of chattels gets too long, AND there are a lot of conditions, AND a small deposit- the offer starts to feel very unfair to the seller.

Everyone wants to think that they did a good job in negotiating their home purchase or sale. Be reasonable in your offers and negotiating.

Make sure the seller feels like they got a good deal too. Reputation matters, and you need to build good relationships in this business. A strong reputation will get you more referrals, more opportunities, and more profit.

Negotiation TIP 4: Know When to Fold ‘Em

When I was a kid, my Dad loved to sing that Kenny Rogers song “You gotta know when to hold them, know when to fold them, know when to walk away, know when to run”. It doesn’t just apply to card gambling- it’s true for negotiating in real estate.

Don’t fall in love with the house (or, the idea of doing the deal) and pay too much.

Negotiating is an emotional experience. It can be easy to lose site of your goals or stretch them a little in the process. Sometimes, you might feel like you’ve invested so much time you can’t walk away, or you’re worried you won’t find another deal quite so good, and you settle for terms that don’t make sense for you.

If it’s not the deal you wanted, walk away. So often that leads to an even better deal. Sometimes, the seller will call back days later and the investor then you can negotiate an even better deal because you’re back into a position of power and a calm rational state of mind.

Negotiating doesn’t have to be a stressful experience. Use these tips to make your next real estate purchase a successful one.  It does take practice to become a great negotiator. But by using the guidelines above, and remembering to use Kenny Rogers’ advice too- you can save a lot of money and create an abundance of the great deals that you want.

 

Candice Bakx-FriesenCandice Bakx-Friesen has been successfully investing in real estate for 13 years. She has diversified her buy and hold strategy to include duplex, single family, multi-family, and commercial holdings. She’s also a realtor in Manitoba. Her passion for helping others is fierce and she loves to see people succeed. Candice welcomes your questions or comments; contact her at Candice@cbfteam.ca.

One Strategy to Find Tenants Faster, Negotiate Better Deals & Raise Money More Easily

light bulb brain

“Don’t play hard to get. Be hard to get.”

How do you sell a $20,000 purse? You keep it in short supply and only sell it to people who meet certain criteria. Once only a few people can have it, everyone will want it.

Of course, it is a lovely looking bag. And Grace Kelly reportedly fell in love with it when filming Alfred Hitchcock’s To Catch a Thief, eventually leading to it being named the Kelly Bag by Hermes.

There’s more to this than just being hard to get, of course. Few people can afford such a huge expenditure on an accessory which also makes it a status symbol but Hermes understands what makes people desire something to their core.

A big part of what drives our desire for something is not a rational need. Knowing other people want something, not being able to have it easily and fear of missing out, all drive us to want something more than we would otherwise. It also drives us to make decisions and take action. It’s the foundation of the simple principle of persuasion called the Law of Scarcity.

Understanding this law and putting it into practice in your real estate business can help you sign the tenants you want quickly, negotiate better deals with sellers and have your potential investors say yes to your deals faster.

Here’s how to use the Law of Scarcity in your real estate business:

The Law of Scarcity is a powerful tool to use in your real estate business. But there are many ways to do better deals and find great tenants. If you are looking for other ways to do better deals, here’s another video tip for you: https://revnyou.com/how-to-find-great-real-estate-investing-deals/. 

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Words with Magical Persuasion Powers

Words with Magical Persuasion PowersI’m about to ruin the good thing I’ve got going with my husband Dave. Yes, all in the name of sharing and helping you, I am going to burst the blissful bubble Dave is living in.

I’ve got him under a spell. I’ve been using magical words on him for weeks and it’s been amazingly effective. Take this for example:
Before you do the dishes, let’s take Bram for a swim.
Like magic, he does the dishes when we return.
It’s probably your ability to be so flexible that allows you to make the best of any situation.
Like magic, what would have been an ugly scene turns into something we laugh about.
These are phrases with magical powers.
These phrases can be used in just about any situation where you want someone else to do something, but you don’t want to demand it of them. In other words: where you want to covertly convince them to do what you want.
Of course, you’re going to use these magical words for good not evil– which is why I can comfortably share them. I know that you’d never try to convince somebody to do something that is NOT in their best interests.
I don’t really understand WHY they work … but they work more than they don’t. I’ve been testing them after spending quite a bit of time reading and handful of books on persuasion. The most useful book I’ve read on this subject lately is ‘Covert Persuasion’ by Kevin Hogan and James Speakman and I owe them credit for most of these phrases. 
So … here’s five magical phrases put into a real estate context to help you see how you’ll use them:
  1. You don’t have to decide now” <to a tenant considering renting from you – something about this phrase actually makes them want to decide now>
  2. What is it that helps you know whether you want to invest in real estate now or wait awhile?”<to a prospective joint venture partner to understand their decision strategy and learn more about how you can help them with your deal>
  3. If you could have the perfect investment deal, what would it be like?”<to a prospective investor – equity or debt – to give you a clear picture of what they want AND to get them thinking and imagining about what they are looking for>
  4. I don’t know if signing the lease now is what you want to do” <again, to a tenant who is waffling on signing the lease>
  5. Why is it that some people can easily see a good deal while it eludes others?”<you could say this to a seller or buyer or potential investor>

Of course, there’s a whole lot more to this than just the words you use. You have to be congruent with them (your body and tone have to match the words) and you have to use them in the right situations … but test them out. Maybe you’ll find your children picking up their toys or your spouse buying fewer shoes or taking out the trash without an argument. Or, just maybe, you’ll find some words that make real estate investing just a little bit easier! Whatever you do, I hope you benefit from this because I’ve ruined the magical powers I have on Dave just for you. :)

CREDIT for these phrases goes to the book Covert Persuasion by Kevin Hogan & James Speakman. If you want to learn more about HOW to use these phrases and dozens of other covert persuasion techniques pick up a copy of this great book. 

Published September 13, 2011

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