4th Step: Getting the Price Down
How to get the lowest price on a Wholesaling or Seller Financing Deal
2 of my favorite real estate trainers were David Finkel and Peter Conti. I learned this almost 20 years ago from them.
The 1st technique – What did you realistically expect to get
The 2nd technique – Using ranges
The 3rd technique – Picture a fictitious buyer through an agent to knock 6% of the price
A mistake I find many investors that have trouble getting the seller to come down in a fashion that still keeps both you the buyer and the seller feeling good, it’s a mistake in negotiating price.
How to get the sellers to participate in the financing?
Well need to maintain rapport throughout the entire negotiation that just the beginning.
Being a bully forcing the seller to do all the repairs that you need to do, all the costs of closing, and how the house needs all this work it’s not that attractive right now, this might work if you are purely wholesaling, but doesn’t make you feel very good as a business operator.
I like to use these 3 techniques right in a row….
You: what was that price you wanted for the property again?
Seller: I’m asking 500,000 for the property.
You: Oh and what did you realistically expect to get for it? (1st technique)
* Seller: realistically, I think of get 470, 480.
* You: okay so you realistically expect to get around for 460, 470…(2nd technique)
* right, that make sense to me.. That if it realtor came in here right now with a serious buyer was willing to give you that full 470, or sell, you probably turn that down home? (3rd technique)
* Seller: no, at this point I’d probably take it just be done with it.
* You: sure I understand. Let’s see… 6% of 470000 is… Hang on a second.. It’s been a long day for me.
6% of hundred thousand is 6,000 ….and of 6% of 400,000 is 24,000,
and 6% of 70,000 is 4200.
(That’s 24000+ 4200 or $26,200)
(If you haven’t heard me say this before, you need to play little dumb, play like Lieut. Colombo, scratch your head, the longer you can take with this calculation the better. If you just punch it in your calculator and go 470 thousand times .06, that’s not powerful. What is powerful is the seller thinking God that’s a lot of money, as much is possible.)
Seller: jumping in.. That’s 26,200.
Investor: oh thanks for doing that, 26 200. Okay so the bottom line you’ll be getting about 435,000, okay that makes sense.
notes: number 1, what did you realistically expect to get, needs to be said with the right tonality. The word realistically, spread it out, elongated, and when use the expect to get part, say it at a higher voice.
Notes: number 2, whatever the lowest prices seller gives you into a range with his number at the higher end and, if the seller does the object the low end of the range as a new point from which you’ll negotiate.
Notes: you buy language should be nodding up and down you say this
Notes: the range you use is important to match your local market: a hot market is a smaller range, a slow market is a higher range.
Notes: it’s important that you use negative phrasing and it is important that you do the math slowly. To ensure that the seller feels comfortable with the final answer. So this lowest price is going to be your starting basis not the final price. If you’re writing anything down, don’t write anything down until you get to this starting basis price. In that example 435,000. And then when you write this number down you are legitimate ties an it as the top dollar price. You may need to negotiated lower or give him this price
So what you just learn how to do is to simply and easily get the price down by lease 8 -10% or more of the original asking price
Next – The Magical 2 words to use to never lose a negotiation.