Page 127 - Trump University Commercial Real Estate 101

Locking in Y our Profit

The seller says he ’ s willing to negotiate, but you need to be more
reasonable. As a show of good faith, he drops to $ 975,000, or $ 25,000
lower.
You thank the seller for negotiating, but you say that you ’ ve run
the numbers and you really can ’ t pay more than $ 925,000 for the prop-
erty. You ’ ve just come up $ 15,000.
The seller comes back at $ 960,000 ( $ 15,000 lower), and you coun-
ter with $ 935,000 ( $ 10,000 higher).
The seller says if you can close in 60 days he will lower the price to
$ 950,000, so he just took off another $ 10,000. You tell him that you
can indeed close in 60 days and you ’ ll split the difference and meet
him halfway. You ’ re at $ 935,000 and his last number was $ 950,000.
Therefore the split now is at $ 942,500.
Let ’ s see: You ’ ve come up from $ 910,000 to $ 942,500, or $ 32,500.
The seller has gone down from $ 1 million to $ 942,500, or $ 57,500. In
addition, you ’ ve gotten the deal below your strike price and both of
you have given in to the other person several times.
This is not theory. It works. This one single negotiating principle
can save you or make you hundreds of thousands of dollars over your
lifetime with anything you negotiate in the future.

Multiple Offers

You might make three different offers simultaneously for the same

property. The first could be a cash offer, the second may be a mixture
of cash and terms (that is, a note to be paid later), and the third could
be no cash and the seller holds a second mortgage for her equity.
The cash offer is always the lowest. Remember how you must
guard your cash. Besides, if the seller gets all the goodies up front, it
should be a lower offer from the standpoint of time value of money . You
have an opportunity cost, and could have put that money to use else-
where, making money on your money.
The second offer involves a small amount of cash at the time of
closing with the rest due at a set date in the future. This is the next -
highest offer.

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