When what might’ve seemed like a good deal suddenly looks like a terrible deal, how do you renegotiate to regain your advantage? Chris Arnold, one of our coaching students, found himself stuck on a recent deal when the condition of the house told a different story after he’d already agreed on a price.
If you’ve given yourself enough breathing room to account for a change in the condition of a home, then negotiating a more fair price isn’t too hard. But what if you just can’t agree to meet in the middle? And what if your seller is bulldozing your best efforts? I talk with Chris about how to start from a position of strength.
When you have to reconsider because of one of the 3 Rs, resale value, repairs, and rents, it’s important for you to come to the table with solid numbers. And if you get into a heated disagreement over the price, relying on the numbers can protect your reputation as well.
Listen carefully to how Chris and I break down where the negotiations could’ve gone bad, and my tips for how he could do better next time. It can be easy to get carried away in the back and forth of a conversation, especially when there’s a lot of money on the line. But you really want to protect your relationships while also protecting your profits. You’re running a business after all.
Practicing with a coach can help you smooth out the edges on your negotiating techniques. I hope listening to this exchange helps you see how you can renegotiate so that you keep your cool while maximizing your profits. If you’re interested in working with me, get in touch through the REI Network website.
Gavin: Hey, guys, how you doing? Gavin Timms with REI Network. I am with Chris Arnold, coaching client of mine. Chris, how are you?
Chris: I’m great. Thanks, Gavin.
Gavin: Awesome. Right. Chris has been gracious enough to let me record this and put it out just before we get going. I just want to do a couple of things here. Make sure if you’re watching this on YouTube, go and like and subscribe to the channel because we’ve got more cool stuff coming out. Also, watch out for the new podcast. REI Network Podcast in association with the Real Estate Investing Mastery podcast with Joe McCall. So go and subscribe to those two shows as well. I appreciate that. So, Chris, how are we?
Chris: I am great. I’m great. You know, things are moving along. So as you know, we’re on contract number four. One in closing and working on getting another one and closing right now.
Gavin: Yeah, pretty amazing. We’re going to be doing a proper podcast with Chris. We’re going to turn this into a role play here on a certain deal. I just want to give a shout out to you, Chris. Pretty amazing, month one . I can’t say this about many people in California, a virtual market. I mean, you’ve run with it. Unbelievable. Exactly like I was. You know, I see me the same way when I go in is that you will not let anything stop you. So you’ve learned so much in a month than most do in six months because you’re taking massive action. You’ve got one in closing within the first three weeks. You got four under contract total that you were working on. Talking about a renegotiation that needs to happen here in a second. Great job. I mean, I think if anyone is watching this, the takeaway is need today is to take action, right?
Gavin: I mean, it isn’t as soon as we get this role, when we get these leads. we get these systems settled. You know, that’s what we’re bringing in. And so my advice and guidance, when you’re the one controlling this, it’s your business, you’re making it happen. So I’m not sitting here saying, Oh, it was all me. And, oh, this is just what I do. No, absolutely not. We bring a lot to the table. Right. We have 50 percent we’re bringing. You bring the 50 percent of just implementing. We talk to our team a lot because we will call people like you because we can get results faster because you’re like you don’t question, you just get on with it. And then you say, what’s next? And that’s a great conversation to have. So let’s talk about this deal. We got a second one that we wanting to send to close in. OK, so talk to us, give us a bit of background and then let’s look at what you did and what we could have done.
Chris: OK, so this guy I got him in to you know, I have callers that called him. I gave him a call. He has two properties, actually, that he wants to sell. He wants to retire and get out from under them. One of them is kind of in the sticks. And so I backed away from it. But this one’s right in kind of a hot spot of where people are buying and fixing and renting. And so I went in and made an offer. I think the ARVs in the 70s. I don’t have the exact numbers, but it’s in the 70s. So my math ended up being I need to go in around twenty five to make the offer work for a wholesale deal. And so I went, made the offer, sent the contract at twenty five. He called me like a day later and said can you do thirty-two. And then. So I talked to him a little bit and asked him how he came up with that number and you know, why he needed it. And all those things. And I said, well let me step away and call you back a little bit later. I gotta get with my partner. We’ll run some numbers and see what we can do.
