1. I Call This First Tip The “Phantom Partner”.
Anytime you're negotiating with a buyer or seller, and they think you are the final authority, they will try and pin you down for an answer or commitment. This is never a good position to be in, but you cannot simply avoid their advances without seeming like you're evasive or hiding something. At the end of the day you want to appear non-threatening as possible. I have found a great way to do this is always have a “financial partner” that is the ultimate decision maker that way you can “pass the buck” on to them. Obviously this partner can be real or fictional but either way they are not physically at the negotiation with you.
For example when dealing with a motivated seller always write everything you are offering down on a sheet of paper in front of them. NEVER say things like “We will offer you X dollars for your property”. This locks you in and can possible shut you down and shift the power to them if they say “We are not interested in that price”.
Instead always start off your offer with “After getting to know you better and seeing all the repairs that will need to be done to the property I am going to need a minute to run some numbers.” Get out your pad and pencil and make sure they can see you penciling out your offer. I use a yellow legal pad with red pen!
SIDE NOTE: When you start off begin very excited with a HUGE grin on your face. As you pencil the numbers slowly turn your grin into a very serious look as if your getting a little frustrated. Keep on running your numbers and end back at a big smile when you deliver your offer.
“Ok… I have some wonderful news for you today. (Now show them the piece of paper) Because we have some available money right now I can offer you $X dollars in cash and close within 14 days pending a small inspection from my partner.”
If they panic or say “NO” just remain calm and say “well what were you thinking you wanted for the property?” No matter what their answer is I always reply back with “Well, you will have to do better than that if we are going to be able to make a deal today.” After I say that once or twice and I feel I have come as far as I can at this moment I then “pass the buck” onto my phantom partner. I say things like “While I think we are close to making a deal I can tell you there is no way in a million years my partner will go for this price.”
Then you write the price they are asking for the property down on a piece of paper. I say one final thing before I step outside to call my phantom partner. I say ” Mr. Homeowner for a second let's just forget about (insert the price they are asking) because I don't think I will be able to get my partner on board. Let's look at (then write down on your paper a price that is in the middle). Now this is out of my hands but if I can talk with my partner I am certain i can get him to commit to that much money for the house.” Then I reach out across the table and go to shake their hand and say “The best part about dealing with us is that we never back out of a deal unless we find something terribly wrong with the property!”
SIDE NOTE #2: Never spend time trying to justify your lowball offer! This never works and will only cause frustration on both sides of the deal! Remember this is a business transactions and you are a professional.
Now I learned this technique from an investor that did it to me when I was learning how to invest in quick cash real estate, and trying to wholesale him a property I purchased at the foreclosure auction that was full of garbage. The concept of nibbling is done after you make a deal with the person. It works by you saying things like:
“Now I am assuming this property will come completely cleaned out before you deliver it to me?”
“You plan on leaving the appliances as part of the deal correct?”
These little “assumptions” get you some extra bonuses after a deal has already been made so I always “Nibble” every time I make a deal now!!!