BiggerPockets

3 Tips For Dealing With Tough Sellers

Commercial real estate owners who dig-in, say no, and don't work the deal are tough to buy from, because they seem uncompromising. Many investors succeed at buying from them and make money in the process.

These investors understand that you make money when you buy real estate and cash your check when you sell it.  To make money investing in real estate, you must buy well.

It's easier said than done.

Here are 3 tips on how to do it dig out, open up, and get those owners working with you to make great deals happen:

1. Get one on one with the owner. It's scientifically proven that if you don't have other buyers competing for the property, you stand to profit from a lower purchase price. The owner will perceive you as the "right buyer" for the property and will not hold out for other "options" that may or may not be attainable.

In my commercial real estate brokerage company, many investors understand this concept. They call my brokers and ask that my people introduce them to "off market" deals where there isn't "any competition" because they understand that being the only option at the table gives them a distinct advantage over other buyers and the owner.

2. Establish a personal connection. Studies at the top business schools have proven that when two parties know something about each other before entering the negotiation, they're likely to reach an agreement in their negotiation than groups that don't. Establish a personal connection with the owner of the property you're buying. Share information about yourself, your background, and what you're trying to accomplish by discussing a purchase of the property.

You'll establish credibility with the owner as well as a basic human connection that will make you more persuasive in your negotiations. And because the owner knows more about you, he'll make a greater effort to put a deal together.

3. Don't let the owner get hung up on pricing. Did you know that when an owner makes a public proclamation of his desired price, he's more likely to "hold out" because he doesn't want to be embarrassed by selling for less?

When you're negotiating with the owner, save the pricing discussion for later in the meeting. You must first understand why he's selling and then work to the pricing talk. If you start with pricing, the owner will get stuck on his number and become defensive as you challenge his number.

Use these 3 tips in your next meeting and please email me of your successes.

Comments

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  Jackson Horn — 11 months ago

  Very interesting. Great post.