Do You Know How to Negotiate the Right Way?

Eliza Seekamp

Categories: Commercial Property Management

Whether you’re starting as a wholesaler, negotiating short sales or working on a master lease option, a core REI skill is negotiation. You have to be dogged in your approach to get deals done, but there’s a right way and a wrong way to negotiate deals – regardless of your area of focus. In this article, we’ll talk about how to negotiate the right way.

1. Always know your numbers. Knowing all your numbers (top price you’ll pay, percentage fee to a flipper, deposits, etc.) will help you negotiate with more confidence. You’ll be prepared when a seller comes back with a counter offer. You’ll know how much wiggle room you have when unexpected repairs pop up. You’ll be able to walk away when the deal just won’t work. Numbers give you posture. Know them inside and out.

2. Care about the people you are dealing with. I said this last week in my article on becoming a wholesaler that you have to adopt a helpful attitude. It’s true. Sure, we’re all in this business to make money, but we’re also here to help people out of bad situations (which we get a nice paycheck from). But if you’re not willing to be helpful and caring in your conversations, you’ll close fewer deals and come across as shallow.

3. Document everything. Sure a handshake is a huge part of business, but documentation keeps things civil, legal and helps in negotiations. If you have a question or your buyer/seller disputes something, it’s best to have it in writing so you can clear it up before someone walks away from a deal.

4. Be willing to compromise. Real estate is all about wheeling and dealing. You have to be willing to make a few concessions. However, don’t make concessions if you won’t get the deal you need to make a profit. It’s one thing to lower the amount you will make by a few hundred dollars or to make an allowance you can make up when you flip or sell, but it’s quite another to make a concession and not make a profit. It’s better to walk away than negotiate your profit out of a deal.

5. Always have an exit strategy. There’s a saying in advertising, “Don’t fall in love with an idea.” The same is true in real estate. Don’t let yourself fall in love with a potential deal. Don’t bank on a deal closing until it’s signed, sealed and delivered. You need to be able to get out of a deal at any point and need to structure your contracts so that this is always possible.

Stay tuned to the Investor Insights blog this month for more strategies on negotiating deals.

Property Owner