I know most of you are probably thinking “how can you negotiate with a seller in this market?” or “how am I supposed to find a deal that I can afford?” but in each of these questions I’ve been able to do just that! Although the Bay Area is experiencing continued growth as home values continue to rise, I’ve spent time learning with my team to develop strategies for negotiating. From a previous newsletter I talked about a book entitled Never Split the Difference by Chris Voss (I still suggest you read it or get the audiobook) and he highlights several strategies for negotiating. He recently posted an article (HERE) that asked:
When someone asks you “How much?” what’s the worst thing you can do?
Answer with a price!
What he aims to teach here is the traditional wisdom of getting the other party to name a price first to find their anchor. Read the article for some more tips on how to get the other party to give the number
The term “Seller Finance” or “Seller Carry” is something we’ve been successful in utilizing when buying investment properties and the high level explanation is when the seller of the property takes the role as the lender; in short, acting like a bank for the buyer. Stay with me, because this is a great strategy that continues to see huge benefits. In some cases, a seller will be open to accepting monthly payments throughout a loan period (interest included) instead of receiving a lump sum payment for their property. I’ve seen this several times with sellers who wish to defer their capital gains exposure when selling a property. The reduced burden of the buyer to provide the entire asking price gives the opportunity to withhold some of their cash for upgrades to the property.
The final piece to discuss for this week is what’s commonly referred to as a 1031 exchange. Now once again I’ll preface this with the statement how I am not giving tax or accounting advice and you should consult with a licensed CPA or attorney before getting into one of these deals! A 1031 exchange comes from an IRC code section that allows for an exception to the payment of tax on the gain from a sale of property. There are very specific rules to follow when identifying a “like-kind” exchange, however this is a great strategy to learn more about for those interested in expanding their real estate portfolio.
Reach out and join the flipping party!! Hope you all have a great weekend!