The Book on Negotiating Real Estate Quotes

“Just because you don’t walk away with a deal doesn’t mean you shouldn’t try to help the seller solve her problem(s) if you have the ability to do so. Perhaps you could refer her to a real estate agent who can help her? Your goodwill may come back to you in the form of a deal further down the road.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“To reject an offer or counteroffer, sometimes it’s easiest to simply say that you’d lose money by accepting the deal: “I appreciate that counteroffer, but if I were to pay $150,000 for this property, I’d end up losing money—I’m not going to make it long in this business if I do deals that lose me money.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“The Most Important Tip of All I want to end this chapter with the most important tip of all—not a negotiating tip per se, but a general investing concept that you must consider throughout any real estate negotiation: No Deal Is Better Than a Bad Deal”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“If you walk away from a negotiation because you really can’t concede anything additional to the other party, make a point to keep the door open. Let the other party know that you are still very interested in working together, and should anything change on either side, you’d love to reestablish the discussion and continue working toward an agreement.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“I’ll then step away to call my wife, spend a couple minutes on the phone with her, come back to the buyer, and say: Me: “Okay, my wife is good with everything except the closing date— she reminded me that we have a vacation scheduled the week you want to close, so we’d have to close the week prior. Are you okay with an earlier closing?” At this point, I’m already off the phone with my wife, so the buyer knows that any further negotiation or a request for more concessions from me would likely result in another phone call and more wasted time. Since I didn’t ask for anything too big, there’s a reasonable chance he’ll just say okay, and we’ll get the deal we wanted, plus an earlier closing date.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Don’t Interrupt Letting the other party talk for too long during a negotiation can get very uncomfortable. By not interrupting a long speech, our silence can subtly indicate that we agree with what they’re saying—even if we don’t. And, oftentimes, the other party will say something that we really want to address or contradict, and we know that if we don’t do it right away, we may lose our chance. Even with those downsides to letting the other party speak too freely and continuously, it’s generally wise to let them speak without interrupting them. First, interrupting is considered rude. We don’t want the other party interrupting us when we’re speaking, so we should be modeling that behavior ourselves when they are speaking. But there is a more important reason why it’s bad practice to interrupt someone who is speaking during a negotiation: You may be cutting them off right before they are about to offer you a concession! As we discussed above, when you listen more than speak, you give yourself an opportunity to collect information from the other party. You also give the other party the opportunity to talk themselves into a corner and potentially offer up more than they should.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Avoid negotiating over text message or email. If the other party wants to ask for a concession, make them ask you face-to-face, or at least over the phone. It’s easy to ask for things in writing—don’t make it easy for the other party to ask for concessions! Don’t”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Never negotiate with yourself. In other words, once you put out an offer or counteroffer, don’t provide any concessions to that offer until the other party responds.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“This is an important tactic at other points in the negotiation as well. When the other party throws out an offer you can’t accept, say nothing. When the other party asks for a concession you don’t want to provide, say nothing. Even when the other party offers a concession to you, but you think you can get more, keep your mouth shut. In our society, most people get very uncomfortable with prolonged silence. Especially when someone else has initiated the discussion and we are now expected to answer. By maintaining your silence, one of two things is likely to happen: The other party will get uncomfortable with the silence, and will break it themselves; or The other party will interpret our silence as anger or disappointment, and will work to rectify the negative reaction.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Keep Your Mouth Shut The most powerful (and often one of the easiest) negotiating tactics can be summed up in a single word: Silence. Talking less during a negotiation is almost always a good thing. First, the less we talk, the less information we give that the other party can use against us. Secondly, when we talk less, we tend to listen more, which can provide us information that might be useful later in the negotiation. But, when we say “silence” we don’t just mean talking less and listening more. We literally mean silence. After you put out an offer (or counteroffer), shut up. Don’t say another word until the other party responds, no matter how uncomfortable you are or how long the silence lasts. The most obvious reason to do this is that the other party might need some time to think about your offer and if you give them enough time to consider it, they may just say, “okay.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“The harder you make them work during the negotiation, the less chance they’ll back out when the negotiating comes to a close.