By Chris Tinsley

Disclosure: Some of the links in this post are affiliate links and if you go through them to make a purchase I will earn a commission.

Negotiating in real estate is an extremely important skill to be able to lock down deals and build wealth, however; it is also one of the hardest skills to master. Luckily there are a ton of books and information on this topic. One of the most influential books on this topic that I have read is: “The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property” by J Scott and Mark Ferguson.

If you know you need help on this topic I would go out and purchase this book right away. Implementing these strategies will send you on your way to success. What follows are the top 10 tips for negotiating real estate from J Scott and Mark Ferguson’s book. Stick around till the end to see my favorite list of real estate investing/ business books!

1.  Seller Motivation
   

Before you do anything, you need to determine the seller’s motivation. If this individual doesn’t want to sell their property fast and at a steep discount, then it is time to move on. You need to realize that for most people their home is a very emotional topic. Very often it is their family’s home that they grew up in and it holds a lot of memories.

True Story: Last month I spoke to an individual who had a 3 bed 1bath home that was in rough shape and almost a total gut job! (This was not the lite rehab that I generally look for.) He was still living in the house and had a serious hoarding issue. He wanted to sell his home quick but since it was where he grew up and held a deep emotional connection for him it was difficult for him to let it go. What ended up being most important to him was that it went to someone that would take care of it. Not the money!

Realize it is not always about the money!

2. Most Acceptable Offer

Next you need to figure out the most acceptable offer that the seller will still want to negotiate with you. Not as easy as it sounds! You may have to see what they owe on the property and any liens they currently have. Sometimes the sellers just want to get into a new house but sometimes they want you to fund their retirement. You won’t know this until you have a conversation and find out their situation and what they need. People are not text book situations and require patience and time in order to determine what you can offer, whether that is money or some other type of term.

True Story: I was speaking to a lady about her 2 bed 1 bath house built in the 1930’s by her grandfather. He built this home as a marriage gift to his wife. It had been in this family since then and held a deep connection for her. When this happens, their lowest offer and your highest offer can be way apart. In this case she just wanted to get out of the home and move on to a safer place that wasn’t falling apart but she didn’t want to give away the house for nothing. However, it wasn’t worth what she wanted. Very often you and the seller may be to far apart in prices and will be unable to make a deal.

“No Deal is better than a bad deal” “J Scott and Mark Ferguson”

3. Terms, Contingencies

Now you need to decide what your terms and contingencies are in the deal. There are so many things that you can offer, and this is where your creativity can take off.

Earnest Money: $500, $1,000, 2% of purchase price?

Closing Date: ASAP? 2 months? 6 Months? What does the seller want?

Financing: Owner financing? Conventional? Cash?

Appraisal/ Inspections: Waive inspection? Multiple inspections?

Personal Property: Do they have an old car they will throw in the deal? Anything else you can sell they don’t want to haul away?

Closing Cost: Will you pay them or the owner? 50/50?

The terms and contingencies are virtually unlimited!

4. Offer a Simple, Summery in Writing

Most people DO NOT want to read a 10-page contract to figure out all your terms and contingencies when they don’t understand it at all! Make everything legal with a real estate contract but also have a one page sheet that summarizes your offer and the contingencies on a easy to read format before you blast them with a bunch of legal speak!

True Story: I had a deal fall through for this exact reason. I sent over my 10-page contract with the offer before sitting down and talking through the offer and explaining the whole thing in an easy to read format. With this individual, it turns out the whole contract was too overwhelming and I lost the deal. I am sure I would have got the deal if I sat down and explained the offer step by step.

5. Focus on what you agree on

Negotiating can be tough and sometimes you need to focus on what you agree on. Circle back to those things that you agree on. Maybe it is closing soon, remind them how they will be able to get out of their current situation and how you can help them do that.

6.Use Experts

Use expert advice to help you push through tough spots in negotiation. If you know the property needs a new roof for $10,000, using an expert to give you a professional quote can help you to be able to negotiate the price of the property down. This can be applied to any issue with the home. Get an expert!

7. Shut Up

Sometimes people just want to feel heard. They don’t want to hear all of your real estate knowledge and how smart you are. They just want to know you are listening to their issues. Then they will be ready to talk about selling their house.

8. Appeal to a Higher Authority

If you have a hard time saying no then use a higher authority. This can be ANYONE! I very often say I have to talk to my business partner (my wife). I recommend being honest here in case they call you out and catch you in a lie. Even if you say you are talking to your business partner and it is your dog.

9. Take Breaks

If you have a stall in the negotiations, then take a break. No need to get this done in 15 minutes.  Take this opportunity to review your progress. You can also take this time to remind them of the consequences of not making a deal with you. For example, the time/ money they would be losing etc.

10. Avoid Concessions

Finally avoid to many concessions. Instead try to trade them. Start with those things that are the highest priorities. Make sure to use giveaway concessions you don’t care about losing to keep the negotiations going. Remember it never hurts to ask and it is already a “no” if you never ask.

To get the full run down on negotiating real estate and becoming a highly successful investor….

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