In the highly competitive world of real estate investing, profitability and success often hinge on your ability to negotiate the best price for an investment property. Experienced investors know that negotiating real estate to secure bargain deals will streamline your portfolio’s growth and business scalability.
Whether you’re strategy includes fix and flip opportunities, rental properties, or land acquisition for new builds, mastering the art of real estate negotiation will give you an edge over the competition. However, negotiating a real estate deal can be tricky for investment beginners, and knowing the when, where, and how of real estate negotiating is pivotal to bargaining success.
In this article, we’ll discuss proven strategies for negotiating real estate, including the best times of year to shop for deals, how to leverage property conditions, and how to optimize relationships and research to secure the best market deals.
Whether you’re strategy includes fix and flip opportunities, rental properties, or land acquisition for new builds, mastering the art of real estate negotiation will give you an edge over the competition. However, negotiating a real estate deal can be tricky for investment beginners, and knowing the when, where, and how of real estate negotiating is pivotal to bargaining success.
In this article, we’ll discuss proven strategies for negotiating real estate, including the best times of year to shop for deals, how to leverage property conditions, and how to optimize relationships and research to secure the best market deals.
Seasonal Opportunities for Bargain Deals
The real estate investment market has never been more saturated with competition. Taking advantage of seasonal opportunities for different investment types can unlock new opportunities and discounts for savvy investors.
Fix and Flip Properties
The winter months (November – February) present unique opportunities to employ negotiating tactics for fix and flip homebuyers. With holidays, time with family, and travel plans all peaking during the winter months, both consumers and investors slow their searches. This means more available opportunities with less competition.
And, with less buyer activity on the market, sellers, whose properties did not sell during peak real estate months, are typically anxious and more willing to drop their asking price. Additionally, sellers may be motivated to sell before the end of the year to capitalize on year-end tax benefits.
And, with less buyer activity on the market, sellers, whose properties did not sell during peak real estate months, are typically anxious and more willing to drop their asking price. Additionally, sellers may be motivated to sell before the end of the year to capitalize on year-end tax benefits.
Rental Properties
Similar to fix-and-flip properties, the best time of year for long-term investing is during the winter months. Less competition, anxious sellers, end-of-year benefits, and, believe it or not, holiday cheer make negotiating real estate during the winter months a worthwhile venture for investors.
However, early spring months (March – April) provide a unique opportunity for deal hunters. In early spring, a plethora of new homes become available. While opportunities increase, so will the competition, but as the adage goes, “The early bird gets the worm.” By pouncing on new opportunities early and often, you open the door to early negotiations and can push for a quick close from the seller.
However, early spring months (March – April) provide a unique opportunity for deal hunters. In early spring, a plethora of new homes become available. While opportunities increase, so will the competition, but as the adage goes, “The early bird gets the worm.” By pouncing on new opportunities early and often, you open the door to early negotiations and can push for a quick close from the seller.
Land Acquisition for New Builds
With the current U.S. housing market inventory short 4.5 million homes, it’s never been a better time to be a new build investor. Different times of the year can prompt sellers to negotiate based on tax implications, including:
- January/February: Sellers facing property tax bills may be more flexible
- March/April: Income tax season might motivate cash-strapped landowners
- December: Year-end tax planning creates motivation for some sellers
Winter (December – February) also provides real estate negotiation opportunities during the new build process. Spring and summer are prime building seasons, creating high demand for contractors and other tradesmen. Local permitting authorities are also swamped with zoning applications and approval processes during these seasons.
One of the greatest advantages of off-season winter construction is the availability of builders and skilled tradesmen. With fewer job prospects, contractors, plumbers, laborers, and other tradesmen are often more willing to take on work at lower negotiated rates. And, permitting approval processes are often streamlined during the off-season, too. Without having to wait on laborers and permitting, investors cut time and costs.
One of the greatest advantages of off-season winter construction is the availability of builders and skilled tradesmen. With fewer job prospects, contractors, plumbers, laborers, and other tradesmen are often more willing to take on work at lower negotiated rates. And, permitting approval processes are often streamlined during the off-season, too. Without having to wait on laborers and permitting, investors cut time and costs.
Leveraging Property Conditions in Real Estate Negotiations
One of the most powerful approaches to negotiating a real estate deal involves strategically leveraging property conditions throughout negotiations. Oftentimes, properties requiring the most work provide the greatest discounts and profitability. Knowing which structural issues to look for and how to present them will help secure the best possible deal on an investment.
When shopping for an investment property, some of the top buyer negotiation strategies include:
When shopping for an investment property, some of the top buyer negotiation strategies include:
- Documenting Everything: When evaluating distressed properties, documentation is a powerful tool.
- Take detailed photos of all defects and repair needs
- Obtain contractor estimates for major fixes (roofs, plumbing, electrical, HVAC)
- Hire an independent appraiser to identify hidden issues
- Create an itemized list of repair cost estimates
- Focus on Structural Problems: Prioritize structural and mechanical issues over cosmetic ones during real estate negotiations. Things like foundational problems, roof damage, and electrical issues carry more weight during negotiations and are more likely to drive costs down.
- Present Solutions to the Seller: Providing solutions can be as powerful as highlighting problems. When presenting your case for a lower selling price, give the seller reasons to want to work with you. Present yourself as an authoritative figure with the experience and skills to solve the renovation problems, or show proof that you have adequate and reliable funding to close quickly on the property.
Using Research to Sweeten Deals
Research can be another influential tool during real estate negotiations. By doing your homework on local market trends and past sales, you can offer research-based facts to sellers to convince them to lower their asking price.
To solidify your real estate negotiation script and use a data-driven approach:
To solidify your real estate negotiation script and use a data-driven approach:
- Research and present comparable sales that support your asking price.
- Reference market trends that align with your negotiations.
- Tie the market research back to your property repair cost estimates to build your case.
An evidence-based approach to negotiating real estate makes it harder for sellers to dismiss your ask as unreasonable.
Building Relationships & Partnerships
Building rapport helps create a more personal connection and relationship with a seller. Take your time to listen to their motivations, concerns, and obstacles, acknowledge the seller’s attachment to the property, and express your genuine interest in making it a great home. Oftentimes, sellers are more receptive to your offerings when you show compassion and support while negotiating real estate.
Once you have found the right property at the right price, partnering with a reliable and fast capital provider will ensure you capitalize on your negotiated real estate opportunity. CIVIC provides top-of-the-line investment lending packages with flexible terms and fast approval times.
CIVIC offers several investor-designed business loans, including:
Once you have found the right property at the right price, partnering with a reliable and fast capital provider will ensure you capitalize on your negotiated real estate opportunity. CIVIC provides top-of-the-line investment lending packages with flexible terms and fast approval times.
CIVIC offers several investor-designed business loans, including:
- Fix and Flip Lending
- 1-4 Unit Bridge Loans
- Ground-Up Construction Funding
- Rental & Rental Portfolio Financing
If you want the best capital provider backing you through your real estate negotiations, contact a CIVIC expert today. CLICK HERE to schedule a FREE consultation.