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“This is also a great tactic if negotiations ever stall—revisit the things both parties agree upon and remind the seller of more of those things that may not have been discussed for a while. For example, if things have come to a standstill in the negotiation, you might say: Investor: “I know we haven’t yet agreed on price, but I think we’re pretty close here. Remember, we’re happy to take the house as-is— you don’t have to clean out the basement or the garage. And our title company is happy to come here to your house to sign all the paperwork, just to make everything more convenient. My offer of $90,000 really is my top number, but I want you to be confident you are getting a great deal, so I’ll give up some of my profit and go to $91,500. Can we close on that?”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“By focusing on the agreeable issues, the other party will get the sense that progress is being made—that an agreement is on the horizon—and they will be more inclined to continue moving forward with the discussions. For example, you might write down a counteroffer and say to a seller: Investor: “Okay, it sounds like we both agree on the major points— we’re going to pay for the property in cash, we’ll close on your preferred date of February 16, and my partner will need to see the property and sign off on the deal. Now, all we need to do is come together on price. I know you said that you couldn’t do $87,500—what if I can increase my offer to $90,000, and we include a five-day inspection period for me to bring in my contractors to take a look at the property? Will that work for you?” In this case, even if the parties were far apart in price, we’re sending the message to the seller that we’re actually pretty close to a deal. In fact, I like to reiterate all the things we agree upon every time I make a counteroffer.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Don’t let negotiations ever become too tense. Try to keep things light by smiling, interjecting with small talk, and making jokes. Negotiations that are too serious often end up failing and creating hard feelings between the parties.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Instead, present the offer confidently, and then shut up and give the other party the opportunity to draw his own conclusions. Once you present the offer, sit back and just let them process what you have said.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Investor: “Great! Now, I know we talked about the fact that you want $110,000 for the house. I already mentioned that I’d be purchasing your house as an investment, and unfortunately, I just can’t afford to pay that much and still be able to make a profit on the deal. But, here’s what I can do. I can either pay you $90,000 in cash for the property or I can pay you $100,000 if you’re willing to owner finance the sale. That means we would complete the sale in ten days, but you would wait six months to collect your $100,000. Which of those options would you prefer?” At this point, if you’ve done a good job of selecting your offer prices (e.g., you weren’t too generous), there is a good chance the seller isn’t going to accept either of those offers without some additional negotiation. The good news is that we’ve gotten the seller to implicitly agree to all the other terms and contingencies in the contract. Not only that, but we’ve now given the seller two options for the sale price, and his response to your final question (“Which of those options would you prefer?”) will give insight into which direction the negotiation goes.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“To avoid dealing with someone who thinks they’re the decision maker but isn’t, the best question to ask is, “Is yours the only name on the title?” If the answer is “yes,” you can safely assume the person(s) you’re speaking with has the legal authority to sell the property.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“In a real estate transaction, there are several ways you can determine if you’re dealing with the decision maker. As we mentioned above, in many cases, it may be easiest to ask flat out, “Are you the one who will make the final decision on this purchase?”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“When offering on a property where you don’t think you’ll have competition and where you plan to pay cash, make your offer with financing anyway. This way, when you need a concession to provide to the seller later, you can offer up a cash purchase instead. This was your original intent, but now, you will likely get something in return for it.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“In some situations—especially when you’re not confident that your opening bid is reasonable—consider offering a range instead of a single value. For example, instead of saying, “I’ll give you $100,000,” consider saying, “How about somewhere in the $80,000 to $100,000 range?” Giving a range allows you to “feel out” the other party, indicates flexibility on your part and may make the other party feel as if they “won” should they accept an offer in the part of the range that most benefits them.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“While great negotiators can sometimes turn situations where there is a gap between buyer and seller MAOs, in many cases, the price gap is impossible to overcome and the likelihood of a deal is small. For that reason, we typically like to take one of two approaches to these types of negotiations: Go in with a very low offer (typically at or below your target price) in hopes of shocking the seller into realizing that his property is worth much less than he had thought. If he doesn’t walk away and is still willing to negotiate, there is a chance that he is more highly motivated than you had anticipated, and he may reduce his MAO.
