How to hammer down the price on prime real estate as a beginning investor
The idea with real estate is to earn money, not lose it. One way to gain wealth in real estate is to buy properties at a lower cost point than its assessed market value. When an investor can do this with prime real estate, it ensures that they will make more money when it comes time to sell. Additionally, the lower the purchase price, the more an investor’s capital is preserved for rehabbing and working other lucrative deals. The following are a few tips for hammering down the price on prime real estate that any beginning investor can employ when working deals.
Exuding Authority During Negotiations
When it comes to negotiating price, it is critical that an investor negotiates from a position of authority and power, not weakness. For this reason, it is critical to learn how to properly use real estate terminology, and how to make strong points for why the seller should come down on the price to meet the investor’s offer. Confident negotiators, those who come across as authority figures when negotiating for a price reduction, tend to be taken far more seriously than someone who sounds like they are unsure and working their first deal.
Always Ask If the Seller Is Motivated to Sell
The first question any investor should always consider, whether they are a beginner or a seasoned pro, is how motivated the seller is to sell their property. If the answer is that the seller is not very motivated, then this is a sign that negotiating for a lower price will likely not turn out well. If the seller is extremely motivated to sell, then this will provide an investor with the green light on a deal that usually means that negotiations could be fruitful. The problem is that a lot of beginning real estate investors fail to ask this question. Consequently, they waste their time trying to negotiate with sellers who are not really motivated to give them a good deal.
Dare to Be Bold with an Offer
If a piece of prime real estate has been on the market for more than 90 to 180-days, chances are it is significantly overpriced with respect to market sentiment. This is a problem for a motivated seller—especially if they need to move a property quickly. The good news is that a beginning real estate investor can always dare to make a really low purchase offer. However, if they are not getting a lot of offers on the property, the seller may counter with a price that is much lower than a beginning investor may anticipate paying.
Offer to Pay in Cash
You may not know this, but investors who make offers on properties for sale and can pay in cash are often taken more seriously than buyers who entangle a deal with third party financing. Paying with cash is attractive to sellers and improves a buyer’s ability to negotiate for a lower purchase price, because it typically ensures a quicker closing time. Secondly, it avoids the risk of the third-party financing falling through and creating complications along the way.
While there are many negotiating tactics that can help a beginning real estate investor to get a lowe purchase price on a property, there is one bit of advice that few beginning real estate investors carefully consider. The type of real estate agent an aspiring investor should be working with is one that is a real estate investor themselves. This type of investor will be a secret weapon who will know which real estate opportunities fit a new investor’s search parameters for the best possible deal when looking for prime real estate. This type of agent can be a kind of mentor and a beginning real estate investor go to person for a vast number of lucrative deals too, because they look at the local market through an investor’s eyes.