Chris: So I went back, ran the numbers, gave a little bit. And, you know, I ended up making a bigger jump than I wanted to, but I did twenty-eight, five. I felt the numbers were confident. They could still work. I could still trade it to an investor.
Gavin: Had you been in the property at this point or not?
Chris: I hadn’t. But there were some good oh, I sent a runner out to take pictures for me. All right. I missed that part. Right. So. Yep. So we had it as soon as we were in conversation. And he wanted to redo the offer. I needed to see the property. Right. So I said, I have a runner that’s local. He actually is an Uber driver. And so he ran over, took some pictures, sent them. And then I realized there’s no way we can get to 32 for sure. And we did a lot of talking. And I know I jumped like twenty-six. It went on back and forth for a few days. We landed on twenty-eight five. He said if you can do twenty-nine, I’ll sign the contract right now. I thought, you said when we’re close, get it signed.
Chris: And so I got it signed. He sent it back via DocuSign. And then I started. I sent it to him. I’m in California. So I sent it to my wholesaler who is in New Orleans, who works in the Baton Rouge, Lafayette and New Orleans market. And so he brought a buyer to the table. We got him into the property and his offer is thirty-five. Cash, right now. So we want to get it into closing as soon as possible. And somy wholesaler came to me and said, hey, do you think your guy will go down now that we’ve been in the property? And I said, I don’t know. Let me check.
Gavin: So OK, so few good things there, absolutely right. If it’s close, you get it under contract because you’re squabbling. Early doors in the negotiation from twenty-five to twenty-nine, which are looking for Grant. Right. And we don’t really know if we’ve got a combat down. We don’t know we be sentencing you spreading that to go for ten. Right. So I think, yes. Close enough. Now if you were twenty thousand dollars off, then obviously that’s not close enough. Right. So good job on that. So you went back and forth, got it under contract at twenty nine. Now you’ve got pictures. You’ve gone now to do the inspection with the buyer. The buyer has said thirty-five. Let’s go. I’m ready. OK. So first thing is our goal is also always go two thousand more, If we can. Never give you the bottom.
Gavin: So unless it’s like you’re happy when you’ve got to squeeze, squeeze because remember, by squeezing either side might produce three full five thousand dollars but that over fifteen deals, 20 deals. We’re talking tens of thousands of dollars over year. Right. It is important. So I’d probably go OK. And the wholesaler needs to go in, at least go for thirty-seven. For this to work or we’re going to have to get more people in. This is I would go, you know, you’re the only ones that’s in, we’ve got other people wanting to go in. I’d rather just sell it and be done. Can you get to thirty-seven and we have a deal? All right. So that’s what I would be going on the buyer’s side trying to lift that up. Now we’ve got to go back to the seller, and this is where it can get a little dicey. Right.
Gavin: So the good thing is, is that we have the price so we know what we need to get it. We already know we have the money. We have six thousand dollars. We want to shoot for ten more, for ten plus. On our fees, minimums. Right. So six, it is what it is. If we have to do it. All right. We make money. It’s not the best. But it’s money. It adds up. It’s better than losing the deal. Well, we’ve got to try again. We got two up, we’re at eight thousand. Now, can we go and get it down? So what do we have in our toolbelt? Or tool box that we need to go back in and have this negotiation, which is what we’re gonna do right now. OK, a few things that I would be looking at before going into this. You started at twenty-five. OK, so that’s a big thing that you’ve already told him. You went in at twenty-five. OK, so take that into consideration when we go back to renegotiate. Because you already knew that. You went back and forth. You’ve not seen it. You got pictures. You’ve not done the inspection. The buyer goes in, now, why? OK. You wanted to ask for, forty? How much did you ask for the buyer?
Chris: Forty-three. I think he was at forty-three.
