Negotiation Strategies: Get a Better Price For Your Property

Dan: [00:00:00] Welcome to the real estate investing podcast, where we help you unlock your potential freedom through land investing, real estate investing, and entrepreneurship. Hey everyone, welcome back to the real estate investing podcast. Today’s topic. We’re discussing strategy used to negotiate a property down.

I’m your host Daniel Apke joined again by my brother and business partner, Ron Apke. Before we get into the show, let’s go over a question from one of our featured discord members. Today’s question is from Wayne. Wayne asked, I’m having trouble selling land recently as it seems to be my bottleneck. Any suggestions?

I’m currently using Realtors and they haven’t been great with communication.

Ron: I mean, bad realtors or realtors who aren’t doing their job or meeting your expectations can be a bottleneck in itself, Dan, and from how he’s wording the question, I think it’s more so that is the bottleneck opposed to, like, selling the properties, which obviously that’s the same thing essentially, but if you have realtors who aren’t being active with showing the property, aren’t [00:01:00] actively answering phone calls from buyers or buyers, realtors, That is going to be a bottleneck.

Um, you gotta push the realtors to do the job correctly or try to get out of those contracts. Um, obviously while this is all happening, market the property yourself. Um, on Facebook, other places, Craigslist and try to get some leads yourself and try to sell the property, but a realtor who’s not doing their job can be a huge bottleneck in itself.

Dan: Yeah. And dispositions is, you know, its own pillar in this business model, Ron. And I think looking at realtors as a lead or looking at realtors as a whole, it’s really a business within itself. You have to treat it as a job itself and you have to treat it as, you know, leads. Interview them and call 10 different realtors around the area and really just look at it.

Like take it very very seriously because it can cause bottlenecks We’ve been in that situation one way to avoid that and it’s not going to always work but one way to avoid that is to really spend time qualifying your realtors and Choosing them very very wisely taking a slow amount of time to do it Giving them some [00:02:00] homework and going through those questions that we kind of discussed in that previous episode around Other than that, let’s get into the show.

Today’s topic, strategies we use to negotiate a property down and what we mean by that is. You have a property you’re buying for 50, 000. You can’t buy it for 50, 000 for reasons we’re going to discuss in this episode. So what are some of the strategies we use to that? We need to get them down to 25, 000 to make this deal happen.

And that’s common in this business model. So that’s what we were talking about in this show guys, strategies that we use to negotiate a property down. I think it’s one of the most valuable things that you can do in this business is getting comfortable with those situations. It’s a way to make a ton of money, Ron, get used to those conversations.

It can make you a lot.

Ron: yeah, and the ideal situation when talking a property down is always going to be something is wrong with the property where that gives you a good amount to negotiate with. But there’s obviously situations where you just might misprice something or the market changes and you have to.

Lower your price on what is a good property. So those are a little more difficult and we’ll kind of get into all of that. Um, but this [00:03:00] can’t, this makes people hundreds of thousands of dollars a year, the people who are really good at this and it can lose, not lose you money, but it can, uh, lose you deals if you’re not comfortable with these conversations or don’t get comfortable with making these conversations.

Dan: And it always shocks me how many deals that people make that our company, that things that we see in the community, Ron, how many times. This is successful. Like obviously it depends if you’re talking a property down from 50, 000 to 5, 000, it’s going to work a lot less than if you’re talking down from 50, 000 to 40, 000.

But even like 50, 000 to 25, 000, you guys will be shocked in general, I think, with the results you see from once you get good at this. Like just talk, being confident on the phone, getting these conversations, getting the number in their hands. These people, a lot of time are selling for a reason. They need the money and it works a lot more than you, you guys think

Ron: it happens like it’s a high, high percentage of these that you can close. If you’re being upfront with them, if you’re just being honest with the situation, like a lot of times they are going to come back and be fine with it. They might have to talk to their [00:04:00] husband, wife, whatever the situation is.

