During the 2009 foreclosure crisis I was doing business in Phoenix (and other places). The scarcity of buyers in Phoenix was great for me as a real estate investor who was negotiating to purchase fix & flip project properties at my price and my closing date. Motivated sellers knew it could be a long time before another serious buyer appeared, so they were less inclined to push for more and risk my walking away.

But for a flipper there was a downside to those same market conditions. When it was my turn to be the seller of the rehabbed property, homebuyers knew they could offer less and ask for more concessions. I had to expect that, and knew I had to be flexible so I could sell fast, get my cash out and move on. That’s the other side of a buyer’s market – in fact, that’s a good time to be a rental investor who isn’t trying to sell!

As you strategize your plan for a wholesale or a fix & flip property, always remember that you are destined to be two things: first a buyer, then a seller.

In a seller’s market you may find it tougher to negotiate the below-market price you want on each prospective project property. But once you have the property, your financial plan for the rehab project should prove more reliable, because you are in a much better position to hold the line on your own asking price when buyers start submitting counter offers.

In a buyer’s market use your leverage to keep your own purchase price as low as you can. You need more cushion in your project financial strategy, because when it’s your turn to sell the rehabbed property you have to expect buyers to make low counter offers. With fewer buyers in play, you may have to be flexible so you can close the deal sooner rather than later, get your cash out and move on to the next one.

My first gut-check to determine how I’ll handle counter offers is to look at the home sales market and the relative position of sellers vs buyers. The market balance tells me something about the buyer’s alternatives. If they don’t love my offer, can they easily switch over to another property? Or not? If I don’t close this time, how soon are there likely to be new offers from other homebuyers willing to meet my price?

Be realistic about the market, use leverage when you have it and be flexible when you don’t – and remember you want to close ASAP to finish this project and free up the cash for the next project!

Do you consider your local real estate environment to be a seller’s or a buyer’s market?

Want to earn money with little or no investment of your own? Keep an eye out for my upcoming ebook explaining wholesaling and how to make it work for you!