Gavin: Forty-three, you came in at thirty-five. You can get him at thirty-seven, I’m convinced. We’re at thirty-five right now. For what it is. And that’s just one. Back. Ideally you want more buyers as you’re going in. I think we can get it over a couple of thousand quite comfortably because you position the forty-three. The key is, is why can’t the buyer pay forty-three? Because it needs this and this and this. And the repairs are more or it won’t sell for as much or whatever. Right. The three Rs resale value. You know the repairs and the rents, it could be on one of them. So let’s say some repairs. Why call the buyer pay? You get that information from your wholesaler on the ground. And it’s okay, well, look, it needs a new roof and we didn’t know that. The roof looked all right, but it’s 20 years old now, the nails are popping out the top. Blah, blah, blah. Right. The ammo, ammo for the seller.
Gavin: So we get all this thing and then this is then what I will be leading into. OK, so I know I was already at twenty-five. Talking point. Touching point. I know that these repairs the pictures couldn’t see. OK. Go back and say, so let’s just say I now want you to act how we act, because I know you’ve already done this right. And he wouldn’t move. So we’re not going to push him, but I want you to be honest with what you did and what I’m going to do. And you can say it wouldn’t have mattered anyway. Then that’s a fair comment for you to have. Right. I’m not saying that all this will just be in the way. I’m just saying from the conversation what I would be going back into program. So let’s say ring. Ring.
Gavin: Hey, Chris, how you doing? Gavin. Can you talk for a minute?
Chris: I can.
Gavin: Awesome. Right. So we’ve just been over and done the inspection on the property. And there’s a few things that come up I just got to talk to you about. All right. You know, obviously, we’ve got the pictures and everything, but it looks like it needs a new roof. And we’d not planned on that. And I want to talk to you about the price. You know, I originally came in I was a little worried about this at the store. I came in at one twenty-five, as you know, and we went out because I thought I could do that. But, you know, with this new roof, it’s going to cost us eight thousand dollars. And I’m not asking you, Chris, to drop eight thousand. But is there anything that we can do? Because I’m struggling to make this work right now.
Chris: Well, you know, we agreed on a price already, and I had someone else that was interested in it, so I can just bring them to take a look at it. I can wait for them.
Gavin: OK, so you got somebody else interested? OK. Well, now I understand that, I just wanted you to know where we’re coming from you. I don’t want to be coming back and, you know, having this conversation, but I’m ready to go and close. So we’re ready to move forward. I just want to know if you can come down a little bit. I mean, could you do one twenty-six.
Chris: Twenty-six. Are you saying twenty-six thousand?
Gavin: Yeah. Twenty-six.
Chris: Yeah. No, I mean we talked about twenty-nine. And remember I asked you for thirty-two when we first started. And so I, I feel confident that I could, I could sell it at that price. So if I go lower than that it doesn’t make sense for me.
Gavin: Yeah. It makes sense. But I mean I just don’t want to go through all the hassle that we’re ready to go if I can. I mean there must be something. Can we meet in the middle at least? Like I’m at twenty-six. You’re at twenty-nine. Can we go in the middle and just get it done? And then I’m ready to close.
Chris: I’m going to step out the role play for a second.
Gavin: OK. So that would have been my final. OK. That was going to be my final, like this is going to be it. No. Now you’re getting annoyed. Yeah. I’ve pushed you enough. Well, you gave me enough that you’ve not really pushed me. Right.
Chris: You’re not at the edge.
Gavin: But if you’re like, no if you go look, I’ve told you at twenty-nine or else I’m getting someone else in. Then I go, all right, look, just give me a couple of hours. Let me I might get one more person in. Let me see if I can work the numbers and then I’m going to calm down and then I’ll come back and accept. Right. You see how I pushed one more time just to see if I can get you fifteen hundred less. I’m pivoting. And then I’m saying just meet me halfway. I know you were at 132 but I was at 120. There’s no way I could’ve made this with thirty-two. I need to be at twenty-six if we could do it. No. Can we meet in the middle? So then we’ll go in twenty seventy five or whatever the middle is. Yeah.
Chris: So you’re notched it.
Gavin: So I’m then trying to meet him. So he’s winning. He’s winning in the negotiation.