But they want money like these people called us in the first place because they want money if you use the right taxes Tactics to negotiate. I think you’ll you can do you can make a lot of these deals happen. I see it all the time

Dan: I Definitely don’t approve of this strategy But one thing I see in other industries and it’s not very ethical so I wouldn’t do it in general and I think it’ll come around and bite you but like I’ve applied for commercial loans before and business loans before and things like that.

And they’ll text me or email me or send me a postcard in the mail that says, Hey, we have a 308, 000 check ready for you to pull out whenever that, you know, that’s kind of how they start. And then you call and they get qualified. And they’re like, Oh, the most we can qualify you now is 220 after looking through everything.

So they started high. I don’t like that strategy. I think it’s very unethical, but. Does get leads and you still can make it happen. Like I’m sure they’re doing it for a reason, Ron, because they’re in it. They can talk these people down to get the smaller loan.

Ron: Yeah. Getting people on the phone is a way to close deals for sure.

Like Daniel said, I’m not a huge fan of the ethics behind that, but it’s going to happen [00:05:00] accidentally sometimes too, where you just overpriced and you just got to work the weeds, like you might send out a full mailer. At market value for all I know, and you’re going to get a lot of calls with that situation.

Um, hopefully it wasn’t on purpose and that’s just something that accidentally happened. You’re going to have to negotiate with a lot of people, but you can definitely get deals out of those where you have to talk to people down 50%.

Dan: Yeah. Let’s get into reasons why we have to negotiate price downs.

There’s a few of them that really come to mind. Like Ron said. Just having a high blind offer price is probably the most common. You just overpriced your mail. This is very common at first. It’s common throughout. It doesn’t mean you’re not gonna get deals in that county. It really doesn’t. It just means that you’re going to have to talk people down.

Like if you’re pricing a hundred thousand dollars, five acre property for, and you sent them an offer for $88,000, you have $12,000 a margin there. You’re not gonna make money at the end. So overpricing is definitely the number one way.

Ron: Yeah, for sure. And that happens more so with newer members. I think it’s probably, I bet it happens mispricing 75% of the time, their first [00:06:00] mailers, honestly, whether it’s high or low or anything in between, um, and it’s like, it’s going to give you, and the new members who get the deals on their first mailer are so comfortable on the phones, or they just get comfortable or they’re comfortable being uncomfortable, whatever the situation is.

And they make those deals happen out of those deals where they offered 80, 000 and they can only offer 50, 000 for the deal to make sense. Um, it’s the people that the people who struggle are the people who try to make the 80, 000 work, try to rationalize the 80, 000 when market value looks like 100, 110, 000.

Those margins don’t work in our business. Um, but yeah, pricing is a difficult thing for sure. That’s why we offer a service where we price for people to hopefully eliminate overpricing and mispricing. But, um, it’s going to happen at some point if you’re pricing yourself overpricing and you’re going to have phone calls where you just got to make, try to make deals happen.

Dan: Exactly. And the other reason Ron defected land, like that’s a really big reason people are going to have, whether it’s slope or wetlands or FEMA or access [00:07:00] issues. You’re going to have to go back that 100, 000, five acres that I was talking about, Ron now has very questionable access. It’s a thousand feet off the road, not a cleared driveway all through the woods.

That, that, that 100, 000 retail property that you thought is a hundred isn’t a hundred anymore because the end buyer is not going to want to clear a thousand feet off the road to get back. And you’re not going to be able to get people out there. It’s just going to drop the price drastically. So reasons like that are is really probably the second most common, I would think.

Ron: Yeah, there’s reasons where we just need to cancel the deal. And then there’s also reasons like Dan was talking about where maybe it’s a little bit of wetlands. Maybe it’s a little bit of floodplain where we can negotiate down, but, uh, we can still make the deal happen. We need to negotiate down, but we can still make the deal happen.

And then there’s other times where the defects just make it. unbuyable land in our minds. And that’s when we’re just transparent with the seller. And we just let them know the situation. Unfortunately, we can’t move forward with this purchase. Or if there’s a defect, unfortunately, we can’t stick to our offer price because of X, Y, or Z.

And here is the offer [00:08:00] price. We can close on this in two weeks. I think the transparency of Dan there is extremely important.

