How To Win With Real Estate...
Lesson #7

"Negotiation Basics"

GOOD DEALS COME FROM GOOD NEGOTIATION

When you meet with home sellers to talk about purchasing their home put on your best warm, friendly personality.People prefer to deal with people they like. Show some interest in the reason they're selling and show concern for them and their family.

You prepared for this meeting by studying your notes, reviewing the value of comparable homes in the area and doing a walk through inspection of the home. You now have a good idea of the top price you are willing
to pay and the kind of terms that will make the purchase a good investment.

You've done your home work, so now you can relax and just chat about the purchase and more importantly, what is the least they will accept as a purchase price.

As a buyer, you negotiate from a position of strength. You don't have to buy this property. It's important to remember that you will win some and you will lose some. It's all just business and you should not let yourself get emotionally involved with any one property.

If this deal does not go together there will always be new opportunities. The most successful investor
is the one who can say "Thanks for your time" and walk away when an acceptable deal can't be done.

Some general negotiation guidelines:

1. You'll never pay less for a property than your first offer. You may think you've made a low offer and then, you're surprised when it's accepted. Well, it's too late to offer less. Never be the first to mention a number.

2. You may never really know a seller's motivation or circumstances. The seller may have paid $125,000
and now a neighbor tells her it's worth $280,000.

The seller may have thought that $280,000 was a crazy price which no one would pay. When you happen along and offer $200,000, he or she is delighted and accepts.

On the other hand another seller, when told a property is worth $280,000, may think that $280,000 is too low. They hold out for every cent until someone offers their price or they take the property
off the market.

3. A first offer is exploratory. Don't load down a first offer with a lot of conditions. Work on the price first and later you can use your conditions as bargaining chips. There is not a mandated time limit between offers. You can follow a first offer with a second, third or as many as it takes.

4. If your first offer is refused, the seller will usually make a counter offer. The seller expects to come down from his first offering price. You now have to react to the counter offer. This is where you use your knowledge of the area and this particular property.

You point out that there just aren't many buyers for homes in this area right now. Sellers are having to
come way down in price to make a sale. You mention all the money you'll have to spend on the
repairs you found needed when you did your walk through.

You do all this in a very friendly manner, but now you've put the seller on the defensive. He not only has to justify the asking price, but also has to confront the costs of any work to be done.

The negotiating process proceeds with new offers. Each time you offer more money you ask for something
in return. Will the seller pay for a home warranty? Will the seller pay for new floor covering in the kitchen? Will the seller pay to have the big tree in the front yard trimmed or removed?

Now the seller doesn't really want to pay for anything, but remember this is a MOTIVATED seller. You only want to deal with motivated sellers who have a real need to sell and get on with their lives.

You might ask the seller to help you with the down payment. Would he carry back a portion of the purchase and take payments for five years?... starting next year?

As you gain experience you will find many ways to frame offers that allow you to make the greatest profit and at the same time satisfy the seller. Finally you will get all you can get from this seller in price and terms. At this point you decide if it's
go or no go!

5. If you really want the property, make the deal then and there! One of the all time great real estate investors says, "Never Steal In Slow Motion". He doesn't really mean you steal properties. He is just
stressing the fact that when you find a really good deal get it done NOW because if you don't the next guy
through the door will!

If you're on the fence and looking at other properties, take your time. When you've completed negotiations, you and the seller will sign a Purchase and Sale Agreement. This is a contract and it will specifically set the
conditions of the sale. You must learn to fill this out yourself. It's not hard.

In a short time you may get so good at establishing property values and at negotiating that you specialize
in buying property and quickly selling it for a fast profit. This is called "flipping".

Profits of thirty and forty thousand dollars per flip are not uncommon. Real estate investment offers many opportunities for even the part-time investor.

You may buy one home to hold for long term gain and you may buy and flip 3 homes for cash income. The more you know about real estate investing the more fun you can have!

Here's a great resourse for profiting in real estate...