A phrase that's worked for me…

I hope you’re having a great weekend.

I found myself with a little extra time this afternoon and thought I’d write you a quick email explaining a useful negotiating phrase that’s worked well for me when buying property – something that has sometimes knocked down the purchase price by thousands, even tens of thousands, of dollars.

By way of context, the art of negotiation is giving up something you don’t want (i.e. ‘deal leverage’), to get something you do want. If you don’t have anything worthwhile to offer up, then it can be hard to justify asking for something else (like a discount) without seeming unreasonable.

So let’s say you’ve already negotiated the price down, and now you are looking for a new angle to chisel an even bigger discount. That’s when these words (see bold below) can really be valuable. Here’s how I’ll use them:

“Okay, great. I really appreciate the seller has gone down to $Amount. Now, what’s the price for cash?”

Hang on a minute, won’t you be paying cash anyway? Well, yes, you will (but maybe EFT rather than folding notes), but what I’m talking about when saying ‘cash’ is buying without a ‘subject to finance’ clause. This can be seen as advantageous if the seller has had other offers fall over because of financing issues, or if they don’t want a contingent sale on an event that is becoming harder and harder (i.e. qualifying for finance, lower valuations, etc.).

Now, I don’t like risk, so I’ll still routinely buy myself some time by using a ‘get out’ mechanism in the form of a blanket due diligence clause (and I can use that time to shore up finance, if needed*), but taking any ‘subject to finance clause’ off the table provides the deal leverage needed to request a discount.

Sure, it’s not going to work in every case, as sometimes the price for cash is no different. But you’ll be surprised how often a little, or big, discount will be offered, if only you can come up with a plausible reason to ask for it.

* If I can’t get the finance arranged in the due dilly period then I can either extend it, or quit the deal and get all of my deposit back.

P.S. I NEVER recommend buying a property without some kind of ‘get out’ clause unless you are an experienced professional investor who fully understands the risks.

• This topic was modified 5 years, 8 months ago by  Steve McKnight.
• This topic was modified 5 years, 8 months ago by  Steve McKnight.