How to create a winning deal

I always say that every deal comes with multiple terms that are open for negotiation. (And I’ve  talked about it in some of my previous posts.)

Negotiating these terms can ensure that the property fits your budget or broader investment strategy.

Also, knowing about these terms can give you a lot of bargaining power. You can close the deal in a way that benefits everyone involved, while satisfying all your buying criteria.

There are actually many things that are important to negotiate to create a winning deal… here are just a couple: 

  1. Settlement Time

A longer settlement time could benefit you as the buyer. You might be settling on another property or you might be away at the time. 

On the other hand, the seller can also benefit from a delayed settlement in some situations. If you’re ready to offer such a delay, they might reconsider the price or other features of the contract.

If you decide to go with a longer settlement period, you must talk to your lawyer about it. Whenever I have to close a deal, I send a draft to my lawyer and ask them to go through it.

Sometimes they’ll leave some comments about what I should change.

Also, I always contact my bank or broker to discuss the financial side of things.

There are many situations where this is vital. For example, let’s say that you won’t be able to settle for six months. In this case, the seller might not be able to lock in the price. 

You must see if you can afford to possibly pay more in the future. If so, you need to know exactly how much. As you figure this out, you can decide how high you can go without overpaying for the property.

  1. Rental Guarantee

This term is very handy, especially if you’re buying a vacant property. The seller may offer you a rental guarantee to provide more value and perhaps increase the selling price. 

There’s a trick to it though.

Sometimes you can use a rental guarantee to bring the price down by a lot.

For example, I once negotiated a rental guarantee of $40,000 over 12 months. This means that the seller needs to put that amount of money in a trust, which I’m free to draw from if I can’t find a tenant.

Of course, there are sellers who aren’t going to accept this. They might suggest a lower guarantee, maybe $30,000, and call it a day.

However, the seller will always put in a clause that sets the rules for the guarantee. For example, you can’t ask for an astronomical rent with the goal of profiting from the trust. 

This is why you’ll want to have your lawyer look at it as well. They can tell you if everything is kosher and if you should take the deal.

Negotiating a rental guarantee can be quite complicated. If you’re lucky, you’ll find the guarantee directly on the ad, or your agent will tell you about it.

If not, you’ll have to work closely with your lawyer to set everything up the right way.

At the end of the day, these are only two of the terms you can negotiate. There are several more that you should know about to enhance your deal-making potential.

Sign up for my webinar to learn all about those terms.