Updated over 7 years ago on . Most recent reply
Your Best Negotiation Story
Hi BP,
What is the best negotiation you've done so far, what moves did you make and how did it turn out for you? Just walked on my first SFH deal and want to learn more about effective negotiation.
-Reposted in the Buying and Selling category
Most Popular Reply
@Shafi Noss I had a 3 unit building that had a 60k mortgage that had not been paid in years. It was also in an active tax lien foreclosure and about 50K was due in taxes. The owner lived out of state and was clearly going to lose the property one way or another.
The owner wanted $250K which was ridiculous. We wanted to pay $90 and thought we might wholesale it for $100-$120. The property needed significant maintenance, a new furnace and was 100 years old with lots of lead paint. The owner insisted the furnace worked and there was no lead paint and it was totally renovated in the 90s.
We finally got her down to $165. This was with a stipulation that the furnace worked and there was no lead paint as she claimed. If that was not true she agreed to adjust the price downward for the furnace and lead paint remediation.
Well of course the furnace did not work and yes there was lead paint. She defaulted on the contract refusing to reduce the price as agreed.
We noticed a couple of months later that the tax sale foreclosure was having a hearing. We called her attorney back and he was aware of the hearing. We said we were still interested in buying but only at $120K. She agreed. But to pay off the taxes and mortgage this would mean only about $10k in her pocket. We found a buyer and sold it to them for $120K
So how did we make any money?
We played the lender and the tax sale bidder against each other. We had information about the position of both parties that they didn't know. We were able to get them to accept $70k discount between them as payment in full.
The end Buyer got a fair price for the property. The seller got full price for what it was truly worth. We made $70k by knowing how to negotiate a complicated transaction.