Negotiation Is A Contact Sport : Avoid Making These Blunders

Posted on 21. Jun, 2011 by in General

The negotiation process is one of the most important and often the most overlooked factors in your success as a real estate investor. Negotiation is all about knowing the motivation of each party involved and striking a deal that’s a winner for everyone. Getting it right can make the difference between financial success and failure.

At the start of our investing career, we found negotiating to be difficult especially when placed into a situation with a stronger negotiator.  Here are 3 critical negotiating mistakes that most investors make when starting. We’ve made them – hopefully you won’t.


1) You Lack Time

In the past, we’ve fallen into the trap of being pressurised to make a decision quickly.  In the end, this poor decision has ended up costing us hundreds of dollars.

Our advice to you is STOP, TAKE A BREATH and SLOW DOWN.

Any deal that warrants an immediate decision is one you should consider carefully.  As a buyer, you need to conduct a thorough due diligence and until this is in order, you must dismiss the urgency.


2) You Fell in Love with a Property – You’ve gotta have it!

When you have fallen head over heels in love with a property and absoutely don’t want to walk away from the deal, you are heading for BIG trouble.  You have moved from an investor to an emotional buyer and emotions have no place in real estate investing – whatsoever!  Always be willing to walk away from the table empty handed.  There’s often a valid reason why the deal falls though.  Just accept it and move on.  It’s really tough to do especially when you are certain this property is the “one”.  From experience, there will always be another deal, often bigger and better, right around the corner.


3) You’ve Cut Corners

It makes great business sense to buy in areas with a future not a past, areas with a strong economic outlook. Regardless of where you buy, you should always do your homework and research the proposed investment in depth.  Don’t cut corners. Investigate the property’s location, condition, present and future value, repair costs, cash flow, vacancy rate and expenses, property management fees – to name just a few.  Your due diligence should be extensive and thorough.  Once armed with this information, you are in a strong position to negotiate price and terms.

Have a great week,

Jane


 

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