4 Things You Can Negotiate Besides Price When Buying or Selling a Home

4 Things You Can Negotiate Besides Price When Buying or Selling a Home

3 min read
Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. Marcus has been named the “Equity King” for his impressive ability to find real estate opportunities with massive amounts of equity.

Experience
Marcus, a high school dropout, went from G.E.D. to M.B.A. Although his education has a major impact on his investment philosophy, the real impact came from his upbringing.

Marcus thrives on completing successful transactions. As a young kid, his parents and grandparents faced many challenges; as a result, it made him think of ways he could help. His mother and grandmother were avid investors—not in the market but in people. Marcus was a recipient of those investments. And his early years were hard work growing up on a farm.

Marcus was a strategist at an early age. To relieve the burden of his family buying him clothes when it was time to return to school, he decided to make a small investment that paid big dividends. Marcus decided to purchase a small piglet at the beginning of summer, feed it until it became fat, and then sell it to a local farmers’ auction before the school year started. This was one of his first transactions and the beginning of his adventure of finding equity in every opportunity.

Marcus’ hard work continues today: He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. Although wholesaling provides great money, he saw the opportunity to buy some of the deals he found and convert them into cash flowing rentals.

Marcus currently holds seven rentals, two of which are commercial units. He’s also done the unimaginable and purchased a school, which was converted to a daycare center. Again, he turns what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to increase his portfolio without any money out of pocket.

Marcus has been featured on numerous podcasts, such as the Louisville Gal Podcast, the Best Real Estate Investing Advice Ever podcast, FlippingJunkie, and many others. He’s currently a featured blogger for BiggerPockets, the largest community of real estate investors in the world.

Along with completing transactions and working to build his portfolio, he provides mentorship to aspiring investors. This is done through one-on-one interactions and through his successful YouTube channel and blog.

Marcus does utilize his M.B.A. for more than real estate. As a consultant for a successful non-profit institution south of Chicago, he uses his expertise in the development of human capital. His philanthropic efforts help existing stakeholders develop in their capacity to serve those in need of assistance.

Education
Marcus completed his M.B.A. in 2011 from Olivet Nazarene University.

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In wholesaling, there’s a huge misconception that price is the main sticking point in negotiations. Today, I want to provide some key areas during the negotiation process to help you secure the deal.

Motivated sellers are not only motivated by money. Situation and circumstances play a big part in the acceptance or denial of an offer, too.

I’ve spoken with hundreds—maybe thousands—of sellers along my journey. As a real estate investor, I can confidently say there are a lot of deals my team and I have secured that had nothing to do with price. As we negotiate, there are some areas that we strategically structure to make the deal attractive for both parties.

Before we discuss it all, I would like to add some context to what I am referring to.

A Recent Deal That Had Nothing to Do With Price

As a virtual wholesaler, we’ve been marketing in multiple cities. Chicago happens to be a hot market for us.

I personally received a call from a woman who was interested in selling due to the passing of her husband. She moved out of the house because of the memories, and she was currently living with a family member.

During the call, I acknowledged the excellent condition of the house (here are some pics) and informed her that, unfortunately, our offer would be well below what she was looking for. I said she should consider listing the house with a Realtor. We ended the call, and I figured I would not hear back from her.

Unexpectedly, I received a call about four months later. It was the seller again, asking if I was still interested in the house. I kindly reminded her of our prior conversation and offer, but she insisted I meet her at the property.

During the walk-through, I was even more amazed at the condition of the house. She recently had installed new windows, refinished the flooring, added a new roof, and it was all situated on a double lot—just to name a few impressive qualities.

Businessman talking on mobile phone and making notes. Man sitting at his office desk working on graphs and charts and discussing on phone.

She informed me she knew she was giving the house away, but because of my honesty and transparency, she was willing to work with me. All she asked was that we pay the closing costs and reduce the close of the escrow timeframe. She wanted to expedite the sell, as she was going to use the money to purchase another property so she could have her own space again.

We agreed and got the deal done. We’re now in line to wholetail the deal and clear nearly $100,000.

Related: 10 Tips for Negotiating Like a Pro

Areas to Focus on During Negotiations

I wanted to give you the above backstory, because too many investors get caught up on money being the main negotiating factor… when sometimes it’s not. (Although with this deal, we didn’t have to negotiate much—only the close of escrow date.)

Here are other areas to negotiate.

1. Earnest Money

This is a key area to negotiate. The earnest money deposit amount is not a standard amount, as some seem to believe ($1,000). We use higher or lower deposits, depending on the seller. If the seller is looking for a higher price and we cannot reach that with our offer, it’s good practice to increase the earnest money amount to prove you are vested in the deal.

We are aware the earnest money is refundable, but sellers will relax on negotiating if they know you are willing to increase the deposit.

2. Close of Escrow

Closing faster (as with the example above) will relieve some of the stress and uncertainty of selling.

Sellers can get sellers’ remorse. If you limit the time for them to ponder their decision, they may be willing to accept a lower purchase price.

Calendar page marked with drawing pin, closeup

3. Rehab

Negotiating should not be a win-lose proposition. It’s good practice to make this clear in the beginning—but especially during the rehab valuation.

Negotiate around the rehab numbers. Let the seller know there’s some work that can get done cheaper.

However, some corners cannot be cut. When negotiating from a position of integrity, this can break down barriers.

Related: 6 Effective Tips to Ensure Your Offer Gets Accepted

4. Title Company

This may seem absurd, but some sellers like to close with their own title company. Inform the seller it’s common practice for the party that’s paying closing costs to determine the title company.

However, as an alternative, provide the seller the convenience of having the escrow officer or mobile notary meet them at the location of their choice. This is a major win for sellers.

The Bottom Line

These are a few areas around negotiating that can put the seller at ease. The more you offer, the more the seller understands it’s a mutual agreement between parties and not a war.

Do not get hung up on price. Offer alternatives that are wins for the seller in lieu of negotiating the offer amount.

Are there other areas up for negotiating that I didn’t mention above? 

Add them in the comment section below.