Just a post i read over at reiclub that is good information about negotiating a deal.

There is an old saying “You don’t make your money when you sell the home, you make your money when you buy”. From my experience that statement is about 50% true. Your ability to negotiate can end up playing a huge role in how much money you will make on a deal. Learning how to negotiate with sellers and buyers will be one of the keys to your success as a real estate wholesaler

Good negotiation with the seller will save you money on the purchase home. Good negotiation with the buyer will allow you to sell the home for more money. It goes without saying that spending less and selling for more is the key to maximizing profits.

Negotiation strategies for all situations

1.Identify your wants and needs ahead of time. Needs are the things that must happen in order for you to put a deal together. Wants are the things that you would like to happen in order to put a deal together. Always stand your ground when it comes to needs, if you must compromise your position be sure that you do so with your wants.

2.Try to identify the sellers/buyers wants and needs- By knowing what the sellers needs are you may be able to keep a deal together by making it a win-win for both of you.

3.Know what you are trying to accomplish ahead of time- If price is most important to you then focus you efforts on price. If financing is your primary goal then focus your efforts on getting the type of financing that you want.

4.Be sure that all of the decision making people are at the negotiation- Make sure that all of the decision makers are at the negotiation with you. There is no need to waste your time negotiating when the buyer or seller needs to consult with another party before making a decision.

NEGOTIATION STRATEGIES FOR WORKING WITH SELLERS

1. Make your offer for an odd amount of money. If a seller sees an offer like 123,000 they may think that you have just pulled a number out of nowhere. If you offer an odd amount like $121,768 a seller will be more likely to think that you know what you are doing and some actual thought was put behind the number.

2. Never say “This is what I think you home is worth”. Instead let the sellers know that “This is the amount that I can afford to pay for your home”. This slight change in dialogs will help eliminate discussions about how much the seller thinks his/her home is worth.

3. Don’t be an expert. Sellers are apt to feel that they are being duped if they have a sense that you know far more than them. I am not saying to act like an idiot but definitely avoid appearing that you are an expert.

4. Move past sticking points. If you come to a sticking point in your conversation with a seller don’t sit and dwell on it. Move onto the rest of the negotiation and come back to the sticky point later on.

5. Ask for everything. In most real estate purchases there will be a variety of things that you could care less about including in the contract. Things like appliances, window coverings, antique fixtures, etc. Even though you may not really want them, include them in your initial offering so that later down the road you can give back those things to leave the seller feeling like you are willing to budge a little in the negotiation.

6. Use an expense letter. Layout the expenses that you think will be incurred in purchasing the sellers property. Be sure to include ghost expenses like interest paid while marketing the home, taxes, Realtor fees, closing costs, etc. You may not end up doing many of the things on your expense list, but it will give the seller something concrete to look at while evaluating your offer.

7. Make the seller feel good about themselves. If a seller likes you, the chances of your offer getting accepted at a lower price increase significantly.

8. Set up an imaginary deadline. This is a great tool for getting indecisive sellers to make a decision. Do not push too hard or you will appear fake. Example: Try to bring up the fact that your partner and you are going to look at some other homes tomorrow. Let the seller know that you only have the money to buy one home right now, and you would love it too be the theirs.

9. Test the seller. Don’t make them a firm commitment but ask them things like “If I could offer you x, do you think we might have a deal”.

10. Find out why the seller is selling before making an offer. One of the best ways to uncover the motivation of the seller is to find out why they are selling. If the seller MUST sell you can negotiate a far better price than if they are just CHOOSING to sell for no particular reason.

11. Find the sellers time line for selling. Prior to making an offer find out what kind of time line that the seller is on. The seller’s time line will often dictate the type of terms that you should be offering.

12. Do not get emotionally involved. Emotions have a strange way of affecting your profits if they are not controlled. Remember your goal is to save money, and if a seller knows that you are in love with their home then you have lost. Keep in mind if one deal does not work out, more deals will come along.

13. No bragging. A potential seller does not want to hear how much money you have made real estate investing. Bragging about your success will only increase the likelihood that the seller will feel that they are being duped.

14. If price is your main concern make everything else easy. If you want the seller to come down substantially in price then write a very clean offer. Clean offers often include fast closing times, cash, no inspections, and a good procession date.

15. Prove to the seller that you are a strong buyer. A seller will be far more likely to lower their price to a strong buyer than a buyer who may not have financing lined up. If you are sending the deal to someone else then a testimonial letter from someone else who you have helped may do the trick.

16. Be animated. When the seller lets you know what price they would like to get for the property show a surprised look, or take a deep breath. This non verbal cue may get them second guessing there price.

These are a few of the strategies that have worked great for me, I would be interested to hear what other people are doing.

Eric

http://www.reiclub.com/forums/index.php/topic,37799.msg0.html#new

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I never even realized it.  I’ve sent out letters before, even gotten calls.  There was no way I was afraid.  It’s been two weeks since I wrote about sending the probate letters to my lead list and I had yet to do it.  Why?  To me it seemed like I had good reasons…

1. Needed to put up crown molding in the office
2. Thanksgiving
3. Family
4. Didn’t have the envelopes
5. Didn’t have stamps
6. Dentist appointment

These are valid reasons right?  I was going to send out the letters the first chance I got.  That chance had just not come and I still was planning to send out the letters.  I wasn’t afraid to send them out, I just hadn’t gotten around to doing it yet. right?

Most people would agree with me, and find those above reasons to be valid.  That is why most people don’t ever become successful.  I was lucky enough to have met some great friends through this blog and one in particular called me out this past Monday.   In case you didn’t read his comment…

Scott, when are you going to stop making excuses and start taking action?