Dan: Yeah. And we’re going to get into some tactics and how the conversation goes. But obviously if that’s way number two, those are easier conversations. You have more ammo because the land’s defected.

You can call the seller and say, Hey, listen, uh, when I originally offered you, I didn’t realize that. Three quarters of your property or half your property’s in a wetlands and a flood zone or whatever the situation is. I can’t buy this for $55,000 anymore. The most I can offer, it just gives you ammo. And the good thing about that is usually they do know, usually they know what’s wrong with their property, so it’s not, it’s typically not going to be surprise.

We have had situations around where there’s been loads and loads and loads and loads of trash on the property, and I used to take the pictures that we would get and kind of send them to in an email. As I call the person. So like I call them. I’m like, Hey, I’m sending you an email right now with the pictures.

I just wanted to have this discussion up front. We got these pictures back. There’s 5, 000 pounds of trash sitting in the front of your property that we’re going to have to [00:09:00] remove. I got to drop the price 8, 000. Something like that.

Ron: Yeah, that’s a very common one. And, uh, a lot of people on these vacant parcels where no one’s visiting the parcel, like a lot of people, neighbors put their trash there, especially in.

Uh, more rural America where I don’t know, there’s not a trash service or they just do it just because it’s vacant land right there. And it adds up over time. Like, some of these places, it’s crazy what you’ll see in terms of trash on these properties and you send those pictures to the seller. Like, they can’t really argue much with that.

Like, yeah, they wouldn’t want to buy that land either. If it’s like that, the seller might live a 1000 miles away. They’re not going to go clean up the trash. Um, so yeah, dropping the price 000, depending on the severity of the trash is a extremely normal thing. And most sellers will agree to that.

Dan: Yeah.

Let’s talk about that. So like, let’s talk about the, how the conversation typically goes. Let’s, let’s go with just, let’s start with your price too high. So you offered 65% of market value. What’s that conversation look like since you have less ammo?

Ron: Yeah, I mean, I think it’s all about honesty, Dan. And like, I, I offer too [00:10:00] much on this property.

We do have cash ready to go for this, but unfortunately I cannot stay. I cannot go forward with the offer price I offered. Um, you don’t want to make something up in terms of their land. That’s what, that’s not how I like to do it with the negotiate. I like to be as honest and transparent as possible in an industry that can be kind of unethical at times, um, being honest and transparent goes a long way with these sellers.

So just letting them know, like. I’m sorry. I offered too much on this. I understand completely if you’re not interested in moving forward, but here is what I can offer. And we can close on this in two, three weeks, whatever the situation calls for.

Dan: Exactly. And then sometimes also when you price too high, you will find things wrong with the land too.

It’s rare that we have a plus land and I wouldn’t say it’s rare, but it’s not, it’s not common to have a plus land every single deal. So you’re going to get some C minus C plus. You know, B, B minus land back. And that’s very common. And you might be able to take, Hey, your property is only 200 feet wide. You can kind of use that and plant that in their head as well.

If there are some defects as well, [00:11:00] because sometimes there’ll be some slight defects and you price too high and it’s a combination of the two. So let’s use that ammo. And that’s more common than not. Like obviously if they have a perfect square property and it’s perfect and there’s a lake on it and there’s no wetlands or no slope, anything like that.

Yeah. But a lot of times you get this back and you can, maybe there’s an easement going through the middle of their property, something like that. You can kind of use both. Uh, both as a technique, I think, too.

Ron: Yeah, for sure. Like you said, like, if there’s something wrong with the land, we’re going to let them know in those situations.

Um, even if it might not call for a 15, 000 dollar price reduction, maybe we need to drop the price because we did overprice and there is a slight defect on the land. Um, so yeah, using what you have, I think is important and. I think being honest in this situation is going to win you more deals than you can imagine.

These sellers really appreciate just, I think the speed also Dan isn’t talked about enough. Maybe like if I get a purchase agreement today and I let them know tomorrow that I can, I need 10, 000. I can do it for 10, 000 less. Versus I [00:12:00] wait two weeks, they think it’s going through and then I tell them I need to do it for 10, 000 or less.

