Closing the deal is the last and final step of the negotiating process in real estate investing. Deciding which method of negotiation will be the most beneficial to you as the investor. You are probably asking your self right now – So, Jeff Adams, how do you you seal the deal?
There are a variety of methods to consider when “sealing the deal.” Closing on a real estate deal is the icing on the cake…the best part. It signifies that all of your hard work has been worth it and the time and effort put into the whole negotiating process has finally come to fruition. The method an investor chooses to incorporate in the transaction is contingent on the specifics of each deal that is being closed upon. A successful transaction should be beneficial to both the buyer and the seller.
6 Closing Negotiation Methods
There are several methods to consider in regards to closing a real estate deal. Figuring out which one works the best for each deal is the most important element. Once a real estate investor has decided on the method he/she will put into place, the ball gets rolling and home ownership is moments away. The route an investor chooses to take can either make the closing process a smooth experience or a tedious one.
Justify Your Offer Technique
Any offer that is put on the table typically comes with a justification factor. The closing of any deal involves the satisfaction of both buyers and sellers alike. For this reason, “Justifying” your offer in regards to the terms and conditions is imperative. For example, as a buyer, if you make an offer on a specific piece of property, you have to have the information and the ability to offer reasons and financial statistics that confirm and justify the numbers.
In the situation of a Rehab or Wholesale real estate investor buyer who made an offer on a distressed property their chances of success will improve by giving the seller a breakdown of what the actual costs would be if they did choose to work with a real estate agent, repair and rehabilitation costs, escrow and title costs involved, termite inspection costs, appraisal fees, and other closing costs. this real estate negotiation technique gives the buyer the upper hand. The more information that a buyer can divulge, the better it is for both parties involved.
Control The Options Technique
Another technique to consider is the “Yes or Yes” closing technique, which can also be referred to “No is not an option” technique. What this closing method entails is that a seller presents several options to a buyer because this strategy makes it more difficult for a buyer to say no. Giving a seller the power of choice speaks volumes. A buyer is under the intention that he/she is in control, which they technically are, but within the parameters that you have established and presented. In addition, allowing for a flexibility of meeting schedules, closing dates, and payment methods is also a way to motivate potential sellers.
Sleep On It Technique
If a seller is skeptical or apprehensive about closing on a deal, offering a “Sleep on It' technique may be a deal maker. Dealing with a seller that is unsure can present a host of problems, so in order to avoid this insecurity issue, giving the seller the opportunity to take the agreement home and think about it offers a greater sense of security. The key to this closing technique is getting the seller to actually sign the agreement with the indication that they do have a limited time period where he/she can re-consider their decision. The seller receives a greater level of comfort and is generally prone to holding onto a home or property that they technically already own.
Knowledge Is Power Technique
Educating sellers demonstrates that you are willing to share your expertise and guidance throughout the negotiating process and eventual closing of the deal is the key component of the “Knowledge is Power” closing technique. Sellers are more likely to work with buyers that are open, hones, and upfront with them about what they are getting into. If you are a buyer who is eager to educate seller on what is exactly involved regarding the deal is also a good way to establish a level of trust with your seller.
Act Now Technique
When time is of the essence, consider the “Act Now!” closing technique. If a buyer creates a sense of urgency and highlights the current real estate economy that we are experiencing, helps to accelerate the deal process. Decreasing home prices and increasing interest rates are great motivators to incite the enthusiasm of potential sellers. The mention of possible loss on a deal also stimulates and intrigues a potential seller.
All About “You” Technique
Another technique to consider is one that is “all about the seller or buyer.” Often times, sellers want to know what benefit and profit a specific sale has to offer to them. The “What's in it for me?” closing technique comes into play with this method, as the sellers' situation is the main concern and focus in regards to the sale. Most sellers want to feel like they are getting the most out of the deal as they possibly can and offering them an extra bonus can often seal the deal. It is key to note that a seller will be more willing to sign an agreement if the seller believes that he/she is getting away with more than what the terms and conditions that were originally anticipated and negotiated.
Once you have decided on how to proceed with the closing process, you can securely move forward in the overall process of home/property ownership. Once the deal has been sealed, the possibilities on both current and future investments are endless.