Robyn Seymour - 7 Steps for Successful Negotiations in Real Estate Investing

To find out what is really significant to the seller and what they really want by asking a lot of questions. Don’t be frightened to ask questions as this is probably one of the weakest skill sets I see in investors; they don’t feel comfortable asking people questions. Many times when I am coaching investors, they will call me to ask about a deal and they do not even have basic information from a seller because they were to afraid to ask. If you don’t have the answers, there is no way to help the seller or structure a deal that works for you.

Ask open ended questions. Close ended questions will only get you a yes or no answer, but by asking open ended questions you allow the person to speak freely which will give you more information to work with. You need as much information as possible so you can create a deal and solution that works for both of you. Here are some examples of questions to ask and how to ask them: You don’t want to ask how many bedrooms and baths does it have. It is better to say, Can you tell me about your house? This way the person will tell you how many bedrooms and bathrooms along with other things about the house. Another great question to ask once the seller has described the house is “Wow, it sounds like a great house and you’ve lived there a long time. I bet you have seen a lot of changes over the years.” Once they answer that, I’ll say “So may I ask you if you have lived there so long what is making you want to move now?” By asking this I am getting what their real motivation is. Plus they just substantiated that it is a great house and they’ve lived there for a long time so now they feel like they have to give me some substantial kind of reason to justify why they would want to give that up. Most times when I ask this question the seller just opens up and tells me everything that is going on in their life. Another common question is “does the house need any repairs?” The answer to that is usually, NO. But if I say “tell me about the condition of the house”, the seller has no idea where to go with that. They will start describing all different parts of the house and what’s going on. I’ve had sellers tell me that the biggest problem is that the basement floods when it rains. That is crucial information I might have never gotten by just looking at the house.

Connect to the seller on some personal level. As they talk to you try to find something in common. For instance if they tell me their kid is in college, I’ll tell them mine son is also in college. The more comfortable they feel with you, the more information they will share. The more comfortable they get in talking with you, the easier it will be later on when you get to the much more personal financial questions about their mortgage and payments. What is important here is that they see you as a consultant and somebody who is on their side.

Listen to everything that the seller has to say. This is absolutely critical because you don’t know what piece of what they are going to say is going to play into the deal later on. One time I had a lady tell me that her son had gotten hurt in an automobile accident and was in rehab. At the time I didn’t establish that as important information. But later on in the transaction what I realized was that her son was still in rehab and what she really wanted was for him to be able to complete his rehab while they still lived in the house. So while I was pushing for a quick sale on the house what she really wanted was to be able to stay in the house. Once I understood that and I linked all those things together in my head, I offered her that we could sign the paperwork that day so that you know that the house was sold, but she could move out of the house anytime in the next six months. Once I made that offer to her it was nothing for her to sign the agreement. But I had to have had those early conversations to really be able to understand what was going on in her head.

Don’t knock the seller’s house. You do not want to insult the seller. This is their home and the place where they live. By going into the house and pointing out everything that is wrong with the house, you are creating a me vs. them divide. There is never a situation where it is appropriate to knock the house. In fact, if there is anything I can compliment about the house I try to do that. Even if the whole house is falling apart but there is a beautiful rose bush, I’ll compliment that. Again, you are trying to build rapport and a personal connection. You will never be able to if you are pointing out all the negatives about the house. Once the personal connection is made the negotiations will be much easier.

Determine the real motivation for selling the house. What’s really important to them? What’s really going on? For instance, it could be that they are just behind in their payments and they just can’t take any more. It could be just something simple like that the house is in disrepair and they just want to move on and know that there is no way that they could sell it. It could be that they are just fine financially but that they are getting a divorce and they just want to get away from the other person. The house is the only thing holding them back. Whatever it is you need to uncover what is important to them. Why do they want to sell now and what is really their hot button? What do they need and what do they want? Remember people always respond more to what they want than what they need. For instance, they may really need to sell their house but what they really want is to be able to relax again and to enjoy life. What they really want may be for the bankers not to call them any more. May be to not receive any more phone calls from attorneys. What they may want is to not have to deal with their spouse. What they may want is for their spouse not to get any proceeds from this house. What they may want is to be able to move into an assisted living house tomorrow and not have to worry about this house any more. What they may want is to not have to worry about how I am going to move all of my personal belongings. So always get down to what they really want and then present your offer in terms that address their wants.

Know what is important to you. You need to know what your deal breakers are, what you can easily give in on, and what you absolutely have to have. Sometimes what may be important for them may not be a big deal for you. The things that you have to consider are the price and the terms. How does that price have to be paid to them? Are they going to give you any sort of seller financing? Are you going to be able to purchase the property subject to the existing mortgage? What about a vacancy period? Can you have control over the house for some time that nobody is in the house? If you want to wholesale it, can you get your buyers in easily? Or if you want to renovate it can you get all your contractors in and get all the bids done early. What about tenants? Are there tenants on the property? Make sure that you get something in turn from the seller who receives something from you.