When buying a real estate investment:
1. Check if the seller is motivated to sell the property
In real estate investing, dealing with someone who does not really want to sell their property is a waste of time – you should forget about them and move on, no matter how promising the deal might look like. How to check the seller’s motivation level? It’s relatively simple: try to make an appointment. If he or she puts it off (especially if it happens a few times in a row), there is a 90% chance that the seller is not motivated to sell.
2. Inspect a property before making your first offer
Never, ever make an offer before a close inspection of a property. This will put you on the back foot throughout whole negotiation process! Also, don’t let the seller force you into making your offer RIGHT AFTER the inspection. You will need at least a few hours to prepare your final offer. It’s best to inspect the property and then make an appointment for the following day. Do not make any offers before that time!
3. Prepare more than a single offer
Do not enter negotiations with only a single offer. Even if you don’t have any aces in your sleeve, make sure that you can make at least three offers – and that your final one is still profitable enough to enter the deal!
4. Talk to the seller while leaving
If you and the seller can’t reach an agreement, try this simple trick: make your final offer standing at the door. First off, this way you give a clear sign that the seller can’t hope for a better deal. Then, this puts the seller on notice that you are about to walk away from the deal – he or she may not like your offer, but there is no guarantee that the next real estate investor will give the seller better terms. This can often make the seller more receptive and accept your proposition.
Selling your investment property:
1. Be sure that you really want to sell the property
Before you tell anyone that your property is on sale, think if it is really the case. If you deeply hate the idea of selling the property, it is generally a good idea to try to keep it. Every real estate deal has plusses and minuses. If you sell, you get instant cash profits, but sacrifice long term capital growth. If you decide to hold, the opposite applies.
2. Be reasonable
When it comes to negotiations, don’t be ridiculous – you can demand high prices, but make sure that they are reasonable (certainly not twice the average). You will only be left with an overpriced property that will be difficult to sell. Moreover, making such high offers may cause some real estate investors to back out from the negotiations. You usually can hope for more than the buyer’s first offer though, so it is always worth to haggle a little.
3. Read through all the clauses and contingencies before signing anything
There’s an old saying: “The devil’s in the details.” Nowhere is it truer than in real estate deals. Before you sign anything, read the contract (especially the small print). Such things as being held responsible for making all necessary repairs requested by the buyer or agreeing for waiting six or seven months for the money may spoil even the best-looking deal.
4. “There’s always another buyer around the corner”
If the purchaser does not seem to be able to meet your price expectations or offers you terms you cannot really accept, don’t waste your time. There is always another purchaser around the corner – and even if there won’t be anyone else, you can always call the buyer later, can’t you?