Renegotiating

This is for situations where contracts need to be renegotiated either because you uncovered additional issues during inspection, the market has shifted during the transaction, or you are unable to find a buyer for disposition.

General rules:

  1. Renegotiating is to be done sparingly and not as a general business practice. It is a necessary evil to the business but should not be abused.
  2. Don’t renegotiate and drag sellers along if you dont have a FIRM exit strategy in place. If wholesaling, you should have an assignment contract from your buyer signed and ready to go.
  3. Always anticipate renegotiation strategies to be challenging and potentially turn sour. Every renegotiation is a violation of the trust the Seller gave you.
  4. If you renegotiate just to boost your profits out of greed, youre a piece of shit.

Process:

  1. When calling for the renegotiation, plan out specifically what you are going to say and how you plan to say it.
  2. Going into the call, just like when delivering all bad news, dont beat around the bush, just cut to the chase.
  3. Open with a brief intro and explain the reason for the reduction. This can be because of condition, lender issues, whatever. Normally at this point it is best to be honest.
  4. Already have the Addendum with the price reduction written up to send immediately while on the phone. If you have negotiations on a reduction price, its easy enough to just change the price before sending.
  5. Just like when signing the first PSA, plan to have them sign while on the call or follow up immediately after the reduction is sent so you can ensure there are no questions.
  6. If they want to “Think About It” or talk to other investors, be understanding of their situation. Try to keep them on your side by reassuring them that that would mean starting over and you can now GURANTEE you are good to go.
  7. A good strategy to show more seriousness is to offer to increase earnest money or give other concessions.