You can’t blame the seller. After all, they have a personal and emotional attachment to the property, but it can be frustrating when you are trying to purchase an investment property and the seller just isn’t in touch with reality. The price is inflated. The contingencies are ridiculous. And they just won’t come to the table, let alone answer their phone! It’s supposed to be a buyer’s market, right? Yet here you are, doing an uncomfortable tango with a difficult seller. Other than turning your back on a desired property, what else can you do? Here are some suggestions for negotiating with difficult or unrealistic sellers.
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PUT ON YOUR BEST FACE
Yes, it’s a buyer’s market. And we’ll get to that in a moment. But initially, you have to engage the seller. If the seller is represented by an agent, treat the agent with respect. Try every phone number for the agent that you can get your hands on. If you can’t reach the agent, leave clear and detailed contact information for how the agent can reach you. Call daily until you reach him or her, leave one message each time, and always be pleasant and respectful. – no matter how long it takes.
If the seller is unrepresented, do the same thing, but with the seller. Don’t get pushy or demanding. Offer to meet the seller at a time and place convenient for him or her. Offer to drive to a workplace or restaurant. If you go to a restaurant, pick up the check. You’ll be asking him or her to pick up a lot more than that, so it’s a small price to pay to initiate some goodwill.
BE A GOOD LISTENER
It’s starting to sound like dating, isn’t it? And negotiating with sellers is a little that way. Start the conversation by asking a lot of questions and listen to the answers: “Tell me about your property; what are its best features? Why are you selling?” If it’s her or his primary residence, ask “Where will you be moving to?” Make note of some key points, like: (a) Value the property features that are held dearly. Build rapport this way. (b) Put together a deal that helps the seller solve her or his reasons for selling. Make price less important in the negotiations by showing the seller how working with you will help them to achieve their goals better and faster. (c) If they are moving, do some homework on their behalf. Get some information about their desired new home turf. Refer them to a trusted agent in the area who can help them find a great deal. Show them why this makes so much sense – they’ll be able to get a great price on a home in an area where they want to live.
DO YOUR HOMEWORK
Gather and study as much of the following as you can: (a) comparable property sales in the area from the last 3-6 months, (b) inspection report, (c) appraisal, (d) survey, (e) seller’s disclosures, (f) area market values and trends for this property type, and any other information that may be pertinent to negotiating price, contingencies, and other contract details. When building contingencies into the contract consider contract stipulations that respond to the seller’s needs – from when you were listening earlier – to show that you are constructing a deal in their best interest. When you meet with the seller or the agent, point out this language in the contract, and bring all the supporting evidence for your contract decisions, including price. Let the documents and contract language do the talking. Don’t get defensive, combative, or pushy. It’s now time for the seller to get realistic and not emotional. Your negative emotions will sabotage the process and prevent that from happening. So, make your best case and leave it in their hands. If you don’t hear from them and the response timeframe is drawing to an end, place phone calls as you did above and try to discover what the sticky points may be, or if they just need more time.
While it’s a buyer’s market out there, sellers are human, too. They love their properties, and have many warm memories attached to them. They are frightened of declining values and wary of low-balling hucksters. You’re in the driver’s seat, so be relaxed, friendly, patient, and understanding. With a gentle approach, considerate negotiations, and honest realism, sellers will eventually come your way rather than heading for the door.
Great info as always. Your right about not being pushy it really kills rapport with the seller and then in the long run they wont sell to you.
Well said Josh. it’s easy to sometimes forget about the basics – and you’ve nailed some of the basic things everyone should take to heart with this post. It’s making that extra effort to show people you care about them too that will set you apart and make people remember you … in a good way.
I try to put myself in the seller’s shoes for a bit. If you as an investor can SHOW the seller the fact that you prefer to work as a TEAM to solve the seller’s problem and help yourself at the same time that relieves alot of their hesitation. Also, expand on the commonalities you share. Listening skills are VITAL, jot notes on the positives and negatives of the property, but more importantly, the seller’s FEELINGS about the property. Find ANY common ground and build on that. “I understand how you feel about those shrubs, my aunt used to have some alot like those, and I remember how nice they were”…..If they are going to relocate, try to help them by a very small amount of time on researching their interests in that area and what is going on there. Even if it’s just a couple of tidbits of “insider information”, you can call them and NOT EVEN MENTION anything about the property for sale. Something like, “I was thinking about the area you mentioned you may move to, and out of curiosity I just found out _______________” and add what pertains to thier interests. Then say goodbye or leave a message without mentioning the first property. This does two things: I shows you have their best interests in mind; you demonstrated that you’ve gone over and above the call of duty by helping them and their guard lowers substationally. Also, if they’ve not purchased another home yet, get an idea of what they’re looking for and do a quick search through your resources, and say “You know Bob, I’ve got access to alot of information the average person doesn’t. That saves me alot of time and money, and look at what I just found.” Then mention a couple of properties in that area or something that would help them. Now you have the opportunity to get involved in TWO transactions. That gives you flexibility on negotiations on both properties, GIVE a little on the property they are selling, then ADJUST the one you may consider selling them. Again, it demonstrates you are willing to compromise on some things, and help in another. Always keep those doors open, and when you’re proving to the seller you are there to help by providing something they don’t expect, their resistance fades.