They’re going to be a lot angrier two weeks from now. If you do it in a quick time, time frame, they’re going to be a lot more willing to go down for you.

Dan: Exactly. And it all, a lot of it comes down to confidence and just knowing our business model. Like, why did they want to sell in the first place, Ron?

Why did they want to sell in the first place? They needed the cash. Okay. We know that they need the money for whatever reason, or they just want to get rid of their land and go on that vacation. Whatever the situation is that you negotiated with on the front end and got that purchase agreement. Now you have to negotiate down.

It comes to confidence knowing what our leverage is. We can still close in two weeks. You got to reiterate that. Hey, I can still close in two weeks and get you that dream vacation that we were talking about. I would love to still do business with you. I know that it’s not the original offer and I apologize for that.

I wish I could have been upfront with that, but I really didn’t know until I looked into this and this, whatever it is. And I think that goes a long way.

Ron: Yeah, without a doubt. Um, I think that even if it’s short, like that relationship building on the [00:13:00] front end, when you get the purchase agreement, um, because ideally all these negotiations are typically negotiations like this and negotiating down happen after purchase agreements.

Um, so, yeah, you get that purchase or you build that rapport during while you’re getting that purchase agreement. Then 24 hours later, you go back like, listen, I apologize. I can, I can still make this happen, but unfortunately I can’t do the original offer price.

Dan: Yeah, exactly. It comes down to just getting comfortable with those situations.

Keep trying them. Keep attacking. Never ever throw a deal out. Even if you priced way too high, don’t just throw it out without having that conversation with them. Always have that conversation with them. I know it’s so easy. or whatever to just click, you know, deal canceled and then it goes away. But you’re going to, you guys can make so many deals happen this way.

So the biggest thing, if you want to take one thing from this episode is be very aggressive on these negotiating down tactics. There are some other options when the property is too high or too risky. And you know, if you sent them a high off or whatever, they won’t negotiate down. They want that [00:14:00] price.

Maybe you’re at 65, 70% of the deal, Ron, it’s not, it’s not attractive. That tactic that we do much of, cause there’s more operations. It’s harder to scale. There’s, you know, cons to this business and it’s a whole different disposition strategy as well. But when you’re too high or it’s too risky and they won’t come down, maybe it’s in half in a flood zone.

They wouldn’t come down to your 50, 000 from 65, 000, whatever it is. You can consider double closing Ron. And I want to talk about that because that can go a long way for people who. Maybe don’t have as many deals as we have, or some more successful people. And they want to get deals under the belt, or they’re okay with bringing in a whole another disposition strategy to their business.

Cause it, it is a lot double closing. Like it’s a lot of different moving parts and pieces. But if you guys are trying to grind deals, this is an option as well.

Ron: For sure. And double closing is basically it’s wholesaling. It’s finding the end buyer before you buy the property, then you can basically make the difference.

Like, let’s say Daniel said 65, 000 or 65%. Let’s say 65, 000. You find an end buyer at 90, 000. [00:15:00] That all happens in 1 day. You buy the property and sell the property the same day. Um, what we like to do in these situations, what we advise people to do is be transparent again with the sellers on this and get under contract for being able to list this property for 90 days or whatever the situation is like, listen, I can buy this right now for 45, 000 and close in 2 weeks.

If not, like, I can, I can get you to 65, but you gotta give me a couple months to find an end buyer. Having those conversations a lot of times will work out well for you. But like Daniel said, there’s risk in those in terms of the time you could potentially lose the deal. You can maybe not find an end buyer, but for new people, I think it’s a great way to get some cashflow.

Dan: Oh yeah. You can make a lot of money doing it. It’s just not as scalable. Um, I always say step one. Let’s offer, like try to negotiate best, best case scenario. You send the perfect offer at the perfect price, which does happen. It doesn’t even need to be perfect. You send a good offer at a good price that you can close and they’re willing to close, right?

