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When you’re selling a property and looking to maximize value, negotiating will play an important role. By the time you reach this step, you’ll want to have determined the right time to sell, found the right broker, and have implemented an effective marketing strategy. By following the right steps with negotiation, you can move through to the final stage of closing, which will be covered in the next article.
Follow these guidelines when selling your property to work with buyers and get the highest and best price:
1. Work with Specialists
As mentioned in Step 2 of my book, “The Insider’s Edge to Real Estate Investing,” you’ll want to work with a team who has insight and experience to help you gain the competitive edge. Look for a broker who has a track record of successful negotiations and is in tune with the market trends and conditions. Similarly, having a specialized real estate attorney can help you ensure that the legal aspects of the deal are handled correctly and that your interests as the seller are protected.
2. Create a Competitive Environment
Having multiple buyers who are interested is a key part of successful negotiations. If several parties want to purchase the property, the price can be driven up as a result. To ensure this competitive environment, you’ll want your broker to get maximum exposure for the building. This can include showcasing the property in multiple listing services like CoStar, LoopNet and Crexi, creating a video that highlights the building’s features and potential, sharing it on social media, and working with the brokerage community.
3. Understand Buyer Motivation
Buyers will have different interests and needs, based on their circumstances and financing options. Knowing what motivates a potential buyer can give you an advantage when working out a deal. Buyers who are carrying out a 1031 exchange, are in a position in which they sell a property and then need to reinvest in a like-kind asset within a certain timeframe. They could be more motivated to close deals quickly to defer capital gains taxes. Similarly, understanding if a buyer needs financing or has equity partners can help you evaluate their ability to move forward and transact. An end user might be interested in the property and willing to pay a higher price, though finding the right buyer for this can require a longer marketing process.
4. Look at the Terms
To get the maximum value for your property, you’ll want to be aware of other factors beyond price. Work with your broker to consider the terms involved, such as closing dates, deposit amounts, and contingencies. To reach a close, you might look for creative solutions that could appeal to buyers, such as allowing a longer closing period or offering certain concessions on property conditions. It may be possible to present terms that are attractive to the investor and beneficial to you as the seller.
5. Prepare for Complex Situations
Negotiation often requires creativity and adaptability, especially for deals with multiple parties involved. Not long ago, my team worked to sell a portfolio of a dozen buildings on the Upper East Side. It was held by two warring sides of a family who had splintered out into four different groups with four different attorneys. With so many stakeholders involved, the negotiating process took so long that potential buyers were turned away. To solve the issue, we put the portfolio on an auction platform. We set a bid deadline when buyers would have to submit their proof of funds and be ready to transact. As a key part of this, we had the seller’s attorneys agree to a contract up front. This helped streamline the process and we were able to successfully close the deal.
6. Maintain Momentum
The process of negotiating a property can take unexpected turns. During this phase, it’s important to keep all interested parties engaged until the contract can be signed. This typically includes regular communication and making sure all legal and property-related documents are readily available. This can help you avoid last-minute hurdles which could delay or even derail the deal.
When you’re selling a property, negotiating involves the right preparation, strategy, and understanding of the market dynamics. If you work with a broker who is transparent and advocates for you as the seller, you can have effective communication throughout the process. They’ll be able to create a competitive environment, tap into the buyer’s motivation, and finalize terms that are in your favor. With expert guidance, navigating through negotiations for a property can help you ultimately maximize the return on your investment.
