When we do deals in real estate, we’re talking money and profit. Money is one of the main reasons why we got into real estate, and it’s one of the most important factors in a real estate deal.
So it’s not ironic that one of the main hurdles that a real estate investor has to overcome is in finalizing the property’s value with the seller. Agreeing on the price of a property to be sold is a challenging situation. As the real estate investor, you have to think of a way to have your price considered for the property. You’ll be the one investing money in it, after all.
But it’s not always an easy flow when considering the price for the property, especially if your price is not what the seller had in mind. There are times when the seller’s price is lower than yours and would only give you a small profit at foreclosure.
It all boils down to how you can get the sellers to go with your prices. And there’s a way to have the sellers agree on your price without having to get on the seller’s bad side. You wouldn’t want the sellers to turn away from you when you force on them a price that may seem unreasonable to them.
All you really have to do is to make your price the reasonable market value for the property. Explain the breakdown of your total price to the seller. Let the seller contemplate on the real value of the property as you perceive it to be.
Step # 1: Ask for the seller’s price on the property.
Don’t directly state your price. Consider all odds first. The seller has his reasons for setting up a price. It’s good for your business relationship to hear the seller’s side of the deal. The last thing you want is to blow off the deal so you don’t want to force things on the seller and make him feel frustrated with you.
Step # 2: Agree with the seller’s price… for now.
You read it right. Agree with the seller’s price… for now. It’s a nice feeling when an idea is appreciated. The seller went for the price he thought was reasonable, and it is to be commended, even if it is has a big difference with your own price evaluation.
Step # 3: Bring in your price to the picture.
After taking the seller’s price into consideration, it’s time to bring in your price! Oftentimes there will be a great difference between your price and the seller’s price. You will have to give the breakdown of your own price then.
Enumerate to the seller the expenses, the discounts, and the minuses. You can include an investor discount of 10-20%, stress out the fix-up and repair costs if the property is really in despair, include the commissions, and other factors that have made up your market price.
Step # 4: Make them feel that what the seller is doing makes sense.
Throughout this whole process, the one thing that you have to remember is to make the seller feel like all that he’s been doing has made sense and is reasonable. Getting him or her to agree on your price will be at times frustrating. But you can still foster a good relationship with the seller when you don’t make him or her feel like he or she was mistaken on the market value of the property.
The property is fixed up, and the price is being decided. But one thing is absolute in getting the deal done and that is to maintain a healthy business relationship with the seller.