Keys to Successful Negotiations -What Every Investor Needs

Keys to Successful Negotiations – 

What Every Investor Needs 


keys to successful negotiations


Welcome back to our Negotiating series. In our last article we talked about what negotiations are, and what are the possible and preferred outcomes.   If you missed that article, just click HERE so you can catch up.

Today we are going to look at important keys to successful negotiations. First let’s review when negotiations begin with a real estate transaction.


When Does a Negotiation Begin?

You might be surprised by the answer to this question. When I ask this question, many people respond “when you get your Letter of Intent (LOI) or Purchase and Sale Agreement (PSA) accepted.”  I disagree.

For me, negotiations begins the very first time you make contact with the seller or the seller’s broker.  That first connection sets the tone for the negotiations.

Because it starts immediately upon contact, you need to gather information quickly and build rapport & trust from day one. When you make them feel comfortable with you, it makes the negotiation process easier.  People like doing business with people that they like and trust. Don’t be defensive with whom you are negotiating. Build rapport. You never know if your paths with cross again on another deal.  If they got a good outcome from your last negotiations, they will be more eager to negotiate with you again.


Keys to Successful Negotiations


Of all the keys to successful negotiations, the most important to remember is that you always want to be solving a problem. If you can solve the problem of the person(s) with whom you are negotiating, you will be a good position to have a positive outcome.


Here are some other keys to successful negotiations.


1.      Do Your Homework

Knowledge is power.  The more you know about the market, the property, the local economy, the neighborhood, and the seller, then the better negotiator you will be.  The more you know, the more able you are to refute comments that the seller makes.  I.e.

Seller: “Our units are the same size as our closest competitors, so you should be able to get market rent very easily.”

If you did you homework you would be able to say to the seller, “Actually Mr. Seller your 1 and 2 bedrooms are 25 & 50 square feet smaller than your closest competitors so I wouldn’t be able to match those rents. Hence my price fairly reflects that information.”


due diligence - keys to successful negotiations

The reason we do all of the Due Diligence is to give us the knowledge that allows us to negotiate. If you can justify your sales pitch with facts, then the better position you will be in to purchase it at the right price and with the right terms & conditions.


2.      Understand what’s Motivating the Seller

Find out everything that you can about the seller. This includes his/her background, financial situation, etc. The more you know about the seller, the better you will be able to negotiate with them.

By helping the seller solve his problem you build rapport. By negotiating around the seller’s pain points, you will be more likely to close the deal because you will help them solve their problem.  keys to successful negotiations

Try to get to know the seller, find out what his/her “hot buttons” are and use them to your advantage. Like a good investigative reporter, even if the seller refuses to answer, you can still learn a lot by judging their reaction to your questions.  Body language speaks volumes.

The more you know, the better armed you are to negotiate a fair agreement.  So ask questions…..lots of them.

a.      What is it that you’re hoping I can do for you?

b.      In the past, what have you done to sell your building?  What worked for you?

c.       What do you plan to do if the building doesn’t sell?

d.      When did you want to close?

e.      How long as it been on the market?

f.        Why do you think it hasn’t sold yet?

g.      Have you thought about carrying back financing?

h.      What will you do with your proceeds?


Ask “what if” questions:

a.      What if I pay cash?

b.      What if I close quickly?

c.       What if I could close within 30 days?

By asking these type of questions you get an understanding of his/her “time” crunch. Is he/she in foreclosure, did a spouse dies or is sick, are there tax issues etc.?

An important tip about negotiations is never impose a deadline on your own negotiation.  It’s a sign of weakness.

Understanding the keys to successful negotiations will allow you to better present your offer as fair and reasonable for both parties.  Stay tuned for the next article in this series where we will discuss common techniques real estate investors can use to help them close deals.

If you want to learn more about real estate negotiations, or how investing in real estate can benefit you, get in touch with us.

Remember, real estate doesn’t have to be complicated.

With Simple Acquisitions, it’s smart and simple!





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