You bought an investment property, did an outstanding rehab and listed it with your realtor. Then it happens: You get a written offer from a potential buyer. Now what?
Let’s first look at what’s normally done, then look at another way that may work better. Your realtor emails you the offer that is usually lower – sometimes a lot lower – than your asking price. Also, the seller is regularly asked to pay a portion of the buyer’s closing costs. Lastly, you’re given two days to respond to the buyer’s offer. After thinking things through, you respond with a counter offer and give the buyer two days to respond. The negotiation drags on until you reach an accord or the potential buyer walks away. Having the buyer and seller fax offers and counter offers back and forth without ever meeting never made much sense to us.
Early on, we all learn that the best way to find common ground – to reach an agreement – with folks is to meet with them face-to-face and talk things through. When you want to get to know someone – want to know what they’re thinking – emails, faxes and phone calls just don’t cut it.
When a buyer makes us an offer, our first question is: Why does he want to buy our property? The answer to this question is a critical piece of the negotiation puzzle. Take a good look at most purchase and sale contracts. Nowhere does it say, “I want to buy your house because…” The only way to find the answer to this all-important question is to meet with the buyers and ask them.
Here’s what Kim and I do instead of going the offer-counter offer, take-five-days-to-make-a-decision route. When an offer comes in, we immediately ask for a sit-down meeting with the potential buyers. We’ll meet them anywhere – at the property, the realtor’s office or over a cup of coffee. In addition, we encourage everyone to join us – the realtors, the buyer’s family members, their attorney, etc.
Here are the results: 1) Getting together is a lot more fun than faxing offers back and forth with folks you’ve never met. 2) Usually we reach a yes-no decision in less than an hour instead of wasting time dragging things out over several days. 3) We quickly find out why the buyers want our property. 4) We easily discover any roadblocks that may keep the deal from happening. This allows us to work out a creative win-win solution to the problem right then and there.
The secret to being a great negotiator is to learn what the other side wants, why they want it, then help them get it. The only way you can learn what the other side wants and why they want it is to ask them…and it’s best done face-to-face.
The next time a buyer makes you an offer, why not give our method a try?
Bill and Kim’s North Georgia Real Estate Investors Association meets on the second Thursday of each month, from 7 to 9 p.m., at the Hilton Garden Inn off Main Street in Cartersville, Ga.
For more information, go to REIoutpost.com