5 Tips to negotiate the highest return in selling real estate

Posted by Brett Carman on 5/7/2008 at 12:34 PM
Posted in Real Estate

You make your money in real estate when you purchase it. In other words, it’s extremely important that you shrewdly negotiate to win when you buy to give yourself the highest return on real estate when you sell. To do this, follow my 5 simple negotiating tips and you should succeed.

Don’t fall in love - Treat your purchase as a business and check your emotions at the door. Use your head rather than your heart because this will keep you from buying at any cost. If the deal makes financial sense.
Don’t just low ball...validate - When submitting an offer which is below what the seller is asking, make sure you have data from comparable sales and a detailed spreadsheet of expenses you will incur (if any) to make the property fit your needs/wants. By doing this, you show the seller that you are not trying to insult him and that you have done your homework.
Leave room to move - I usually like to “ask for the moon” knowing that I most likely won’t get it. In doing so, you can show the seller that you are letting him win too by allowing him to negotiate your price UP from where you started. You may be surprised what a seller will do to keep you in negotiations.
Negotiate closing costs - In addition to purchase price, you can ask for other concessions from the seller such as getting them to pay some or all of your closing costs. Some sellers feel better about paying these costs rather than accepting a lower price. Maybe it is so they can say they got a higher price to their friends/family. It all boils down to their “NET” anyway but this seems to play on their ego quite often. Also, another negotiating “chip” you can use as a sacrifice to show the seller that you are trying to work with him.
Motivation - Always try to find out why the seller is selling. Is it a distressed situation? Pre-foreclosure? Divorce? By learning this valuable piece of information, you can get inside the seller’s head and therefore better appeal to his wants/needs. Maybe it’s just a quick close date they need to get to your price so be sure to get your financing in order before starting to look so you can be ready to move quickly if the need arises.

Brett Carman is a seasoned veteran in the real estate industry for over 17 years. He holds active licenses in real estate, mortgage finance, and property & casualty insurance. Offering a one-stop shop for his residential and commercial clients, he strives to not only educate, but streamline the real estate acquisition process. With a long and proven track record of success, he is uniquely qualified and has a passion for helping people achieve their goals in real estate.

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7 Comments Post a comment

Posted by John Hoff - eVentureBiz.com on 05/07/2008 7:37 PM

@Trump Blog - first let me say this blog template is much more attractive. Good work. Now I just wish the commenting was a little easier (there are too many steps involved to comment and I like to be able to see the post while I comment without having to open a new window).

@Brett - your points are all good ones. There is one I'd like to point out that most first time investors submitting offers often times don't realize. If you lowball a seller, they most likely will be offended on some level. I've experienced this and have learned it's always best to gather the data like you mention.

I do have to say as an investor I have had troubles at times with Realtors. Part of what we do as investors is solve the seller's problems. However, many times a seller's Realtor tells his client not to talk (especially if they know you're an investor).

Ultimately it's the seller's call to talk with you, but a Realtor's voice weighs heavy on the seller. Just be aware that this is something you may need to overcome.

Also, Brett how do you suggest we go about showing the seller why we justify our lower offer if my offer is submitted by a Realtor, given to a Realtor, then given to the seller, etc.

Do you suggest just attaching a letter and the data to the offer?

Thanks,
John - eVentureBiz.com

Posted by member1696811 on 05/07/2008 11:12 PM

I love reading your real estate tips. And, yes, I love business but I don't want to be a mogul, I want to marry one. I am so fascinated by incredibly successful businessmen.

I am getting my long-term plan together, which will involve my starting my own business. So, I might wind up being incredibly successful, whether I like it or not. And, what better way to surround myself with businessmen in suits?

I do appreciate, and try to absorb everything that the Trump faculty writes. Although much of it is so foreign to me, exposure and repetition will help in my understanding. Reading all of Trump's 101 books might be a good idea, as well.

By the way, I love the new colors on the blog!

Posted by Brett Carman

on 05/09/2008 10:28 AM

@John Hoff-
Thanks for your comments and questions. I agree with you on the seller's Realtor notion being a strong influence with the seller. After all, that's why they hired a professional. Here's what I do...I prepare a spreadsheet and call it an "Exhibit A" addendum to the contract. This spreadsheet will identify what known deficiencies exist and how much you will need to spend to remedy. I also request a copy of the market analysis used by the listing agent to arrive at the offer price. If they give it to me, I review and compare it to the data I have.
Usually, the listing agent has purposely discarded or overlooked some of the lower priced data to try and prove up a higher value. I feel like this is sometimes done so that the seller will enter into the listing agreement. They of course, like the notion of getting more money when they sell only to be disappointed later with low offers or expired listing agreements. I tend to lose listings to agents like this but my satisfaction is when the seller's come back to me upon expiration and tell me I was right.

Posted by Brett Carman

on 05/09/2008 10:31 AM

@member1696811

I am glad you are enjoying the blogs we write and congratulations on starting a business! May I ask in what field you are working?

And, good luck with the MRS degree on which you are working!

Brett

Posted by John Hoff - eVentureBiz.com on 05/10/2008 2:33 AM

Brett - Similar to what I do, but I like the spreadsheet idea. I'll try that. Thanks.

And I couldn't agree with you more about how some Realtors only show their clients the better comps to get the listings. I've been victim of this in the past. I've found by doing my own research and marketing, I typically can sell a house faster without the use of a listing agent. But unless people know what they're doing, I don't advise it.

I suppose it also depends on how busy you are.

Posted by member1729723 on 05/10/2008 4:06 AM

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Hi Brett

@Blog – Great colors.

If an Investor is looking to buy via an Agent, he/she should surely entrust the Agent to be competent enough to attend the negotiations and provide all the back-up documentation.

As an investor, be careful to find out from your Agent, "Just who is his/her client, you or the property owner?

I am only a small private agent and do not have the backing of large networks behind me. The going is tough at the moment but being on my own has opened many doors that would be closed if I worked in a large concern. On the other side though, it also limits many opportunities.

You are so right about the finding the reason for selling but do not just resign yourself to that reason being fact. If a homeowner is in a tight spot, the last person he wants to tell is an estate Agent. Tread carefully and gain their trust.

Also, closing costs paid by the seller is a great way to increase their ‘sell value’ but also has a downside when doing comparative schedules as they show a higher value to other potential sellers/buyers.

Don’t believe everything you hear and only half of what you see.

Brett, the Trump Blog is excellent.

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Posted by member1763065 on 05/12/2008 2:27 PM

Mr Carman,

I made the comment, I make money when I buy, not sell in repsonse to your blog 2,4,6,,8 don't forget to appreciate on 5/02. I obviously agree w/you. I will point out however, my good buying negotiated price, is burning up w/time value of money for holding in this market. Honestly, I can not even break even w/some of the depressed values. Every buyer walking in the door goes by the current market conditions, and suggests you give it to them for their price, or via the brokers which have NO clue anymore as to what value and price should be. I even work with Trump Financial, and they are having a hard time just closing loans. This is a market of DO IT TODAY, tomorrow it will be different. I support the Trump people, as they are the only financial people out there supporting me. I guess Mr Trump knows something about real estate! I talk to his folks every day and they work!

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