Chris: Yeah. I didn’t know if you wanted me to go with you or do what we do. He toed the line.
Gavin: He bulldozed you, and you can only, that’s why when we talk about this I’m not on the phone so I can’t say this is what I would do. I need to feel the energy right. But sometimes I will go depending on our previous conversation. I’ll just go look, Chris. I’m going to be honest with you. When we’re talking, we’re squabbling over three thousand here. And I know you don’t want the hassle of all the people going in and doing all that. I mean, you don’t want the hassle. I know you don’t. So I’m going to. But if he’s like, give me the stern, like after that last play you got. Look, I’ve told you one twenty-nine, I’m not moving. I’m getting someone else in. I would then have gone, Look I get it. Let me go to my guys. Let me see if we can work on a price. So I’ll do this. Whatever I’ve gone to negotiate with and then I’m going to say give me an hour and I’ll call you back and I’ll just sit and wait for an hour and then go, all right, let’s go. Make sense?
Chris: That was real life too, because to a certain extent I did what you did. I ratcheted it. I went on the phone with points, repair points. We were here, now we’re here. And then he was literally just toeing the line, oh, I can just fix it and rent it or I can get someone else in there. And so those were, he had immediate comebacks. And so your play was perfect because it just would’ve been ratcheting and getting closer and closer. But you didn’t give up. You said I’ll still have to see. At the end, you didn’t just give it to him.
Gavin: Now, I know I’m gonna have to see because then I’m going for the last line and go fine. All right. If we can do this, then, you know, he may have just before I got off, just gave me just a, All right, whatever. Let’s just do that. But if he didn’t, I’m going to go and let him sit on it and wait. And this depends on how long you’ve had the deal. I will wait a day. Sometimes we’ll just hold to see him get that message coming. I’ve thought about it. Let’s just get it done, you know, and then that will happen. We have to play on how aggressive and how. No, I’m going to call them now and get them this guy. Well, no, just give me an hour. Hold on a minute. Calm down. Let me go. I’m gonna come back and then I’ll just say well, let’s get it done. And you tried, right?
Gavin: Well, guess what? Nine, eight times out of ten. Right. They’re going to move a bit. You’re going to get it. And sometimes you have to go big. I mean, you have to look a lot like, look, we need this and this. We’ve got to move it ten grand, fifteen grand. When we’ve moved it, we had one guy right. Real quick. We had it thirty-two and we had to go to twelve and we’re gonna sell this at twenty-two. And he was having none of it. I said all right well, we can’t do anything so we release the contract. Three months later he called us saying, please, will you buy this at twelve, I’m over it. So you just never know. As long as you feel there’s a reason and you build the rapport that they’re not angry at you because you didn’t perform. It’s the numbers didn’t work.
Gavin: There’s a difference between blagging your sellers and then giving it all the hype and then not delivering, to positioning it, going lower, right. Coming back in and controlling that for it to all make sense because he can’t be mad at you. And then if you get crazy, say look you can’t be mad. I wish I could pay you more. I didn’t know you needed a roof. Eight thousand. That wasn’t in the budget. Well, its nails coming out, it’s this. I can’t, Chris. Believe me, I want to move forward at that price. I’m not going to go and lose money on this. I’m an investor. I’m trying to make money as a business. I’m trying to make it easy and hassle free for you or whatever I’m saying.
Chris: Those are all great points. And, you know, but you wouldn’t know this, but this seller was particularly intent, from the beginning. From the beginning, I think he’s just an intense person in general. And my read on him on the phone was like, I feel like I’m going to lose this. So he switched, kind of control a little bit. For the most part. Yeah, absolutely. So anyway. But yeah, that was good.
Gavin: Well, awesome. Well, look I appreciate it. Hopefully guys, if you got something from this remember like and subscribe to the channel, check us out on iTunes, new podcasts out in association with the Real Estate Investing Mastery podcast. Check them out, like, subscribe. I appreciate you put it in the comments if you have any questions on this. And again, Chris, I appreciate you. Thank you.