- Know the Highest Price YOU Can Pay
- Present an Airtight Offer
- Close Every Single Deal You Win
Know the Highest Price YOU Can Pay. Sounds simple enough, right? Negotiation usually goes back & forth, with seller & buyer starting high & low respectively, then meeting somewhere in the middle. There certainly is a place for this style of negotiation, but NOT when there is a competitive situation with more than one offer on the table. This is when you want to present your strongest offer.
In this situation, you need to calculate your actual highest offer and present that amount. You will fight the urge to start low and meet in the middle. Many of the losing offers are often just $2K-$5K below the accepted offer-those buyers barely lost the deal for being just a little bit too cheap. Know the highest price you can pay and make that offer.
Present an Airtight Offer. An airtight offer is an offer which you cannot walk away for any reason (other than title issues) once that offer is signed. This is airtight:
- Large Earnest Money Deposit – 10% Earnest money is large. I’ve accepted several offers presented with 100% earnest money. Those buyers are serious and always closed their deal.
- No Due Diligence Period – Knowing what you can pay means you don’t need inspections or contractor bids to move forward on your offer. The strongest offers waive their inspections & attorney review period. These buyers are serious and always close their deal.
- Quick Closing – The strongest offers don’t need 30 days to close, they can close in 2-3 days if needed because they actually have the cash to close.
Close Every Single Deal You Win. If you have been in the real estate investment business any length of time, you already know that certain brokers & wholesalers bring a large percentage of the deals to the market. Those are HIGH VALUE contacts to the savvy investor and you benefit when you realize that they are always judging you & your client based on past deal performance.
There are agents and buyers I’d likely never again accept an offer from due to their behavior during the transaction. You wonder, “What did they do?” Either they attempted to renegotiate a lower price or simply never closed the deal. I don’t feel STREGTH from the offers they present after that point. Your reputation for closing will win you deals or cost you deals, depending on how you perform.
Now, if you know your number, present and airtight offer, and close quickly with no headaches, you cement a positive reputation with the parties in that transaction. Do that often over a career, keep presenting your offers, and you will win dozens of deals at better prices when the circumstances are in your favor.
This can be tough because when you don’t win a few you may stop presenting offers. You begin to think you can’t win. When you know your number, (and you’re not too conservative), you present airtight offers with above average hard (think 10%+ EMD) earnest money deposits, and are willing to close in days instead of weeks/months, you will periodically win deals on those terms over competing offers at highest prices.