Success Path: 4 Tips for Becoming a Better Negotiator
Where do you make your money when you flip houses? If you’ve been in the real estate investing business for a little while now, you already know that you make your money in house flipping when you buy your properties much more than when you sell them. When you buy a property, you already know about what it’ll be worth when you sell it, so you know how much you can feasibly pay for the property (including rehabs and other costs) if you want to make a good profit margin.
Of course, knowing is really only half the battle, and that's what we teach our Success Path students. The other half is convincing sellers and their agents to sell at a reasonable price that will let you do what you need to do with the property and make a profit when you sell it. That’s where superior negotiating skills come in, and it’s why I usually recommend that new house flippers work with real estate agents at least for their first few deals.
After you’ve made a few deals, though, especially if you’ve gotten your real estate license, you’ll probably feel like you are ready to be your own agent and negotiate your own prices. But how can you get the prices you want? Work on your negotiating skills with these tips.
Check Your Ego at the Door
First of all, your ego has no place in negotiations. Whether you feel like you’re on top of the world or not, being disrespectful and arrogant won’t get you anywhere. And understand that when sellers come at you with really high asking prices, it’s not personal. If you think it is, then you’re in trouble. If you can avoid feeling like negotiations are about you, then you’ll already be on the right track to becoming a better negotiator.
Be Specific About Your Concerns
Next, if you think that the asking price for a house is too high because it’s going to need a lot of rehab work, there’s nothing wrong with voicing that concern. Don’t just say, “It needs a lot of work, so I should pay $10,000 less than you’re asking for.” Instead, talk about specific issues you’re concerned about and how you’d like to take the property off the seller’s hands, but you need to address these problems. This will give you an in for getting the price lowered.
Be Aware of Your Body Language
As you’re sitting at the table with a buyer or seller, be aware of your body language and what it’s saying about you. Sitting back says you’re bored. Crossing your arms says you’re not open to negotiating. Avoiding eye contact says you’re hiding something. Sit up straight. Put your elbows on the table, lean in, keep your face in a neutral to positive expression, and make eye contact.
Reflect on What Worked and What Didn’t
After closing on a flip house (or failing to close), take some time to go over what happened, what went well, and what didn’t work. Think of every detail. What kind of language did you use? Was your body language positive or disinterested? Did you push when you should’ve closed your mouth for a few minutes and let the seller think? Reflecting on what worked and what didn’t will help you avoid repeating the same mistakes over and over, and it’ll show you which parts of your negotiating skills are getting better and where you still need some improvement.
Follow these tips every time you sit down with a buyer or seller, and you’ll have much more success in your real estate investing business.
For more information about real estate investing, visit Success Path's BiggerPockets blog.