Getting to the Lowest Purchase Price Possible: The Skinny on Real Estate Negotiation
As most experienced investor’s know-You make your money when you buy a property, and not when you sell it.
Want more articles like this?
Create an account today to get BiggerPocket's best blog articles delivered to your inboxSign up for free
In this blog post I will explain some of the key characteristics that I use when negotiating to purchase investment properties. When looking to purchase that “right” deal- one must always be patient, persistent, professional, and have very thick skin.
Don’t just buy for the sake of adding quantity to your portfolio. Be patient and wait for the “right” deal to come along that best suits your criteria and end goal.
After hearing so many “NO’s” you will eventually get a “YES”. Don’t get discouraged if the offers you are submitting are not getting accepted. Real Estate is a numbers game, so be persistent and keep working those numbers.
When submitting offers, position yourself/company and your brand in the utmost professional manner. You must maintain an impression of having the authority and capacity to purchase any amount of property(s) in a short amount of time.
One of the most significant lessons that I learned early on in my real estate investing career was not to buy properties based on adding quantity to my portfolio, but rather focus on being patient, negotiating better, and growing at a slower pace- ensuring only “quality” investments.
I can comfortably say that even the average investor who pursues networking and is active via phone and email can come across a very profitable deal at least three to four times a year.
As you grow your network with other real estate professionals and they become more aware of your buying criteria and an ability to perform – you will start to get flooded with numerous deal offerings on a regular basis.
When siphoning through these properties- single out the ones that best fit your end goal and submit offers at 50% of the asking price. All offers should be a “cash only” offer and must be submitted in a serious and professional manner.
When implementing this ‘low ball’ strategy, 99% of the time you will receive very unpleasant responses from the realtor or seller- to which you must not react, but respond by being sincere and apologetic while also doing your best to explain that the offered price is just your perception of what the property is worth. The irony in this situation is, that you will most likely receive a call or email from these folks months later asking if your initial offer is still on the table.
There will be that one time, were the seller is willing to negotiate due to his own personal circumstances and urgency to offload the property. In these situations, the sellers counter offer will be substantially lower than the asking price and you will now be in a prime position to acquire the property at a significant discount.
Using a similar method, I was able to purchase “Australia’s Cheapest House”.
Once a price is agreed on, make sure that you are efficient and perform in a timely manner. This will in return make all parties satisfied and will also grow your reputation as an investor that has the influence and authority to make deals happen.
I left this one for last. Real Estate can be an emotional roller coaster at times. Don’t take the words and reactions of others to heart as you never know what there current situation or circumstances may be.
As I was once told:
“NEVER REACT, ALWAYS RESPOND”
What else do you think is needed to be successful at getting deals in real estate?
Be sure to leave your comments below!