Tips for Negotiating Your MAO in Real Estate Investing
Before you can close a deal in real estate investing, there are steps you need to go through. After getting your maximum allowable offer for a property, you need to present it to the sellers. Start by asking the seller the amount they think the house should sell for in its current condition. Most sellers prefer starting with a high price for you to talk them down during negotiation. Once the seller gives a price they say they can’t lower, you can now give an initial offer that is lower than your MAO. However, presenting an offer that is too lower may cost you the deal since the seller may feel insulted by your offer. In this game of negotiation, there are proven tips that can help you negotiate and close a good deal.
Here are quick tips when negotiating with sellers in real estate investing.
Building a Relationship.
Having a solid relationship with a seller is one step to having the deal closed. While it may not require you to come out swinging right away, building rapport with a motivated seller is very imperative. Just look for some common ground you can interact with the seller and cultivate the relationship quickly.
Identify Their Pain Point
Understand that your motivator for real estate investing may not be the seller’s motivator. While you may be motivated by the price, the seller may be having a different primary motivator. Once you know the reason the seller wants to sell, identify a solution that solves the seller’s problem as you will be getting the price you need for the property. Be keen on prompts that show their true motivation because they may not be talking about the real issue. For example, a seller who’s overwhelmed with the task of managing a property, speed could be the most convenient way to solve their problem.
Don’t Talk Too Much
During the negotiation, you may feel the urge to want to be the one talking. Don’t try that in real estate investing. In any of your negotiations, listen and ask questions to the other party. Listening more and speaking less can help you have a better deal because you will be able to learn more about the deal at hand.
Shift the Blame to a Higher Authority
If a motivated seller gets the impression that you’re rich, they may not be willing to discount their price. For the seller to discount the price to a reasonable price, you should shift the blame to a higher authority. In this case, the blame for a low offer is directed to the person you’re advocating for. You will, therefore, have a better chance to negotiate because the seller will know the maximum amount your partner wants to invest on the deal.
Ask the Seller, “Is That Unreasonable?”
Who wants to appear unreasonable? Absolutely no one. This question can be an incredible negotiation strategy. When you ask this question, the seller will be compelled to say no. Negotiation will now continue from there with the seller willing to lower the price of the property.
You Should Be Okay To Walk Away from a Real Estate Investing Deal, But Don’t
In most negotiations, the more desperate person loses. You should, therefore, have no problem walking away from the real estate deal. However, this doesn’t imply that you should just walk away from a deal easily. You should be ready to negotiate as long as possible and try to get what you want. After a negotiation, you will either lose the deal or come to an agreement.