What can help you negotiate a better deal? What negotiating tactics can you use to make thousands more? It comes down to one word: leverage. If you’re a seller, you have it, and being aware of it will make a tremendous difference if you apply these 4 negotiation tips home investors don’t want you to know. The better handle you have on what leverage is and how to use it in negotiations will increase your chance of reaching the best, most profitable deal for you.
What’s in it for you:
In his 1987 book “The Art of the Deal”, Donald Trump (note: this is not a political endorsement nor admonishment) wrote that leverage is “having something the other guy wants. Even better, it’s having something the other guy needs. Best of all, it’s having something the other guy can’t live without.” Admittedly melodramatic but nonetheless a great definition of leverage, and it’s the most critical part of these 4 negotiation tips home investors don’t want you to know. When selling your home, you’ll come across home investors who mostly fall somewhere in between the “want” and “need” categories. Although not the “best” type of leverage, these 4 negotiation tips home investors don’t want you to know will allow you to tip the scale in your favor so that you come out a winner.
1. Don’t disclose your reason(s) for selling
a. Why sellers have leverage: Home investors most often work with homeowners referred to as motivated sellers. These are homeowners who can be defined as being in a position of need and the more they need a solution, the less likely they are to get a home investor’s best offers. For instance, if you need to move quickly or are facing foreclosure, home investors know you’re running out of time and that you’re more likely to accept a deal, even if it’s not the best they could offer. The fact is your reason for selling is personal and you have no obligation to disclose it. Use this negotiation tip home investors don’t want you to know against them and don’t disclose. Doing so will hurt more than it helps you.
b.How to use this against home investors: At the beginning of an interaction most home investors will ask questions like “why are you selling”, or, more subtly, “what’s got you thinking about selling”? Be calm, stay cool, don’t disclose. Instead respond with something like “I’m just exploring my options and would like to see what offers you can provide.” Even if your situation requires a rapid solution, legitimate home investors have proven systems that can supply quality, rapid results on your timeline so they do not need to know your reasons.
If you need to move quickly or are facing foreclosure, home investors know you’re running out of time and that you’re more likely to accept a deal, even if it’s not the best they could offer. The fact is your reason for selling is personal and you have no obligation to disclose it.
2. Show your hand last
a. Why sellers have leverage: Sellers should not be the first to offer a price. The reasons for this are obvious – if your offer price is below your home’s current value, some home investors will agree on the spot which can potentially cost you thousands of dollars. Moreover, offering your price first sets the ceiling in which to negotiate down from. Ultimately, you’ll need to offer a price but let home investors give you their offers first.
b. How to use this against home investors: Home investors will always ask about the price you want. Just as the above negotiation tip home investors don't want you to know, stay calm, be cool, don’t disclose. Instead respond with something like “I’m not sure what my house is worth so I was hoping you could help me determine this” or “I’d like to see what you can offer, and we’ll go from there.” This keeps sellers in a strong position of leverage as the home investor has no knowledge of your negotiation ceiling. On the other hand, when receiving offers from home investors you gain knowledge of their negotiation floor and can then negotiate more effectively between your ceiling and their floor.
3. Marketing costs are crazy expensive
a. Why sellers have leverage: Did you know Google Ads on average costs home investors $75 per click? Did you also know that home investors need about 20 clicks to earn 1 lead and they need about 5 leads to close 1 deal? Add these together and home investors spend between $4,500 and $6,000 per deal. This doesn’t even include other forms of marketing like postcards, automated emails, and website hosting fees. The result is that home investors come to covet each and every lead and will go to great lengths to secure a deal with you.
b.How to use this against home investors: Because the cost of securing one deal is so high, some investors are ready to trade profit for the sake of completing more deals. Legitimate investors like Good Vibes Homebuyers seek to earn 10% profit on flips and $100/month on rentals so ask investors about their projected profit. Anything more than 15% or $200/month should be negotiated down to make your profit go up.
4. Home investors have lots of competition
a. Why sellers have leverage: Supply and demand dictate price. In other words, the less there is of something and the more someone wants that something, the greater its value. The fact is there are hundreds of home investors and as shown by the astronomical cost of Google Ads, each and every lead received by home investors is extremely valuable which causes legitimate investors to negotiate in good faith so that they don’t lose your deal to another.
b. How to use this against home investors: Unlike in the retail industry where competition forces prices down, letting investors know you’re seeking competing offers forces prices up and allows you to expose and avoid illegitimate home investors like real estate wholesalers. Letting them know also subtly conveys that they must compete to earn your business by presenting you with their best offer early on. This negotiation tip home investors don’t want you to know will save you weeks of time and thousands of dollars. Contact Good Vibes Homebuyers now and we’ll present you with multiple offers today that pay you thousands more.
1. What’s another negotiation tip I can use against home investors?
a. After receiving an offer, reject it and don’t give a counteroffer. This is risky because home investors can back out of negotiations entirely or even send a lower offer. To keep them in the game, ask them to send a new offer; if they’re still interested, they will.
2. Which one of these negotiation tips home investors don’t want you to know is the most important?
a. Remember that every seller (your lead) is extremely valuable to home investors, the amount of competition benefits sellers directly, and that home investors ask questions designed to uncover information about your price and urgency for selling. To get the best deal, it’s recommended that you implement all these negotiation tips home investors don’t want you to know in unison with one another.
3. Where can I find more tips on negotiating with home investors?
a. The book “Never Split the Difference” by Chris Voss is a great resource that many home investors use to negotiate with sellers. Level the playing field by reading a summary of the book’s strategies.
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