Killer Property Negotiating for Maximum Profit

Property negotiating is arguably the most important skill in a property investor's arsenal.

But for me property negotiating is not about beating the seller down to the lowest price possible...

It is about creating a win / win outcome for both parties.

By aiming for this outcome, you will be far more likely to get the deal... and get a good one.

In this article, we'll show you how this can be done, using some killer tips, tricks and tactics. There's a free download for you... And I'll even introduce you to my pet frog!

Time is on your side

I always used to believe that a property negotiating was something that had to happen in a single exchange -- a phone call or a meeting -- and then it was over and done with.

Not so!

Some of the best investment property negotiations happen over a period of days, weeks or even months.

Why? Time makes people more negotiable.

The only proviso here is that if you sniff an incredible deal that could be snapped up by someone else if you delay, then lock it down without delay!

Don't dive straight in!

There can be a temptation -- especially if you are dealing with lots of enquiries -- to dive straight in to the negotiation.

This is a recipe for disaster!

Why? Because there are two things you must do first:

• Build rapport / comfort. You have far more chance of getting someone's business if they like you. You need to chat with them and attempt to connect with them first. I do this by discussing the property with them first -- even if they have already submitted their details on my website.
• Stir their pain. The seller is selling for a reason. They have contacted you and not an estate agent for a reason. You need to bring their motivation -- their pain -- to the forefront of their mind. This will make them more way more negotiable.

FREE Download -- Lockout Agreement

Use this form to discourage a seller from selling to someone else in between your negotiating a purchase price with them and you packaging the deal and on-selling to another investor.

You can register to download the lockout agreement form that we use in our business here.

It's about them, not you!

Before you start to negotiate, you need to find out what the seller's goal is. This is imperative if you are going to end up with a win / win outcome. There is no way you can do this without knowing what their endgame is. For example:

• If they are looking to relocate and rent somewhere then you know that they may not need access to the equity in the property right now. In which case, they may be open to a lease option or delayed completion.
• If they are looking to sell in order to buy somewhere else, then a lease option may not be appropriate and a cash sale now might be a better option.

In addition, you can use their desired result later on in order to motivate them to accept your suggested offer... "Just suppose I could buy your house so that you can move to Australia and be with your family...".

The power of silence

One of the most powerful tools of property negotiating is silence.

I am introspective so naturally a good listener. I love to let talkative sellers just talk and talk until they run out of steam.

I have lost count of the number of times that I've done this and the seller has just come out with: "The lowest I'll accept is £x for the house" or "I'm just looking for enough to pay off the mortgage and cover my costs".

Rules of the negotiating game

Here are some rules of property negotiating that will serve you well if you stick to them!

• Never make the first offer. Always try to get the other person to show their cards first.
• Flinch. When they name a price at any stage of the negotiation, make an audible sound to signify that you're not comfortable with what they've stated.
• Know your limits. Always go into a negotiation knowing what your limit is, and don't be tempted to let it slide!
• Leave the door open. If you don't come to an agreement with a seller, always make it clear that if anything changes they can come back to you in the future.

  The classic is where they haven't listed with an agent yet. If they are not super motivated and haven't listed yet then I always say -- list it and see how you get on but come back to me if that doesn't work out.

Killer property negotiating tactics

In a property negotiation, there are a number of tactics that you can use time and again, to great effect...

• Re-run the figures. Saying "I need to re-run the figures" will buy you time and let you come back with a new proposal, without it seeming that you are simply conceding. You have re-run the figures and come up with a reason why you can offer them a bit more.

  Note that this can be used to buy time even if you do not intend to change your position at all!

• Higher authority. Saying I need to check with my business partner / spouse / boss etc. is a great tactic. It not only buys you time but if the answer is "no" then you are not the baddie!

  Someone else gets the blame and you retain your good relationship with the seller.

  Genius!

• Other opportunities. When negotiating, I always drop in that I am looking at other properties in the area (which I invariably am). This introduces scarcity into the equation. It can make the seller fear the loss of your offer and motivate them to accept.

Avoid round numbers like the plague!

An offer that is a straight round number, like £120,000 is just screaming out to be countered.

But go in with something like £123,750, and the seller will think: wow, this guy / gal has put a lot of thought into this and knows exactly what they can pay for my house!

They will be a lot less likely to push back on you.

The law of diminishing concessions

If you do have to make concessions, then make each successive one smaller. For example:

Offer 1 = £123,750

Offer 2 = £124,750 [£1,000 more]

Offer 3 = £125,500 [£750 more]

Offer 4 = £125,750 [£250 more]

This communicates that you are getting closer and closer to your limit. If you just increased by, say, £1,000 each time, why wouldn't they just keep pushing back?

Property Negotiating - Summary

So, we've seen that by using a few simple property negotiating tricks and strategies, you can end up winning great deals... and more of them!

If you want to learn more about negotiating in general, a great book on the subject is "Bare Knuckle Negotiating" by Simon Hazledine.

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