When it comes to flipping homes, it’s all about maximizing profit. And one of the best ways to get the most out of your project is by buying a property for the lowest price possible. Now, just to be clear, we aren’t saying to lowball the seller by any means, but negotiating a lower–albeit fair– price can make a huge difference when it comes to profits. We’re talking thousands of dollars. Unfortunately, not everyone knows how to renegotiate effectively. So today, we are going to share some of the best tactics and tips to help you renegotiate with sellers for your next flip.
The Art of Negotiation
Flipping a home can be a good way to make money, but the process can get expensive, if you don’t cross your t’s and dot your i’s. You should have a firm budget in mind for repairs, renovations, and of course, the property itself.
Fortunately, there are ways to negotiate with sellers to get them to lower their asking price and help you maximize your profit when buying a house to flip. Here are some tips:
- Don’t be afraid to ask!
If you’re looking at homes that are priced higher than you want to pay, don’t be shy about telling the seller what your budget is and asking if he or she would consider lowering the price. This isn’t something they’ll necessarily love doing—it’s not fun or easy for them—but it will help both parties in the long run if they know exactly where they stand on this issue right out of the gate.
- Do your research
Have an idea of what other properties in that area are selling for (and why). When negotiating with sellers over their asking price, it helps if you can give them some idea of what other homes like theirs have sold for recently. This information can also give you leverage when talking about what kind of improvements need to be made before selling your house (upgrades, repairs, etc.)
- Don’t negotiate against yourself
Seems easy enough, but you wouldn’t believe how many people unknowingly negotiate against themselves when trying to buy or sell a property. It’s important to have a goal price in mind when renegotiating a price and be prepared to have a number that you are willing to “settle” for if the seller doesn’t budge. One thing to keep in mind is that when it comes to negotiating, the agreed-upon price is usually somewhere between the original price and the counteroffer.
- Be patient
Do not rush the process. If you and the seller get to a point where you reach an agreed-upon price and you still want it to be lower, then you should take some time to mull it over. This also allows the seller to do the same– and if they are trying to sell quickly, they might come down to your original renegotiated price.
- Be respectful
One last thing to keep in mind is that the ball is in the seller’s court. Even if you run a hard bargain with your counteroffer, if you are rude or disrespectful, they are likely to not budge. Your counteroffer should put you in a position where you are maximizing your profit, but still giving the seller a fair price for the property. If you are buying a property to flip and they are asking $75,000 for it, it could be seen as disrespectful if you offer them $10,000 for it (unless you can prove that it’s only worth $10k in its current state).
The Bottom Line
At the end of the day, remember that the name of the game is to make money. By renegotiating with sellers, you are essentially putting more money in your pocket–money that can be spent on renovations and upgrading the property you want to flip. These tips and tricks for renegotiating with sellers are helpful to know, but remember, that even with these strategies, it’s essential that you are knowledgeable about the property that you are trying to buy.
At HouseMax Funding, we can help you get the funds you need to complete your project and maximize profit. When you make money, we make money…so we are here to help. If you would like to learn more about fix and flip loans or residential transition loans and our application process, contact us today!