For most homeowners selling their house can be one of life’s most important events, and the price you negotiate with a real estate investor, along with the terms, will decide how much money you get at closing and even over the next several years. If getting your asking price is the focus and/or you want terms that continue to pay you for many years, this guide to negotiating with real estate investors will teach you how to succeed at each.
What’s in it for you
Take a moment to think about the last time you negotiated something, can you even recall? Now, ask yourself when the last time a real estate investor negotiated to buy something as significant as a home? The thought can be intimidating, however, this guide to negotiating with real estate investors will help you level the playing field. Here’s how to do that:
Real estate investors rarely offer their best price at the start of a negotiation. They do this for two reasons: (1) if a seller accepts the first offer the investor gets a sweet deal. (2) Having wiggle room to increase their offer facilitates reaching a deal, showing good faith in the negotiation. After you reject the initial offer, follow-up with a counteroffer but then keep quiet. Be cool. In most cases, the one to break silence in real estate negotiations is the one who loses out. Don’t let that be you.
This is one of the most important tips in the guide to negotiating with real estate investors. Informing companies who buy real estate of other offers subtly communicates that there’s competition, so they know to present you with their best. For you to get the best offers from all investors it’s critical that you share the price and terms of your other offers.
This benefits sellers because it sets the floor for future offers or it can help uncover if you’re dealing with a real estate wholesaler. In short, wholesalers auction off real estate contracts at the expense of the property owner. If your existing offers are out-of-line with the property’s market-driven-value, legitimate real estate investors like Good Vibes Homebuyers will be able to sniff out these predatory middlemen and save you thousands of dollars and months of time.
Chris Voss, author of “Never Split the Difference”, says that being right is not the key to negotiating, it's having the right mindset. At the beginning of negotiating real estate your all-encompassing focus should be on the investor; avoid internal dialogue and just listen to what they have to say. When responding ask questions that begin with “what” and “how”. For instance, what about my asking price doesn’t work for you? What would you need to make it work? How can we make this deal happen?
These are known as calibrated questions and they’re gold in negotiating successfully with real estate investors. They make your counterpart feel like they’re in charge, but it’s really you who is framing the conversation. These questions also implicitly look for investors of real estate to solve your problem and will inspire them to speak at length, often revealing telling information that will aid in successfully negotiating your real estate deal.
Once you’re actively engaged in negotiating a home sale with a real estate investor, it is frowned upon to accept an offer from another party. The same is true for real estate investors - it is unethical to acquire another property if it depletes the cash the investor would have otherwise used to buy house.
In the interest of quickly negotiating the sale of your home, consider establishing a date on which you’ll no longer negotiate with real estate investors – and tell each real estate company of your deadline. This home selling negotiation strategy compels house investing companies to act, so you can either sell your home quickly, or move on quickly. This investor negotiation guide recommends allowing 2-4 days for negotiations.
This home investor negotiation strategy can help you uncover the kind of real estate investor you’re negotiating with. Are they wholesalers out for a quick buck at your expense, flippers, buy and rent investors? Knowing which will help you estimate how much profit the investor stands to make.
Most home flippers target 15% profit, so this real estate negotiation guide encourages you to negotiate down from there. Although some buy and rent investors purchase properties with negative cash flow for the tax deduction, the fact is, few are interested in losing money. Request information on the home investors projected monthly income and ask what they think is reasonable. Anything more than $200 per unit, per month approaches unreasonable territory.
When negotiating with real estate investors, asking what they plan to do with the property will help you uncover the kind of investor you’re working with. Knowing will help you understand how much profit they stand to make which can be used to gain an advantage in your real estate negotiation.
The focus of negotiations for the real estate investors at Good Vibes Homebuyers is primarily buy and rent investments. Nonetheless, from time to time, we do flip properties but because our focus is on big volume, not big profit, we're able to offer you thousands more than other investors. Check out our net proceeds calculator to estimate how much you could make.
When receiving an offer, you’re probably scanning for one thing: price. Some offers may first seem great, but significantly less so once you dig in so you must also focus on 5 other things:
With dozens of real estate negotiations and closings completed by GVH, we’ve found that closing costs range from 2-3% and any assistance/credits affect a seller’s bottom line. Value added free services is cash house sellers don’t have to come up with and can make your transition much smoother.
Contingencies are the #1 killer of contracts so be sure your investor already has financing in place or cash on hand – ask for their two most recent monthly bank statements. The type of deal will control how soon you get money from negotiating the sale of your home.
1. What’s another tip for negotiating with real estate investors?
Reject their offer and don’t provide a counteroffer. This home sale negotiation strategy is gutsy because the investor can play hardball or even submit a lower offer, but it sends a signal you can’t be “had”. To keep them in the game, ask them to send a new offer, if they’re truly interested, they will.
2. I want to get the highest price; how can I achieve this?
A good deal to sell your home requires that sellers have good alternatives. If sellers lack them, they lack bargaining power. Although it seems obvious, many house sellers do not seek options and therefore can’t know if the deal they accept is the right/best deal.
3. Where can I find more info to help me negotiate with real estate companies?
As our name shows, we put Good Vibes Only out into the world so even if you’re not selling to us, we’re glad to offer any real estate negotiating advice for free. Submit an offers request and add a short message that you're seeking help on negotiating with real estate investors.
How does getting the price you want sound? What about getting terms that continue to pay you for many years? Good Vibes Homebuyers will gladly provide you with multiple home selling solutions and services that no other home investor companies can beat. Contact us today so that you can thrive with Good Vibes Homebuyers!
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