Negotiate Low-Cost Options and Below-Market Purchase Prices with Property Owners

You must understand that when you make unsolicited offers to purchase options on properties that are not advertised as being for sale, there is a better than 50 percent chance that your initial offer will be rejected. In fact, I consider a 5-to-10 ratio—which means that for every 10 property owners you approach, 5 will [...]

First off, always ask property owners how much they want for their equity instead of how much they want for their property. This way, owners start to think in terms of how much equity they have in the property and not the overall sale price. Plus, you can follow this with my favorite question: Would [...]

When an owner has an asking price for the property, find out how he or she came up with it. This question is critical because most owners are clueless when it comes to knowing how to accurately estimate their property’s current market value. You will find that many owners oftentimes equate their property’s value with [...]

Whatever you do when negotiating a real estate option, always insist that your real estate option agreement include a fixed purchase price for the property being put under option. And never agree to pay a purchase price based on the property’s appraised value at the time the option is exercised. Doing so would defeat the [...]

I define a below-market purchase price as a price that is at least 20 percent below the market value of a property in its current physical condition. And in order to have a reasonable expectation of earning a profit when using real estate options, you must buy options only on properties that can be bought [...]

To gain maximum leverage when using real estate options and to avoid having all of your working capital tied up in real estate option fees, I recommend that you never pay more than 5 percent of a property’s current market value for a real estate option. For example, on a property with a current market [...]

In some cases, property owners will grill you about buying an option on their property. Here are the five most frequently asked questions that property owners pose when negotiating real estate option agreements, along with the suggested answers: FAQ 1: What exactly is a real estate option? Answer: It is a legal arrangement under which [...]

Always try to negotiate a $500 cleaning credit to help defray your property cleanup costs. And have the $500 credit applied toward the option fee at the time the option agreement is signed and notarized. You will find that most owners of vacant, run-down properties will welcome your offer to clean up their property, especially [...]

When negotiating the purchase price of a property, you must always use its physical and financial condition as tools to negotiate a below-market purchase price. To do this, use: 1. Inspection checklists. 2. Repair cost estimates. 3. Code violation citations. 4. Monthly income and expense statements. 5. Vacancy rate. 6. Operating expenses.

If you followed my advice in Chapters 10 and 11 and thoroughly researched the property and its owner when performing due diligence and if you had the property thoroughly inspected, you should have a pretty good idea as to what information you can use to help negotiate favorable terms. Here are five negotiating tools that [...]

Here are 13 crucial terms that must be negotiated in every real estate option agreement: 1. Purchase price of the real estate option: Negotiate a real estate option fee that does not exceed 5 percent of the property’s current market value. 2. Credit for cleaning up the property: Obtain a $500 cleaning credit, to be [...]

Never lose sight of that fact that your two main objectives when negotiating with property owners are to buy a real estate option at a price that is 5 percent or less of the property’s current market value and to purchase the property at a price of at least 20 percent or more below its [...]

I suggest that you follow my six basic rules when negotiating real estate option and purchase agreements with property owners: Rule 1: As the old saying goes, first impressions are lasting impressions, and this is especially true when you begin negotiating with property owners. The image that you want to project is that of a [...]

First things first: To avoid being flimflammed by an identity thief posing as the property owner of record, make certain that the person you are negotiating with is the owner and not an imposter. The best way to verify that the person you are meeting with is, in fact, the property owner is to do [...]

As you will soon find out, many property owners are fervent believers in what is rightfully called the greater fool theory. The greater fool theory is based on the inane assumption that so-called investors who make bad buying decisions will eventually be able to pass their blunders on to bigger or greater fools who will [...]

For whatever reason, some property owners are overly coy about clearly stating the asking price for their property. When questioned about their asking price, they mumble something to the effect of, “Make me an offer.” This type of owner seems to view selling property as a sort of cat and mouse game, in which the [...]

I had the opportunity to hone my negotiating skills while haggling with storeowners in Seoul, South Korea, and with flea market vendors throughout Western Europe. And unlike the vast majority of my fellow Americans, I very quickly learned how to master the negotiating game in both places. I was able to do this because I [...]