To become a successful real estate investor, it's critical that you become a good negotiator. This is a lifelong learning curve, of course, but you can never go wrong by studying the negotiating process and improving your techniques. The bottom line for successful negotiation is: get what you want by giving sellers what they want. There are some basic rules you'll want to learn--and then follow religiously--when you enter into a negotiating situation. The first one is that you can only negotiate with someone who is actually willing to negotiate. If a seller has no real motivation to sell a piece of property, there is little that you can do to increase your position in the process. If there is nothing they particularly need, there isn't anything you can offer that will fill that need. If you run into sellers who are in this position, it may be best to simply walk away and move on to the next property. Non-motivated sellers have dominated the real estate scene in 2005, and many homes have actually sold for above the listed prices, since there has been a glut of buyers who have bid prices up. In such a sellers market, the chances of negotiating a genuine bargain decrease. However, 2006 looks as if the market will begin to shift, especially with rising interest rates, which will lessen the number of qualified buyers and may send housing price downward. When you're looking to fill the sellers' needs, there are several questions you'll want answers to, either from the sellers themselves or from other sources, such as real estate agents, escrow companies, or public records. For instance, you'll want to know why the sellers are selling their home at that time? There are as many reasons as there are sellers, but until you know their individual circumstances, you won't know how you can offer to help them toward their next move. Although it will often be difficult to obtain from the sellers themselves, you can often find out what the original purchase price of the home was, which will give you a good feel for their equity position. This will give you leverage in your offering price, knowing how much the sellers will walk away with at closing. Knowing the sellers' time deadlines can also be critical to successfully negotiating a purchase of their home. The shorter the timeline, the more leverage you'll have in putting together a successful purchase. Its also important to determine if the sellers have gotten a profession inspection done on the home. This can be vital in getting a feel for how much repair the home will need before you'll be able to sell it at a profit. Don't guess; it can be deadly to your bottom line! However, using these negotiating techniques can put you well on your way to becoming a successful real estate investor. Copyright Jeanette J. Fisher |
