Negotiate not Just Over Price, but Over Terms Too!

04 Mar Negotiate not Just Over Price, but Over Terms Too!

Many people think in terms of price. The seller naturally wants something higher, and the buyer desires something lower. Yet to negotiate solely over price is simplistic and at times, costly.

I knew a first-time investor who got into a bidding war on their very first offer, and they won! They had the lowest price out of three offers submitted. How did they snag that deal? The sellers and their young kids lived in the home being sold. The sellers wanted a closing three months later, after school was done for the year. Another reason they wanted three months was because they wanted enough time to identify, purchase, and move into their next home. The first-time investor simply asked what was the seller’s ideal closing date, and why. Armed with a reasonable answer, the investor said that a settlement 90 days later would be fine. The other two buyers insisted upon a closing in 30 days or less. In the five years since that purchase, the property value has gone up 50% and the house has been fully rented.

Depending on your offer price and the competition (if any) for a property, you can make the terms more amenable to the seller even if your price is lower.  Terms include:

• Closing on the date that is most advantageous for the seller.
• Waiving inspections, or agreeing not to negotiate over inspection results.
• Buying in cash, or eliminating an appraisal contingency.
• In transactions in which an appraisal is necessary, include an appraisal gap continency to make up some or all of the shortfall should the appraised value come in lower than the purchase price.
• Allowing the seller to leave debris behind that you will remove at your own expense after settlement.
• Allowing the seller to remain in the property for a short period after the closing date.
• Paying for the seller’s closing costs.
• Offering to buy personal property from the seller, such as furniture.
• Paying for the seller’s moving costs.
• Offering to pay the seller interest for years to come, in the form of owner financing.
• Convincing the seller and their agent that you will make it a smooth transaction with no surprises.

When you ask great questions, you tend to receive great answers. When making an offer, be inquisitive.

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Tai DeSa is a graduate of The Wharton School of the University of Pennsylvania.  He became a full-time real estate investor in 2004 after serving in the U.S. Navy.  Tai made colossal mistakes in investing (and learned some things along the way).  Tai has coached hundreds of entrepreneurs, real estate investors, and real estate agents on how to increase their income and net worth. He has helped hundreds of homeowners avoid foreclosure through successful short sales. Check out Tai’s books on Amazon.com. Tai may be available for coaching and speaking engagements on a variety of real estate topics.  Send an email to tai@investandtransform.com.