Friday, September 2, 2016

5 Hidden Secrets to Having Leverage

1. Buy cash
The old adage "cash is king" rings true in regards to leverage in real estate. Most people don't even carry cash these days. Yesterday I went on a wild goose chase because no one had change for a ten. People with cash have obvious leverage advantages over people without cash, which are time and and opportunity. Time, because when someone wants to sell a property, a cash buyer offers the quickest solution vs someone who has to wait on the bank for financing. Opportunity, because you have a motivated seller looking to move a property fast and wanting your cash. This opens up negotiations or what some call haggling, which helps you use leverage to get the best deal possible. Without cash you're a day late and a dollar short.

2. Set short deadlines
When negotiating a buy set short deadlines so you make it perfectly clear to the seller that you're not in the business of wasting time. Once you've done you're due diligence and settled on a property and you have a verbal agreement, remember, a verbal agreement means nothing. Doc em up! Have your contract ready with pen in hand, ready for the sellers John Hancock. And if by chance the need to think about it give them a maximum of 24 hours. No more, no less. Be firm, stick to your guns, and it'll put pressure on the seller to make a decision. Most sellers don't want to lose a potential deal and will probably try to negotiate further.

3. Be wisely aggressive
What I mean by wisely aggressive is that you want to steer the seller in the direction that best benefits both parties. In other words, know where to press the seller. You are a problem solver and given whatever the circumstances are, whether it be they inherited the property, or they can't pay their mortgage and foreclosure is right around the corner, etc., the seller will disclose their problems. These are pain points, which you can use to support your real estate game plan. When the seller tries to venture away from your game plan, bring them right back to those pain points and how they'll disappear with your plan. Don't assume anything other than the close by consistently executing your game plan.

4. Don't be afraid to walk away
Show the seller that your time and cash are valuable and you're not afraid to use that cash with someone else. Motivated sellers are already hurting, and you know exactly where. Some can't afford to let a cash deal walk out the door, but the like to bluff. The want to seize control of transaction by putting up a strong front when really, you're doing them a favor by paying cash and closing quickly. So shut the window of opportunity and rob them of any hope that they had of hassling you by saying "NO THANKS!" It'll snap them right out of dreamland and bring them back to reality. Like a cold shower or a backhand to the face it works. In your Mr T voice say "I pity the fool who tries to play me!" They'll be begging you not to go as they see the money walking away.

5. Have more than one option
Always have multiple options, and let the seller know that you have multiple options. "Look Mr Seller, I have 5 homes I'm looking at, and can only buy 1. I'm buying cash and closing fast, but I can only buy 1." The last thing you want to do is come over as desperate! A seller can pick up on desperation like a shark can smell blood in the water. They will try to establish a position of power, using you desperation and lack of options as leverage. You can't want it too bad, and even if you do, you can't show it. Show the seller that this is what I do all day, everyday. I am not overly impressed with, nor am I emotionally attached to this property. I don't want to live here, I just want to help you solve your real estate problem. And if you're not the right fit for my game plan, that's OK, I have several other options lined up. This is not to say that you can't be cordial or friendly with the seller. Of course you can. But at the end of the day it comes down to dollars and cents. So don't get suckered into a bad deal because the seller is friendly and offers you a glass of lemonade. Take the lemonade and keep it moving if you can't get the deal that you want.

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