10 Real Estate Investing Negotiation Secrets From Scott McGillivray

Some people are great negotiators, while others will do just about anything to avoid it. In my business, it comes with the territory, so over the years I’ve picked up a few tips. If you’re buying a property, here are some negotiation secrets on how to get the best deal.

Scott McGillivray is a real estate expert and host of HGTV Canada’s Scott’s Vacation House Rules, Income Property and Moving the McGillivrays.

Published July 24, 2019, Updated June 26, 2021

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Know Your Highest Offer

Before you enter into any negotiation, you have to know exactly what your highest offer will be. Negotiations can get emotional and when dealing with real estate it’s easy to say “what’s another $2,000 or $5,000?” The answer is – a lot! Once you’ve budgeted and come up with your highest bid, do not, under any circumstances go over it. The idea of investing in real estate is to make money, not spend it.

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Leave Room to Negotiate

One mistake people tend to make is putting in an offer that they think the seller will accept. Unless you’re expecting a bidding war, try to leave a little room so that they can make a counteroffer that still gets you to where you want to be. The key to negotiating is actually leaving room to negotiate!

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Meet the Sellers

Some people advise against this because investing in real estate is a business and meeting sellers makes it personal, but when it comes to negotiating, I think this is a good thing. If you can meet them and make a good impression, your offer will stand out from all the other faceless ones. Also, if you can meet them in person, you can try to assess who they are, why they’re selling and what compromises they might be willing to make.

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Find Their Pain Point

This sounds worse than it is, but basically it means that you figure out what problems the sellers might have (such as, why they’re selling) and then you find a way to solve it for them. So for instance, if the sellers need to move out of province for a new job, they’ll need to sell quickly. You can negotiate by offering a quick close in exchange for a lower price. This is another reason why meeting the sellers in person can be helpful.

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Negotiate Everything

People tend to think only of price, but when buying a property there are many other things to think about. You can negotiate on the closing date, the conditions, repairs, appliances and even more depending on the property. So even if the sellers won’t budge on price, you may be able to score a deal using a different tactic.

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Know the Market

In order to negotiate effectively, you have to know the market conditions. If a similar house down the street sold a month ago, you should know what it sold for. If houses in the area are sitting on the market for long periods, you should be aware. Do your own research, but also work with a local real estate agent whose job it is to know the answers to all of these questions.

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Don’t Be a Jerk

I like to think this is obvious, but some people try to play hardball and it comes off in an unpleasant way. You can be firm, but you also need to be willing to make compromises. Don’t be pushy or rude. If you come in with a harsh attitude, you’ll instantly turn off the sellers.

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Write a Letter

When you’re putting an offer in on a home – and particularly if there are multiple offers – I highly recommend writing the sellers a letter explaining why you want the house. Selling a home can be a very emotional time, especially if a seller has lived in that house a long time. Being honest about who you are and why you want the home can go a long way. Even if the house is purely an investment, you can tell them your story and why this particular property is important to you.

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Use the Right Language

During a negotiation, try to use language that lets the seller feel like he or she is in control. Instead of saying “we should do this,” say “can I make a suggestion?” This kind of language makes the seller feel like they’re making the decisions and psychologically, this can work in your favour.

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Flatter the Sellers

A little flattery goes a long way. You don’t want to ooh and ahh over every little thing and make it feel inauthentic, but do make the sellers feel like you appreciate their home. One of my favourite lines is “did you decorate yourself or did you hire a designer?” If that’s not believable, you can try something like: “the flowers outside are beautiful, is gardening a hobby of yours?” It sounds cheesy, but people like to hear nice things about their home. It won’t kill you to throw out a few compliments.