Real Estate Negotiating Tactics

Real estate investors tend to settle into a set style during the negotiation process, and most of the time it may work well. It always pays to keep these major 'classes' of negotiation tactic in your back pocket, however:

Standard Practice Tactic
Getting the other party to agree to certain standards and common practices that commonly define such deals. Propensity towards automatic compliance is great. You can also have official forms that are pre-printed with items in your favor.

Bogey Tactic
Use a bogey, third-party bad guy to be the focus of ‘why it has to be this way’. E.G. “The bank will not lend me more than 70% LTV based on the rental trends in this area, and I only have $15,000 for a down payment”. Best if the bogey can be governmental/ regulatory.

Nibbling Tactic
After the major agreements have been made, nibble away at the smaller things to gain advantage. Post-inspection, perhaps. After seller has psychological ‘sold’ mind-set, they will typically make last minute concessions. Repairs, appliances, roofing,

Good Guy/Bad Guy Tactic
Get the person over to your side by being a confidant. “Listen, between you and I, I really want this to happen. My partner is demanding that we discount the property by 20%... I am confident I can talk him into 10% though if we act immediately.”

Deadline Tactic
Put pressure on the other party to react to your proposals. If anything, lets the other party know that there are other proposals you are considering, and that this one stands to fall through the table if a quick transaction is not achieved.

Scott Lukes
Echo Summit Properties
http://www.echo-summit.com/

A Historic Crossroads for Denver RE Investment Opportunities

For those considering entering the real estate investment market or expanding your portfolio, this is an incredible time! The Denver Metro area is in a soft period where there are historically high inventories of properties on the market. And as you are likely aware, Denver recently earned the dubious distinction of ‘foreclosure capital of the nation.’ Bad news? Hardly. Together with the facts below, this could be a tremendous opportunity for you to either enter the real estate investment arena, or to add to your existing portfolio of properties.

The Facts
Mortgage rates at a 4-year high. 2 issues here… first, rising interest rates are forcing more and more would-be homebuyers (and one-time homebuyers going thorough foreclosure) into the rental market. Remember… a 1% increase in interest rate on a 100,000, 30-year fixed loan at 6% adds over $65 to Principal and Interest payments alone! (our Investment Analyzer is a great tool to play with the tradeoff in Interest Rate and P/I payments) Second, while we are still at historical lows rates, they will only get higher (we have already seen a 1% jump over the past year).

Vacancy rates are incredibly low, and rents are rising. Recent studies for the Denver Metro area show a ~6% vacancy rate for apartments and single-family residences. This is less than half the vacancy rate we experienced in 2002 and 2003.

Unlike other areas of the country, Denver has experienced only moderate appreciation over the past 5 years (here is a good site to view Devner RE appreciation in the various areas). Where other areas of the country could experience radical declines in property values, most agree that Denver will sustain a slowdown in growth, if anything at all. There is really not a lot of risk in the Denver market.

Results
All of this adds up to an amazing amount of quality inventory, with very motivated sellers, reasonable financing still available, and most importantly, a strong and growing rental market. Supporting this, we recently put two of our own properties, one in Fitzsimons and one in Walnut Hills, up for rent. After a week of listing them only on RentClicks, we had 2 offers on each property from well-qualified tenants. We also recently raised our rents 7-10% for our other properties, and the tenants did not lift an eyebrow.


Scott Lukes
Founder, Echo Summit Properties
http://www.echo-summit.com/