Negotiation tactics and tips for a better return on your investment properties
Part of the charm of real estate investing, and real estate investors, depends on negotiating your real estate deals—regardless of if you’re buying or selling. Obviously, as a buyer, you want to snag investment properties for the lowest price possible so you can sink the rest of your money into renovations to fix up or eventually flip the property for more money. While as a seller, you hope to get the highest price possible in order to reap a good investment from your sale.
As a fairly successful real estate investor, I’d like to share the following four tips to better chance your real estate deals…
1. Get into the mind of the other negotiator (the buyer or seller)
The more you can find out about the person you are buying from or selling to the better. Knowing how the other party thinks will help you negotiate a better deal in your favor. For instance, what is their motivation for buying or selling? Is it relocation for work, the need for a larger home for an expanding family, the wish to live in a more desirable neighborhood, etc.? Answering these questions will help you to sway the negotiation in your favor. If you are selling property, ask to be present at the property tour so you can gage the buyer’s reactions as he or she tours the property. If they are motivated by things like location in a desirable neighborhood or certain features of the property itself, you can ask for a higher price and expect to get a good return on your investment. In most cases, the more you know about the property, the buyer or seller, and the agent— the stronger chance you have of nabbing the property or selling your property the best possible price.
3. Understand the details of the listing itself
While this advice applies more to those buying investment properties, it also applies to sellers as well. The details of a listing—for instance the age of the listing—can tell you a lot about a property. Generally speaking, if a property has been listed for a long time (e.g., more than four to six months) you can expect to get the property at a lower price. Why? Think of how you’d feel as the seller—anxious to sell due to the purchase of another property, the start of a new job, etc. As a buyer, you can take the listing age as your opportunity to nab a property for less than it’s worth. On the other hand, if you’re a seller with an old property listing, it might be time to switch agents and relist the property to interest fresh buyers.
3. Research the numbers
Real estate investing is a numbers and it depends largely on the price of comparable properties in the area. As a seller and a buyer it’s your priority to know what those prices are, so that you can set an upper limit on your selling or buying price up front. Knowing the maximum value that the property is worth will help you list and bid within the proper range.
4. Leave emotion at the door
As a real estate investor you already know emotional attachments to properties can get you in a lot of trouble—as a buyer and especially as a seller. Emotions can have you either listing a property price so high that buyers are turned off or making a property bid that you can’t afford.