3 Options When Renegotiating A Wholesale...

negotiations Hey Moguls, Steph Davis coming to you with some uber-helpful information about negotiating deals. Well, actually it’s more about renegotiating. I’ve offered up lots of great negotiating and wholesaling info here on Mogul, so make sure you check those out here too.

For today, though, I’m hitting on this subject because recently a student of mine asked me about a wholesale deal that he needed to renegotiate. Here’s the situation…

His situation was that he’d contracted to purchase a property for $110k, and he’d been marketing it at $120k for a couple of weeks with no response. The seller owned the property free and clear and was highly motivated.

Finally, the investor (my student) got a cash offer, but it was for $110k. This buyer was a legitimate player in the area and let it be known that he’d done his due diligence and was ready to close immediately.

Since it’s the only offer received after two weeks, my student was confused about what to do next. Obviously the problem was that there was no profit for him in the deal.

The good thing is there are several options to try in a situation like this.

Here’s what I told him…

Option #1

The first step I would take is to go back to the seller (who seems to be motivated) and see if you can renegotiate a lower price. There’s no guarantee that that will work, but it’s worth a shot. The worst that can happen is that he says ‘no.’

In another similar situation, I suggested this step to one of my students. Since there were a few days left in the inspection period, he took this approach: He went back to the seller and said that when he went through the property, he missed some major repairs and would now have to change his price. In that particular situation, the investor asked that the price be reduced by $15k. The seller then agreed to compromise at $10k – so the renegotiating approach worked. He found a buyer quickly and made $5k. The thing is, this investor was at the point where he was ready to walk away. But one quick phone call brought the solution.

So I would most certainly try this approach first.

Option #2

The next option I suggested to my investor student was that he go back to the other buyers on his list and drop the price to see if they might be interested.

Another thing I want to point out – and this is important for those of you who are just getting started... when you get your first couple of deals under contract, if your buyers are not buying, talk to them and try to get a number out of them anyway. You might say, “If it doesn’t work for you at $120k, what number would work for you?”

This is a great way to learn your market. If you’ve got a deal under contract and you talk to 20 buyers, and they are all telling you they are not interested in $120k, but they’d be interested if it were at $100k or $105k, well, that’s a great education to let you know what’s going on in that particular location.

Remember that even if the buyer says ‘no,’ you can still continue chatting and work to get a number out of them.

Option #3

The last and final option is to talk further with this buyer. How firm is he on this price? You won’t know if you don’t ask. See if he might go up a grand or two. Even that would be better than a big zero on the profit.

Try and Try and Try Some More

Well, there you go, friends. Don’t give up in a situation like this.

Give each of those three options a try and you might be pleasantly surprised at the outcome.

I would definitely try any and all of these options before ever settling for a break-even. As you grow in your business-building skills, you will become more and more adept at negotiating and renegotiating.