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One of the most common questions we get from real estate investors at NoteSchool is how to get started using creative financing in a negotiation instead of the old buy-low-sell-high model.

With the old model, you might offer 150K for a house on the market for 200K. When they say no, you move on. But don’t be so hasty!

Instead of starting your negotiations focused on price right off the bat, start with a broader conversation about why they want to sell their property. (This is what I call the “talk-off.”) This starts the process that gets them to tell you what’s most important to them. Ideally, your negotiation will feel more like a conversation.

You have to position this correctly, so you’ll need to sound interested without being nosey. Don’t ask them for everything on their want list. You ask them, “What are the MOST important ONE or TWO things you want to get out of this deal?” As you continue to negotiate with the seller, you can keep circling back to what’s most important to them, and show how your offer will meet their most important needs.

Sellers come in two basic categories. 50% of sellers have a “money problem,” meaning they need immediate cash for some important reason. The other 50% have a “real estate problem” because they have a property they don’t want and need to get rid of.

If they have a real estate problem instead of a money problem, then they’re more likely to be open to terms that get the property off their hands and out of their hair. The least amount of cash they need at closing means you’ll be able to make an offer that is closer to their full asking price. But if their top priority is getting the price they want on the closing papers, you can always make a cash offer, or ask them to seller finance with no interest, low interest, delayed payments, and all the things that are beneficial for you.

By offering a deal with soft terms that are favorable to you, you can structure the deal so you pay for the seller’s equity over time instead of paying for their equity today.

We do coaching labs on the “talk-off” that helps our students focus on what’s most important to the seller. Once you get this figured out, it’s the springboard that allows you to being able to add creative financing and start buying properties on terms.

This is where the money’s at!

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