In last week’s article “Apartment Building Deal Negotiating Tip # 1: Agree on Methodology BEFORE Making an Offer” we talked about the importance of agreeing on HOW we’re going to come up with our offer price before we actually submit our offer.
In today’s article, we’ll talk about a highly effective way for submitting your offer, which is via video. It sounds a bit odd at first, but it’s worked well for me, and it might also work for you.
As we talked about in last week’s article, negotiating apartment building deals is all about the numbers. One challenge is that you rarely get the chance to negotiate with a seller face-to-face because it’s normally done through a broker.
Therefore, you have to get good at communicating your rationale (i.e. how you “underwrote” the deal to arrive at your offer price) to both the broker and the seller, without the luxury of doing so in person. If they can follow your underwriting process then you have a better chance at getting agreement on your offer price.
Solution # 1: Write a Long Letter
One thing I’ve done for a long time is to put my offer and underwriting process in a long letter to explain how I arrived at the offer price. This is a perfectly acceptable way to accomplish the same goal, but it’s time consuming.
Solution # 2: Submit a Video along with your Offer
I think a better way to achieve the same goal is to email the broker and/or seller a video recording of your analysis and assumptions.
I use a free program from Techsmith called “Jing” which lets me do a video capture of all or part of my screen. The free product is limited to a 5-minute recording, but you shouldn’t need more than that to articulate yourself.
Here’s an example video submitted to a broker for a deal that I’ve been negotiating. I’m capturing parts of my analysis spreadsheet to demonstrate how I’m arriving at my offer price.
I then emailed the video to the broker along with my offer price. Here’s how he responded:
“Brilliant! It reminds me of the Kahn Academy videos I often watch. I will have to use this going forward. I am going to forward this to my clients and we will jump on a call together to discuss and I should have some feedback for you by tomorrow hopefully. ”
Perfect, that’s exactly what I wanted. I wanted the seller to understand my rationale, and the video makes sure that nothing is lost in translation.
He also added: “We have other offers coming in on this property, but my clients were pleased with your presentation and the details in your offer. We anticipate a level of savviness engaging you as the buyer as opposed to the others whom we are in the process of vetting.” So the video analysis also adds a certain level of professionalism which will set you apart from other buyers.
It’s critical that you can effectively communicate to the seller how you are underwriting the deal and how you are arriving at your offer price. And since you’re normally negotiating through a broker, a video is an excellent tool to help get your next project under contract!
Do you have any additional negotiation insights?
Be sure to leave your comments below!