Negotiation Word Tracks Flashcards
(Buyer/Seller):
The buyer put in a offer, the seller countered within a reasonable price range, and neither the buyer nor seller will budge further on price.
Buyer:
John, you made an offer at $X Amount, the seller countered at $Y Amount. We are inches away from a contract. Do you actually want to buy this property? Or did you just make an offer to make an offer to make an offer?
Seller:
John, the buyer made an offer at $X Amount, and then you countered at $Y Amount. We are inches away from a contract. Do you actually want to sell this property? Or did you just say you wanted to sell the property to see what you what type of offers you could get?
Buyer: After asking if the buyer actually wants to transact on the deal.
Buyer:
By my understanding, it seems like you want to transact on the property. Now, the $X amount, between you and I, I’m just curious, did you plan on paying cash for the building?
Likely Response: (No, I’m getting a mortgage.)
Buyer: After the buyer tells you they plan on getting a mortgage to purchase the deal.
So, you’re literally paying out of pocket another X% on $X amount, which is about $Y amount. Does the deal literally make that much of no sense to you at all at $Z amount that it’s not worth the $X amount more?
Buyer/Seller: After a seller gives you their ideal price point for their property.
Okay, and how did you come to your number?
Buyer/Seller: After the seller tells you they came up with a number based on the assessed value of the property.
Okay, and the assessed value is based on what?
Buyer/Seller: After the Buyer/Seller tells you what they believe the assessed value of a property is based on.
We both know the assessed value means nothing. And essentially, to be honest, we are actually excited that the property is assessed for half the value because the taxes are lower. Now the taxes might jump up a bit, but that assessed value has been a benefit to seller. Now if the numbers make sense, then the numbers make sense.
Seller: When you have a few buyers who are interested in the property, and the price point can work if the seller is willing to adjust the terms.
Just out of curiosity, I have buyers who are interested, and let’s just say I can get you $X amount. Are you open to being negotiable on the rest of the terms? At this point it is either the price being negotiated or the terms.
Seller: When the seller is willing to seller finance, and does not want to accept a lower price for the property, but is willing to negotiate terms.
Okay great. Well, you said you were willing to seller finance at X% down at Y% interest. Would you be open to, hypothetically, less money down, and a little bit less of an interest rate? Because if you are agreeable, the buyer can probably make the numbers work.
Buyer: When you want to make sure the buyer is aware of the total amount down required to close the deal.
We’re talking about a $500k PP. You will have a 5% downpayment which is $20K. This does not include closing costs which will cost you roughly 3-4%. So, you will have 5% plus 3-4% out of pocket, so 9% total, which equates to about $45k out of pocket. Are you prepared for that? Now that may be a bit of an overestimation. It may be a smidge less, but I want to be conservative. So, are you prepared for that downpayment?
Seller: When discussing next steps toward selling the property after initial or follow up phone call.
What’s going to happen naturally, if we’re talking about next steps, I would typically come to the property to get a closer look and see if it even makes sense for my client. My client works a bazillion hours a week, they’re not going to take time off of work to see a property that isn’t on the market. So, I’ll stop by, I can take a look at the property, and we can talk about numbers when we meet. Obviously, my client is looking to buy within a certain price range depending on the property and its performance, you’re going to want a certain number, so maybe it works maybe it doesn’t, but if you’re open to the idea of selling, I would love to take a look and present the opportunity to my buyer. Does an afternoon or evening work better for you?
Seller: After the seller ask what your buyer’s budget is for purchasing a property.
They have plenty of capital to purchase this property at a fair price. But even if I told you my client’s budget is $10M, if the property is worth $2M, they aren’t going to pay 10. Right now, I have no idea.
Seller: When you are trying to determine a net amount the seller would accept in exchange for their property.
If I can get you a deal where you net x amount, would you be ready to move forward with a deal today?
Seller: When clarifying whether or not the seller cares about your commission percentage.
As long as you net the number you are looking for, do you care about my commission percentage?
Seller: When getting super clear about the commission percentage the seller would be okay with you earning on the transaction.
Okay, just to be super clear, if I were to get you a $1M contract for the property, would you be totally against paying a commission on that deal for 5%? So, 5% commission if I get you a contract for $1M.
Seller: When making sure the net amount to the seller is what is what they care about most, and not the purchase price.
Okay, so just to be super clear, you’re looking to net $X. It’s not about the $1M. It’s about the $X, is that correct?
Seller: When the seller owns a property free of debt and you want know if they would desire to refinance in order to purchase another property.
Okay, well you said you own a property free and clear. Would you do a cash out refinance of 50%, with an adjustable or fixed rate at a great percentage so it still cash flows in order purchase another property?
Seller: After they ask you what you’re seeing as far as opportunity in the market, and what would happen to them financially if they were to sell or refinance in order to cash out or to buy another property.
What I’m seeing right now is, would your payment be higher for a property at the same price point? Yes. However, we both know that good things don’t last forever, and out of curiosity, are you looking to grow your portfolio, cash out of a deal, 1031 exchange, etc.?
Seller: When letting a seller know what options they have for repurposing the equity build up in their property.
Okay, well you have a lot of money on the table. You can either take that money off the table by taking a profit today, or you can take some equity out of your property today and invest it in another property. You could also hold onto the cash and wait for interest rates to drop and be first in line for the next opportunity that will put you in a better position than you are today.
Seller: When presenting the idea of putting their proceeds from a sale into an investment fund.
Okay, well if I were to tell you there was a way you could move this money into an investment fund where you could actually get better returns than what you are achieving right now, would you be totally against taking a look at it.
Seller: When wanting to know what their net free cash flow is to determine if they would consider an alternative investment strategy.
Okay, well in a perfect world, if you could make a better return than what you are making today… what is your net free cash flow right now?
Seller: When convincing the seller that an alternative investment that would make them more money than they are currently making should be considered.
Okay great! Well, if you could make more than $X a year off of another investment as an example, regardless of what the debt or interest rate is, would you say that is a better investment?
Seller: After the seller objects because they don’t want to list their property.
Listen, I’m not in the business of listing properties, I’m in the business of selling properties. And based on what our conversation is, you’re looking to get the best price possible, correct?
Seller: When the seller objects to allowing buyers to walk the property. Your goal is to list the property for sale.
Okay, so hypothetically, if we were able to coordinate showings once a week, or once a month, but are still able to get you the best price possible while keeping everything at bay to where your super content and excited about the way things are getting done, would you be totally against listing the property for sale?
Seller: When you are convincing the seller that their price point is too high if they actually want to sell the property.
Do you want to list your property to sell (slight nod as you say it), or do you want to price your property to sit on the market (slight head shake as you say it)?
