Top Real Estate Negotiating Strategies Anyone Can Master

There’s an old saying that you make your profit when you buy, not when you sell. Successful real estate investors know that this isn’t just a quaint saying; it’s the hard truth. And the one skill that will enable you to capture as much profit margin as possible when you buy is your negotiating strategies. I’ve assembled a list of top real estate negotiation strategies. I use these strategies personally, and my team uses them every time we need to negotiate anything related to our real estate business. You may already be familiar with some of these strategies. Hopefully, many of them will be new to you and help you in your own real estate negotiations.

Be Willing to Compromise

The first real estate negotiating strategy is to be willing to compromise. Surprisingly, a lot of people think that playing a hard line and refusing to negotiate at all is a strategy. It’s not. All that does is show that you’re unwilling to listen to reason or consider any offers other than your first one. This isn’t the way to get deals done. In fact, it’s a way to burn bridges, which isn’t something any real estate investor should be doing.

Find Out What They Want

Everyone wants something from a deal. Beyond a certain price, there’s usually something else of value that a seller or buyer desires. If you can discern what that something is, you’ll be in a better position to offer it. Maybe it’s a quick closing, a temporary rent back arrangement, a full or partial cash offer or some kind of freebie (i.e., packing/moving services) to help them with their exit strategy. To find out what they want, you need to have a conversation with them that’s more than just tossing numbers out. Humanize the negotiation. Find out the story behind their sale or purchase, and find out what their long-term goals are.

Discover Their Achilles’ Heel

Try to find out the seller’s weak spot in the negotiations. Do they need to sell for a particular reason? Are they in a cash bind, or getting pressure from somewhere? It’s unlikely that a seller is going to come right out and tell you what they’re weak spot is, so you’ll need to learn to read between the lines or do a little investigative research. By no means am I advocating taking advantage of a person’s weak spot, though. Everyone experiences downturns. It’s one thing to leverage a negotiation with a weak spot and another to take advantage of another person’s misfortune.

I’m simply saying that you can improve your negotiating position by highlighting how your offer solves their problem.

Don’t Make Giant Concessions

I usually advise investors to take big strides in life; however, this doesn’t apply to negotiating. Don’t make a counteroffer that’s hugely different than your previous offer. If you do, the other person will think you’re simply pulling numbers out of the fresh air instead of making carefully considered counteroffers. In other words, counteroffers should be in reasonable increments. Otherwise, the validity of your negotiations could come under scrutiny, which takes away your power.

Offer Future Gains

Sometimes two birds in the bush are worth as much as a bird in the hand, especially when dealing with property managers, real estate agents, contractors and others you need to do work for your property. These kinds of workers are always looking for more work in the future. You can leverage your negotiations by offering future gains in the form of referrals, contracted work, etc. For instance, you could tell a contractor, “If you give me a [percentage] break on the price, I’ll use you for all my future rehab through the end of the year.

Get Your Facts Straight

Never go into a negotiation without a clear knowledge of all the facts. One slip up—even if you just misread something on your notes—and the other person will assume your offer is based on wrong information and therefore invalid.

Be as Precise as Possible

Depending on the kind of person you’re dealing with, it often helps to give reasons behind your offer, especially if you think they’ll be surprised by it. You could say, “I’m offering X dollars because the inspection report indicated that there’s structural damage in the foundation.” It’s very hard to argue with specific facts backed up by professional reports.

Keep a Cool Head

Never let your emotions get control of you, no matter who you’re dealing with in the negotiations. Tempers can quickly escalate out of control when one person starts raising their voice or making rash accusations or demands. You can rant and rave all you want in private, but keep a cool head when you’re addressing the person you want to do business with.

Be Reasonable

Finally—and this is sometimes the hardest strategy to keep in mind—be reasonable. If negotiations have gone on for a long period of time, it’s easy to lose sight of the fact that there are two sides to the issue. Step back and really listen to what the other person is saying. Make sure you continue to see the other person’s point of view, even if it’s different than yours. They might have good points, but you’ll never realize it if you refuse to be reasonable.

You don’t have to go to business school to master these negotiating strategies. Anyone can learn how to implement them and be successful with them. Most of these strategies can be used in any kind of negotiating, in addition to real estate. Please let me know in the comments what you think.