Enough of the ‘Getting ready to get ready’ stuff. Get them mailed out and quit being afraid that they’re going to call you ya big baby I’ve bookmarked your site to keep up on whats going on but I still don’t see that you’ve done something so simple and easy like, “Mail out probate letters”

C’mon Scottie, step up to the plate and come hang with the ‘Go Getters’ we’ve got kool-aid and the grass is really greener on this side

To be honest my first reaction was a defensive one, my mind quickly started listing those “reasons” I listed above.   I then took a deep breath and stepped back for a second.   Was I afraid?

Looking back at the last two weeks, I was able to identify many opportunities when I had time to pick up the needed supplies and get those letters out.  I was amazed that fear may have sneaked up into me.

When I got home on Monday night,  after getting lost trying to find my new real estate brokerage to pick up some papers (I laughed when I got lost, cause I thought of Steph), I ran to Staples to pick up envelopes and stamps.  The rest of the night I printed out the letters, addressed the envelopes, seal and stamped them.  It took me longer then expected because the letters printed out in a different order then the addressed envelopes argh!!  The following morning I placed them in the mail.

A funny thing occurred as I sat in my car, in front of the post office mailbox, ready to put the letters in…The Fear Surfaced and become very apparent.  My stomach got a little queasy and I paused, I WAS AFRAID after all.   At this moment this part of Nick’s comment popped into my head..

…C’mon Scottie, step up to the plate and come hang with the ‘Go Getters’…

It seriously did!  I then proceeded to drop the 75 envelopes into the mailbox.  I now feel great, but a little nervous about the calls that are gonna come….haha

thanks for the push Nick!

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I’ve met with all the potential brokers and I think I’ve made my decision on which one to hang my license with.  I was looking for a broker that would allow me to be free to do as I wish (to a point).   The most important factors in making my decision were…

1. Not have to work as a salesperson for the broker unless I volunteered to
2. No desk time
3. No monthly fees
4. No class requirements, but they offered training if I needed it
5. Referral compensation
6. Investor Friendly
7. Investors on board
8. close proximity to where I live (within 20 minute drive)

I was able to find this with two brokerages and took the weekend to think about which one worked best for me.

Break down of the candidates

Candidate #1: Exit Realty

They have a high tech environment that understands what an investor does.  The broker-of-record was a nice guy and was willing to work with me and help me out.  I had the feeling that if I didn’t attend the training sessions or the “required” monthly meetings it was going to be a problem.  Quite a few of their Sales Agents also invested some, but none were full time investors.

Candidate #2:  Realty Executives

I contacted these guys from a Craigslist ad.  It looked to be a very well run company and had everything an agent would need to be successful.  There was one other investor who was just starting to do deals with them in the same fashion as I wanted, which was good.   The broker understood what I wanted to do and was very willing to have me aboard and help out any way possible.  He even offered to sign me up as a referral only agent and let me use his MLS access when ever I needed it.  Very tempting and by far the cheapest way I could go.

Candidate #3: Millenium Realty

This is the smallest brokerage that I interviewed.  In fact it was a one man shop that just got started in June.   His man source of leads are from a group of investors that have hooked up with him.  He will sign up clients who have responded to these investors, but didn’t meet the their criteria.   My investor friend, Jarred, works for the investors (Homevestors actuall).  I had a great conversation with the broker and I love the fact that he works directly with a group of investors.

My Decision…

Well, I’ve eliminated Exit Realty from the equation as I think we just didn’t totally agree upon what I would be doing.  So that leaves me with a choice between Realty Executives and Millenium and I can’t really decide.  They both meet all my criteria but each has their advantages, so let me break those down and maybe you guys can help me decide.

Realty Executives

Advantages:

• Use of their staff for selling properties, creating flyers, postcards and other forms of advertising.
• 70/30 split
• 20% referal (of 70%)
• Works with 1 investor that is doing what I want to do

Millenium

Advantages

• Works with Jarred and Homevestors exclusively
• Small shop that deals with the types of leads that I’m looking for
• Motivated Broker willing to help me out, so I help him get more leads
• 50/50 split
• 25% referral commission

I’m leaning towards Millenium becuase of the direct connection with the investor group that I could be able to leverage.  What do you all think,  right choice?

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Over the last few days I’ve been writing some new articles for my site and trying to just make it a more valuable resource for people to find information regarding probate in New Jersey.   I created a page that listed all the county surrogate websites and I will also be creating a section for lawyers as well.  I plan on using the lawyers section as a possible “I scratch your back, you scratch mine” type of deal with probate lawyers in NJ.  I’ll list their contact information on my site if they send me motivated seller leads.  It might work, it might not, but it’s worth a try.

I also got my first lead off of my NewJerseyProbate.org site yesterday!  This is what the guy had to say…

Lead Info
Name: Cornelius Garay
City: Elizabeth
Notes: need to sell asap

Looking this property up on google maps, it’s an apartment and definitely not in a town I’m looking to do business in.  For those wholesalers out there, when you get leads in towns you don’t do business in what do you do with them?   I was thinking about passing it along to someone else, but would that require me to get more information about this place?  just curious.

On another note, I have a meeting with the broker from Exit today at 5:30.  I’ll probably be signing up with them, I just hope the initial costs aren’t that much.   Look for an update tomorrow to see how it went.

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Good news, Good news!  I took the real estate license test last night and I….

PASSED!

I went into the test feeling a bit nervous cause I never really studied after finishing the class last week.  I brushed up on a few laws and definitions, but that was about it.   The test was a bit of a challenge, there were quite a few questions on topics we barely went over in the class like Project Management.  The testing providers are a master at making a simple question difficult that is for sure.

Next step is to contact Exit Realty Gold and see if they are still interested in having me aboard.  I will let you know how that goes in the next few days.

-Scott Costello, Licensed Real Estate Agent!

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