7 Secret Negotiation Tactics of Pro Real Estate Investors

7 Secret Negotiation Tactics of Pro Real Estate Investors

As a real estate investor, finding a good deal isn’t always easy — especially in today’s market when mortgage rates are up, home prices are high, and inventory is low.

However, savvy investors can often turn a mediocre deal into a great one through the powerful art of negotiation. That doesn’t mean cheating anyone. You must still adhere to ethical and legal guidelines. But in real estate, everything is negotiable. 

So, if you can’t make a deal work because the listing price is too high or a buyer is offering you less than you hoped, this article is for you.

Below are negotiation tactics used by pro real estate investors to sweeten a deal.

If you set clear goals and limits upfront, you’re less likely to cave on them or get sidetracked when you’re negotiating.

1. Research the property and market

Whether you’re buying or selling, you need to know the property in question as intimately as you can. For example, learn its condition, age, history, square footage, and layout. The more you know, the better positioned you’ll be to negotiate. 

The same goes for the local real estate market. It can tell you what similar properties nearby recently sold for (aka comping). Having this data at your fingertips will make it easier to negotiate in your favor. 

Similarly, you should know what current mortgage rates are, how much inventory is for sale, and the average days on market. All of this will give you a better idea of how much negotiating power you have. So, do your homework.

2. Set your goals and limits

To be an effective negotiator, you must have goals and limits going into the conversation. That means deciding beforehand what kind of deal you’re aiming for and what you’re unwilling to accept. 

For example, you may set a ceiling for how much you’re willing to pay for a property or a lower limit to how much you’re willing to sell for. You can also set boundaries around deal terms, concessions, and other variables. 

If you set clear goals and limits upfront, you’re less likely to cave on them or get sidetracked when you’re negotiating.

While you want to learn all that you can about the other party, you don’t want them to learn much about you.

3. Know your negotiation partner

In The Art of War by Sun Tzu, he famously says, “Know your enemy.” While your negotiation partner isn’t necessarily your enemy, the principle behind the phrase stands: You must know the other party well to be a successful negotiator. 

For example, try to understand their motivations. Maybe, they inherited the property in question and are just trying to get rid of it. Or perhaps, they’re planning to use the sale proceeds to fund another investment. Maybe, they’re on a deadline for a 1031 exchange. Whatever it is, understanding their motivation can give you the upper hand.

Similarly, get familiar with their personality type and negotiation style, so you know what to expect. The more you know about the other side, the better.

4. Meet in person

Body language communicates a lot, and much is lost over email and text. So, negotiate face to face. This lets you pick up on subtle social cues that can help better understand the other party. At the very least, talk over the phone, so you can still hear the inflections in their voice (and they can hear yours).

As you negotiate, actively listen to the other side. Then ask them questions to better understand their priorities. This can help you know how to better position your offer.

Focus on the facts of the deal, and put aside any feelings of excitement, disappointment, or frustration

5. Don’t say too much

While you want to learn all that you can about the other party, you don’t want them to learn much about you. Revealing too much about yourself can give them an advantage.

This is why you should never make the first offer. Let them make it, so you can negotiate from there. For example, they may be willing to accept a much lower offer on a house than you expected. Had you given a higher price first, you’d never know that.

As a rule, don’t speak more than necessary. If there’s a lull in the conversation, wait. Use the silence to your advantage. Let it put pressure on the other party to compromise.

6. Control your emotions

Real estate transactions can get emotional — especially if you’re dealing with someone who once occupied or will occupy the property. It’s a lot of money, and there may be a lot of memories tied to the home. 

However, don’t let yourself get emotionally charged. Focus on the facts of the deal, and put aside any feelings of excitement, disappointment, or frustration. Otherwise, you risk the other party using your emotional state to their advantage. 

For example, they might wait for you to make a better offer if you show a lot of excitement about the deal. Or they might call it off if they see that you’re too emotional. So, stay cool.

Whatever you do, remember that everything in real estate investing is negotiable.

7. Be willing to walk away

Lastly, be willing to walk away from the deal. Sometimes, you won’t come to an agreement no matter how hard you try. At that point, it’s okay to say no.

Furthermore, signaling to the other party that you’re willing to walk away can motivate them to compromise. If they know you have other options and they want the deal to work, they’re more likely to make concessions. 

Of course, it helps to have a plan B. So, consider your other options, and let the other side know you have them. This is the most powerful negotiation tool you have.

Final thoughts

Whatever you do, remember that everything in real estate investing is negotiable: the price, closing costs, closing date, home repairs, included appliances and furniture, etc.

That said, you don’t want to bargain so hard on every detail that you come off as difficult. After all, you may need to do business with the other party again in the future. So, try to build bridges, not burn them.

Ultimately, the key to a successful negotiation is finding a solution that satisfies both parties. So, take a collaborative approach and look for a win-win.

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Christian Allred

Christian Allred is a real estate investor and freelance writer. He's written for top online publications like VentureBeat and HackerNoon as well as major companies in the real estate and proptech space.

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