Real estate negotiations are emotional. The placement of a counteroffer is known as handling the emotions of the situation. The following is a technique for placing a counteroffer to get yourself to advantageous terms.
1) Find a price, price has nothing to do with reality, price is a consideration. The key to finding a price is to keep in mind that the recent sales prices of other homes in your area are a rough guide to what you will accept. If you establish a price that is very low compared to the selling price of similar homes in the area, the buyer will not be able to make a profit if they have to pay your remaining cost.
2) You can’t give something for anything. Understand that a counteroffer enables you to place an offer that really benefits you. However, since this is a negotiation you cannot offer something you don’t have at your disposal, which will leave you sitting on the sidelines and possibly losing out on a second sale. Negotiate to get the best outcome.
3) You’ll need to calculate everything. This is the time to be completely honest with yourself and be completely honest with the buyer. If there are issues with the title that you are not aware of, figure them out. A set offer might be appropriate in a perfect world, but in a world where creativity counts the most and a deal with options is the one where the winner is the most likely to go wrong. If you can find ways of eliminating the possible issues of title ownership you will be able to save time with your counteroffer.
4) Analyse the buyer. This is where negotiators like HOW TO GET value in real estate investment. Mexico’s tries are different. This is not a discussion of values, but of psychological value in negotiation and this is exactly what you will be offering. For example, if your buyer is a cash buyer and is willing to pay all cash, you can sweeten the deal by offering a quick close on your property, holding a 2nd mortgage to facilitate the sale of the deed or divorce of the property to you and the buyer. Whatever you can come up with will be appreciated by the buyer, who will still be willing to pay more.
5) Be prepared to walk away if it doesn’t work. Knowing that you are offering what you can and the buyer isn’t willing to give anything more will leave many buyers wondering how you can possibly be willing to go lower. Knowing this will make the difference between losing to a competitor (or not) who is prepared to negotiate, and winning the big prize.
6) Be negative and counter offer. By offering too much you will only be wasting your time, but offering too little will leave you paying the mortgage until the price is more than you anticipated. The key to success in negotiating is to operate from a position of power. By offering a lot more than the buyer is expecting to get – even if it doesn’t meet your asking price – boosts your leverage in the negotiation.
Negotiating is not a problem for experienced Investors, but a newbie investor or someone who doesn’t have a lot of experience in this area should develop a strategy to learn, understand and implement the art of negotiation before they ever start negotiating. Negotiations are rarely done in one upfront, all or one scenario partnership, negotiations are usually one or two or even more false starts before you get to the price negotiations at the heart of the deal.
I have learned all of this by trial and error. Negotiations are rarely, if ever, “one size fits all”. Just because you get one offer correct, that doesn’t mean that everyone you consult should be called. I wouldn’t suggest that, but I can’t tell you how many times I have been duped into making offers that ended up not matching my expectations.
Never assume that the only time you will ever be in a negotiation is where it is a “hot” deal. The biggest challenge in any negotiation is not having a price in mind. The biggest disadvantage in having not a firm price in mind is that many times you will not have a price in mind until you have a fairly good idea of what the buyer want. In other words, until you’ve had the buyer come and see the property you don’t know how much they are willing to pay.
The second worst thing you can do in any real estate negotiation assumes that the person you are negotiating with has a definite price in mind. If he acts like he doesn’t know what you are talking about you should immediately recognize that nothing is agreed upon until it is in writing, ever. Don’t assume anything, do not hesitate to ask why the offer is being made, who he is paying and how he is paying it.