All Forum Posts by: Brian Morgan

Good question! You tried the squeeze and got squeezed back... But, don't let them box you into setting a price. Instead, I would switch techniques to the reluctant buyer. "Well, I'm an investor and at this price I just don't think I can make it work. I hate that you spent so much time with me for nothing, but just to be fair what's truly your rock bottom price on this property."

You basically just rephrased the original attempt in a different format. The seller may then make a price concession since you put it on him again. If the seller does drop, Congrats! You accomplished your opening and can start negotiating an even better price, since you have yet to even mention a price that works for you.

If the seller holds firm on the original price, I would start packing my things up and say "Thanks for your time, I'm sorry we couldn't work something out. I wish you the best of luck selling the property." Showing the seller you are ready to walk may cause him to rethink his "wish price"

These are all still opening positions. True Negotiations haven't even really begun yet.

Back to the original "you'll have to do better than that" if the seller does concede price. Try the exact same phrase again.

Seller: "Rock bottom 100K"
You: "You'll have to do better than that"
Seller: "Ok How about 98K"
You: You'll have to do better than that
Seller: "97K!! FIRM!!"
You" You'll have to do better than that"
Seller: 96K please??

A favorite of mine is "Sorry, but you you'll have to do better than that."

For example, the seller gives you his rock bottom price. You pause, like you are studying his offer. Then come back with "Sorry. but you'll have to do better than that." Experienced negotiators will fire back with "Well, how much better do I need to do"
Inexperienced negotiators will usually drop the price some, or a lot! Once they do, then I start negotiating. Works well for me in a lot of different situations, not just housing.

Thanks for the replies!

Aaron and Ben,

You make excellent points. I just need to spin it in a way that makes the seller feel comfortable. The reason I said he might be less willing in 2nd position is because he was recently burned. But, if I present it in a way that makes sense for all, then he should be put at ease.

I'll be interested to see what type of terms he goes for on the 2nd. 0% for 5 Years would be fantastic!! Another side question related to that 2nd is. If he offers favorable terms, can I write it in a way that allows me to transfer his note to another property? Even after I have cashed out of the flip? If I could get a low %, it would be worth it, while I am building up capital. Not sure how or if that works?

Sorry J, Should have been more specific. Yes I would be financing the other $50K with the HML.

As always, Thanks for the info.

Definitely interested in this and look forward to additional details

Hello All,

Looking at my first Fix and Flip and looking for some information on how a hard money deal is structured, when a seller takes back financing.

The HML I would use only lends in first position.

The deal looks like this:

ARV: $250,000
Purchase: $100,000
30,000 Down - HML
70,000 Seller Finance
Repairs: $50,000

Question is does the HML get a First Mortgage for only $30,000 or do they get a First for $80,000?

I'm thinking it is attractive to the HML because their risk is minimized at only 32% LTV. However might be tougher to convince the Seller if he has to take a 2nd behind an $80K first?

Any advice on how to write this offer would also be helpful. Still a Newbie and learning as I go.

Thanks in Advance!

Brian

Hey Guys,

Thanks for the information!

J Scott, I have used your blog numerous times for info already. Not sure how I looked over the budget recap posts! As usual, it is exactly what I was looking for. Thanks again for so much great information.

Hi All,

Been lurking for a few months and soaking in all the great information here at BP! Thanks for all the great info!

I am going to be taking on my first REO flip here shortly and feel I have all my ducks in a row on purchase, holding costs etc. The only area of concern is the rehab budget. I have a GC to work with that was referred through a friend. He has done some smaller jobs for me, and I have been very happy with the work. However, as we move to a full rehab, I obviously want to be sure I am getting the best deal on all the work.

Does anyone have a chart or guideline on how to budget these line items out? I realize that this info will change region to region, and contractor to contractor, which is why I am looking for ball park numbers of what I can expect to spend. Maybe you have a detailed budget from a flip you just completed and are willing to share? Again, I realize this info will change based on the scope and size of each item, but any basic Rehab budgeting info will help at this point.

I am outside of Boston in Northern Massachusetts

Thanks Again!