"Kicking The Tires, Driving Down The Purchase Price..."

5 Replies

I know you investors out there dont ever plan on paying full price for a property...What are your techniques and strategies to knock down the purchase price? I am pretty sure some of you use the same lines every time you place a bid lol...

So lets hear it!

I often pay full price.  In fact, sometimes I pay over full price. 

If I can't pay full price, it's generally because the numbers don't make sense at full price.  So, I'll say to the seller, "I can't pay full price because the numbers don't make sense at full price."

Honesty will get you far in negotiation...

I agree with @J Scott to just be honest. If your numbers don't add up to what their asking then explain how you came up with your numbers. Just last month I lost a contract where I overbid so it's all about if the numbers really work or not. I get so annoyed when people try to bargain using generic excuses.

"You know Obamacare is driving home prices down so you need to come down on your asking price!"

So after you figure out what your total cost are, and what you can rent it for, then you decide on if its a good deal or not? You still dont try to come down any?

Originally posted by @Chance Cooper:

So after you figure out what your total cost are, and what you can rent it for, then you decide on if its a good deal or not? You still dont try to come down any?

 Sometimes.  It depends on the situation and my read on the seller.  If I think there is room to negotiate the price down, I'll try to negotiate the price down.  But, that doesn't mean I have to lie or come up with ridiculous excuses -- I just want a deal that works for me.

I have made offer's on properties where I thought the asking price was more than fair based on my analysis and goals for rate of return (cash on cash).  Regardless of the property type I don't chase properties that don't offer positive cash flow.  

I also look at what repairs the property needs, two of my last three purchases were in need of work after closing.  On one deal I was able to talk the seller down in price as well as get cash at closing for repairs, in the other deal I could have paid less for the property and done the repairs my self but paid full asking price with the seller agreeing to provide cash at closing to cover all the repairs.  The key is to find a deal that makes everyone happy and is good for all parties.

The biggest part of making a deal to me, is to identify what the sellers needs are and structure the deal around that.  If you meet his/her needs you can often find other parts of the deal you can come out of top with.

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