They say real estate is a seller’s market, where the seller has the upper hand in the negotiations, especially if the property concerned is located in a posh neighborhood and is in good condition.
While that’s true to a certain extent, real estate negotiations are more like a chess game. The ultimate winner is not one who has most chess pieces on the board but one who knows how to checkmate their opponent.
Do you know how to checkmate the seller sitting across that negotiation table?
Try these tips:
Start with a Bid That’s Below the Seller’s “Minimum” Acceptable Price
The seller needs to be made feel that they fought a hard battle with you, and eventually won it by getting a good concession out of you.
“I got them double their offer. It wasn’t easy, but I did it.”
This friction is crucial. Smooth negotiations make sellers second-guess the whole process. “Wait, why am I accepting this offer straight away? Even if it is suitable, I should try to get more from this person.”
But how would you know what’s the minimum acceptable price that the seller has set for their property?
You won’t; you’ll just bid very very low. We’re talking about 20%, even 10% of the market value.
You might think this is crazy, but trust us, we know what we’re talking about.
Create a Narrative for Your Offer
Why have you made the offer that you just made?
You need to have a story. Or, rather, two stories. One should focus on the numbers and market, and the other should be centered on evoking emotions.
“I’m interested, but don’t feel the price you’re quoting is right. You see, that property on Street 123 was larger than this, but it sold for less. Plus, there are some cosmetic updates that need to be made.”
Don’t stop here…
“I know this house is very close to your heart. You’re really fond of it. I’d like to give it a new life and make it even more special for the next family.”
Basically, you get the gist of what you need to do. Connecting with the seller is extremely important.
Make an Offer in Cash, if Possible
Sellers crave for certainty. And a cash offer screams of it.
It tells the seller that you aren’t here to back out. It communicates to the seller that you’re serious about buying their property.
For a seller, a cash offer means instant payment; no tedious underwriting processes to wait for, and no concerns of the deal falling through.
A cash offer makes the seller forego some of the profit in exchange for security and certainty.
So, are you ready to turn the tables on the negotiation floor?
About GCP Fund
GCP Fund is a leading national commercial lender headquartered in New York. The company provides a complete range of hard money loan products to real estate investors and businesses.
For more details, please call 1-800-514-7350 or email at contact@gcpfund.com.
