Lessons from One of My Toughest Negotiations Ever

So I met with another motivated seller recently and it took me almost 3 hours before I walked away with the contract. It was a little 800 sq. ft., 2 bedroom, 1 bath house in Phoenix that I wanted to buy to renovate. My plan is to add 900 sq. ft. to the house and turn it into a 3/2.

I think the property could be worth $200,000 – $220,000 ARV.

Seller’s reason for selling: Tenant (hoarder) is moving out. Owns it free and clear.

The beginning of my tough-as-nails deal.

After 1 hour of rapport building, I finally transitioned to the close and told the seller I was willing to pay $100,000 and explained what would happen after we signed the contract. He immediately stopped me and gave me his first objection…

Seller: I have to talk with my wife about this.
Me: I am married and think that is a great idea. Let’s get her on the phone so we can get this wrapped up!
Seller: She is with my granddaughter hiking and won’t be available for 3 more hours.
Me: Well I am positive that IF we strike the right deal and you tell her that you negotiated me WAY up and got a fair price for the house she would trust your judgment and be happy with the deal. Wouldn’t you agree?

Tick, tock, tick, tock…30 minutes later after moving past the wife objection and refocusing on building more rapport…

That was just Round 1.

Me: So, Dean, let’s wrap up this negotiation so I can go open escrow!
Seller: Well, Cody, I have other investors interested and don’t want to make a decision until I speak with all of them and hear their offers.
Me: Dean…I can tell you are a savvy seller and it’s smart to shop around. And maybe if you do, you will get some different offers, but the fact of the matter is I am here right now and I’m positive we can work this out. At the end of the day I only want to do business with people I know and trust…and I feel comfortable putting $100,000 in your pocket. But if I leave here today, I am going to move on to another deal. So let’s take a step back and see what we can work out. Sound fair?

Tick, tock, tick, tock…30 more minutes later after building more rapport (he mentioned wanting to buy another rental property and a pontoon boat, yada yada yada)…

Yep, only Round 2.

Me: All right, Dean, let’s at least review the contract together so I can answer any questions you may have.
Seller: Okay, but I don’t want to make a decision on anything until tomorrow.
Me: Let’s go through it and see how you feel after we are done.

Tick, tock, tick, tock…30 more minutes later after reviewing the contract and telling some bad jokes trying to get him laughing…

Wondering how many more rounds we had?

Me: I think we are close to having a deal here, Dean…let’s quit messing around…what is preventing you from signing this contract here today?
Seller: I am not in a hurry and just want to get the most money I could.
Me: Ahh…so what your telling me is IF you get enough money in your pocket you can afford to do all the things you want to do like buy another rental and a fancy new pontoon boat? Plus, you’ll look like a stud in front of your wife for selling for top dollar! Am I right?
Seller: HA…you’re right.
Me: Then throw out a number that will get this deal done right here right now.
Seller: (After a long pause) Well, I have another investor who verbally offered me $110,000 and that’s the number I really want.
Me: (After a really long huff and puff pause) Well, Dean, I can’t pay $110,000, but I am willing to split the difference and pay $105,000 but that would be my best and final offer. IF I leave here right now that deal would be off the table and I will have to move on. So what do you think…do we have a deal my friend?

Seller: YES…we have a deal!

(Cue the choir singing “Hallelujah” and the trombones and the parade and the balloons. He. Sad. YES!)

What do all these rounds teach us?

So the lesson here is: DON’T LEAVE THE SELLER’S HOUSE UNTIL YOU HAVE A DEAL!

Most new investors would have left after the first objection…

Most markets around the country are on FIRE and you will find yourself in many situations like this one.

Just stay focused on your goal and become great at building rapport and overcoming objections!

Hope this helps,

Cody