The Second Rule of Thumb – The Art of Negotiating with Sellers

One of the first things that you should ask a seller is “Why are you selling your property?” Their answer will tell you how to present your offer to them. It will also help you in determining the key pressure points in the offer. Their answer is going to be fundament to getting an accepted offer. They may not be willing to tell you, which can often be an answer in itself, but sometimes they will explain that they are going through a hardship that is forcing them to sell. Often, they are retiring. Sometimes they haven’t been able to manage the property and so it hasn’t been profitable. There are so many reasons that they might be selling but you need to know.

When you are having difficulty getting a seller to tell you their motivation, you can rephrase the question. “I have reviewed the package and I am considering the property, but can you tell me the rest of the story? Why are you selling? Why do I want this property?” Make them convince you that this is something that you want. If they aren’t able to do that, then you can infer that the reasons might be bad management or financial.

You also want to find out if they have any other offers or if any other offers have failed. If you are currently competing against other offers, then you have to make sure that they way you present your offer stands out. You also don’t want to go in with an offer that you are hoping they will counter. More than likely, they will just move on to another offer. If they have had other offers, why didn’t those offers work out? Were they too low? Did they hate the terms? These answers also help you to structure your offer.

When a seller is motivated, then you can show them how your offer meets their needs. For example, you might be able to show them that you have a quick closing, so they don’t have to worry about the headache of managing the property much longer. When a seller isn’t very motivated, you are going to present your offer differently. When they are not motivated, speed isn’t a motivator and so you have to find out why they are selling so you can appeal to those desires instead. Are they retiring; do they want more time?

Make sure that you work on building rapport with the seller. You want to learn as much about the property and any prior offers as possible so that you can make your offer perfect. You can even say, “What does the perfect offer look like to you?” You may not be able to provide them with that offer, but you can hit as many of their points as possible.

Start practicing talking to sellers by roleplaying with people that you know. Then start calling sellers and see what happens. Create a list of talking points so that you are sure to get all the information when you are on the phone. As always, happy investing.