Knowledge
1. What is a good deal? (Prepare alternate scenarios to work from in advance)
2. Do the circumstances surrounding this deal provide for negotiability?
- Seller’s motivation to sell?
- Seller’s ability to take a loss?
- Seller’s time table to sell?
- Seller’s flexibility with terms?
- Seller’s fears?
- Seller’s experience and style of negotiating?
- Potential usefulness of property?
3. Knowledge of alternate uses for the property or other ways to increase the value of the property that the current owner is unaware of.
Knowledge of alternative financing that the seller hasn’t had offered or explained to him or her yet.
Timing
1. Rapport
2. Qualifying
- Desires
- Needs
- Negotiability
3. Ask for immediate concessions without negotiating.
4. Start your sales pitch.
5. Demonstrate your ability to solve their problem.
6. Ask for best cash offer.
7. Ask for a terms concession.
8. Ask for repair concessions.
9. Make written offer containing multiple non-essential concessions by
seller.
10. Inspect property – Ask for more repair or price concessions.
11. Go to closing prepared to walk away if problems arise.
Negotiable Terms
$ Price
$ Owner financing
$ Assumptions / Wrap / Subject to
$ Down payment
$ Repairs or repair escrow
$ Agency commissions
$ Closing costs
$ Interest rate
$ Step rate
$ Adjustable rate
$ Profit participating
$ Zero interest rate
$ Interest only payments
$ Balloon notes
$ Amortization period
$ Payment start date
$ Interest start date
$ Liability – Recourse / Non-recourse notes
$ First right of refusal
$ Prorations – Taxes, Insurance, Rents, Security Deposits, etc.
$ Escrow / non-escrow
$ Utilities Deposits
$ Seller warrantees – Maintenance / Vacancy
$ Disclosure – Seller / Buyer
$ Inspections
$ Title insurance
$ Closing costs
$ Closing date
$ Earnest money
$ Ability to assign contract
Negotiating Tactics
- Use higher authority to create the good guy/bad guy game.
- Always start your negotiations with an offer high enough that you have room to drop.
- Use logical reasons to add legitimacy to your offer.
- Balk at all demands and concessions.
- Don’t expose your position until late in the negotiations.
- When you do present your position create Red Herrings.
- Don’t trade off concessions one for one.
- Don’t give away large concessions at any one time.
- Always get something larger in return for any concessions you do give
away. - Don’t split the difference. (Say instead, I can’t afford that.)
- Make the opponent feel like they are winning.
- Ask the opponent to BE FAIR.
- Trade off concessions that don’t mean anything to you.
- Keep nibbling right up to closing