If we wanted to go this route for the example above, we’d likely pick an opening price bid somewhere in the $140,000 to $150,000 range.
Communicate to the seller that you don’t want to insult him with a low price and that you don’t plan to make an offer. The seller will either thank you for your honesty (in which case there was no deal to be made), or the seller will ask you what your price would have been. If the seller is interested in what you would have offered, that’s an indication that he may be more motivated than we suspected, and again, may be willing to move off his MAO.
If the seller asks you what your offer would have been, we typically will present the offer exactly as we did in the first example above, but indicate that we might have a bit of flexibility in that price.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Before we begin let’s think back to Chapter 5, where we attempted to get the following three key pieces of information from the seller or the seller’s agents: The seller’s source and level of motivation. The payoff price of the house. The seller’s stated lowest acceptable sale price.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“The Six Major Components of an Offer”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Hold Back Some Concessions”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“While the payoff price of the property shouldn’t necessarily drive your opening offer, you should realize that in most cases, the payoff price of the house will be the seller’s worst-case MAO (this is what they need to get from the sale). In many cases, their MAO will be higher than the payoff (they want to walk away with additional cash from the sale), but rarely will it be lower.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Offer Low—But Not Too Low It’s often said, “If you’re not embarrassed by your first offer, you offered too much.” While we don’t completely agree with this sentiment, we understand the point—a lower first offer is going to give you a better chance of eventually hitting your target point. But, just how low should you go? The general principle behind the opening bid in any negotiation is that it should be low enough that you have plenty of room to come up to your target, but not so low that the other party rejects your offer out-of-hand and refuses to continue the negotiation.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“The stronger the seller’s motivation, the less likely you are to insult them with a low offer. The more motivated they are, the lower your initial offer should be.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Non-Round Numbers Are Better at Anchoring Choosing a round number will send the message—especially to experienced negotiators—that you have no specific rationale for that price. And, if you have no rationale for a price, it’s reasonable to assume that you aren’t committed to that price. For example, if a house is listed at $250,000, and you offer $200,000, a smart seller will realize that it’s unlikely that $200,000 number has any specific meaning to you, and that you’re likely just fishing to see if the seller will budge on their price. On the other hand, if you were to offer, $204,200 on that same house, the seller will assume there was thought put into that offer, and will likely believe that the number has some specific meaning. You could reinforce this belief by communicating additional information to the seller when making the offer. For example, before offering $204,200, you might say to the seller: Investor: “I’m glad I met you today… this is actually perfect timing. I just left a closing this morning where I sold a previous property, and I have some cash available to make another purchase.” You haven’t said that the amount of cash you have available is $204,200, but given that your offer is so specific, the seller will likely assume a connection. The seller is now anchored to your $204,200 number, subconsciously thinking that this number is important to your side of the negotiation, perhaps even a requirement for you. Later in the negotiation, you can reinforce this anchor by saying something to the effect of: Investor: “I only have a specific amount of cash available to invest right now. I may be able to increase my offer a little bit, but not much.” Without saying it, you have reinforced the belief that $204,200 is the specific amount you have available to purchase the property, though you’re willing to reluctantly try to find a few more nickels under the sofa cushion.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“And if a listing has no pictures whatsoever, or no interior pictures, that’s an even better indication that the property is in such bad condition that the seller or agent believes the pictures would discourage most buyers from setting up a showing. Any retail property that is in distressed condition is going to get less buyer interest,”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property

“Pictures: If you can look at the pictures in a listing and determine that the property is in bad condition, other buyers can too, and they are more likely to avoid setting up a showing or making an offer on that property.”
― J. Scott, The Book on Negotiating Real Estate: Expert Strategies for Getting the Best Deals When Buying & Selling Investment Property