Negotiating Price

[Michael G.]

I learned a long while back that the person who mentions price first loses.

When negotiating price do you put the ball in the sellers court and wait for them to mention price or does it not make a difference to you?

I'm also interested in hearing strategies used to sucessfully negotiate price down when the seller comes in above your target.

[Account Closed]

[First, start with small talk to build rapport and put the seller at ease. Walk through the house and make notes of what you see, but don't talk too much about the problems. Give a few compliments here and there. Be sure to give your business card. Then proceed to an upfront agreement at the kitchen table.]

Mr. Seller, let's start with an upfront agreement not to waste each other's time. If I suggest a possible solution that doesn't satisfy you, then will you be honest and directly tell me that it doesn't work for you?

[Seller replies YES]

And of course, if you suggest a solution that doesn't fit what I need, then I'll be honest and directly tell you that it won't work for me. Are you alright with that?

[Seller replies YES]

What price were you realistically hoping to get?

Oh, really? :cry: (inflection downward instead of upward, as if disappointed)

How did you arrive at that number? :roll:

As I am in business to earn a conservative profit to compensate me for the risk in this difficult market, I must also consider the costs for acquiring, carrying, repairing, marketing, which total about [insert your cost calculations here], and eventually selling the property. I ran a quick calculation and it appears that the property can afford to pay [insert your lowest offer price of 30% to 40% of ARV here].

Is that something we should talk about, or maybe you would prefer to wait for another month or two for another buyer?

[Seller quickly looks around the room for a baseball bat to smack you. Then regains composure and complains that the number is too low.]

I'm glad that you can afford to wait another month or two for an owner-occupant buyer, who will overlook some of the work needed and be able to obtain bank financing in another 45 to 60 days, assuming, of course, that the buyer doesn't find a nicer house at a better price.

Please remember that my offer is all cash and I can close quickly. Maybe I can re-run my numbers and try to offer a better price. I know my partner won't like this at all, but if I can offer [insert better price that is halfway between your lowest and highest offer] all cash, how soon can you close?

[If you still have no agreement, then try this.]

Mr. Seller, I've been very lenient with you today, because I've broken some of my own business rules. I think it's only fair that you try to be a little more flexible. I promise you that I'll do my very best to get my partner to approve, if we can agree here and now on [insert your maximum allowable offer MAO] all cash and closing in 15 days?

[Now SHUT UP and wait for a substantive response. If he agrees, then get out the paperwork, fill-in the blanks and get it signed, including closing instructions that allow you to recover your earnest money deposit if you cancel the contract without further approval of the seller. Otherwise, collect all of your paperwork. Thank the seller for his time and leave. If you got a signed contract, then take it to the closing agent and open escrow.]