That’s how you scale this business tremendously. [00:16:00] Step two, you negotiate. You try to come up with a price that works for you to be able to buy it, right? Because that’s how you scale a business. Then you’re, then you’re focusing on just buying the property. When you’re buying the property, you’re not focused on getting in on a contract, finding a seller, lining up that days, dealing with the buyer and the seller.

The future buyer and the seller at the same time and title and trying to organize the double close and all that. It’s just way, way easier to scale. Step three, if that doesn’t work, if you can’t come to terms, having that conversation, Hey, Jim, I know we originally offered you 50, 000. You want 65, 000. I, I’m honestly not able to come up to that price and buy this, but I do have some other strategies that we use that my, my land business.

And to remind you, we’re a family owned business. We, we have different methods of selling properties, but I just want to see if you’re interested in us marketing that property for 90 days and finding aligning that property with something I can get you that 65, 000. I just can’t get it in that two weeks.

If you want that money in two weeks, Ron or Jim, I can, I can get that money to you after that 50, 000. And I think that’s, Kind [00:17:00] of the route to go step one, two, and three.

Ron: Try The negotiation aspect first and try to stick to the buy and sell where you’re buying the property. But

Dan: That’swhat I don’t want people to do is jump too far.

Just skip it out. Yeah. And then you make less money.

Ron: Absolutely. You will make less money if you’re not comfortable negotiating on the phone with these and you just come up to their numbers, like, okay, maybe I can make this work. These people are willing to negotiate whether you guys think you’re not like you offer.

50, 000, they say 80, 000. There’s a middle ground there. They’re not going to be set on 80, 000. They didn’t say 80, 000 cause that is their best offer. Um, they said 80, 000 cause they would like to have 80, 000 if you just say yes, but maybe you can make it happen at 57, five. I don’t know. But being okay with those conversations, you need to get comfortable in this business, uh, with negotiating.

Dan: And that’s what the wholesaler, like I get so many calls and Instagram messages every week saying Souther wants 80, 000. And that’s kind of the lead that they’ll send me for the land. I’ll be like, okay, the property’s worth a hundred. I’m not going to buy this for 80 with our business [00:18:00] model right now.

That’s just, you know what I mean? It’s just, they’re just asking what the seller wants. A lot of that strategy, you got to be stern. Like this business is so profitable because we’re buying at 45%. And we’re not, I mean, it’s just so scalable because we’re sending out blind offers. We’re only getting 13 calls per 2000 leads.

We’re getting one deal per 2000 per 2000 mailers run. And that’s just why it’s so scalable. We’re just getting such a high quality of leads with a good blind offer on them. They’re signing it. 30% of our deals, they sign and don’t even need to negotiate with us, right? Maybe it’s even more than that. Now it was 30 or 40%.

They’re signing that paper, that purchase agreement from what we offered from what they received in the mail and sending it directly to us. And then the other, you know, there’s about 50% of them that we’re negotiating, going up, things like that, talking.

Ron: Yeah, that’s the name of the game, guys, is those negotiations, talking on the phone, doing all that stuff.

Um, like the phone time is something we track with our salespeople. It is an important thing because that’s, I mean, there’s negotiating, they’re building report with sellers. There’s so many things that go into that. Um, and I think just like. Even if you’re not a salesperson getting comfortable [00:19:00] doing some of these things, it’s going to help you grow as an investor.

It’s going to take your business to the next level without a doubt.

Dan: Good stuff guys. Well, that’s all I have. I just want to remind you guys, if you guys aren’t comfortable with those conversations, you sent out blind offers, you sent it too high. It’s completely all right. It happens. It still happens in our business.

We’re comfortable with that. Now. We just know like we’re getting that feedback. We looked at the market. We know we’re high. So you got to expect those calls to come in. When you’re high, you got to be comfortable negotiating down and you will be shocked at how many deals you guys get. As always, thank you for joining.

Please do us a huge favor and like and subscribe our YouTube channel and share this with a friend. It really means the world to Ron and I, but more importantly, it could help change the life of someone else. Thanks for joining and we’ll see you next episode.