Most people think negotiation is about creating a win / lose situation. In other words, they are focused on their outcome not on what the other party wants. The reality is that you really can’t get what you want until that other person gets what they want. In order for that to happen the other person has to actually tell you exactly what they want or you have to ask lots of questions and be prepared to listen to understand what they want. The latter is usually the best way of extracting information to understand what the other person wants.
The first step when negotiating a property deal is to know exactly what you want and what you are prepared to pay. Knowing the type of house, you are looking for and what you plan to do with the property once it comes into your possession. This will require market research. The second step is to know what the other person wants, sometimes that can be a little tricky especially if the other person does not really know what they want.
The properties that often have the most potential are the ones that smell really bad. Many of my property investor friends would refer to this as the “smell of money” because it was very easy to fix a house that smells bad. A smelly house turns most people off, which makes selling difficult. This type of property usually requires the carpet to be ripped up and replaced or the floor boards sanded and polished rather than replacing the carpet. The polyurethane can be the best way to get rid of the “cat pee” smell entirely. Other simple quick fixes such as sugar soaping walls and tidying up the outside appearance add tremendous value. These houses once cleaned up present beautifully, they have increased rent potential and increased ability to sell for profit.
Properties don’t have to smell bad in order to get a good discount on the price. Often properties that are presented in an untidy fashion can be identified as properties that are likely to be highly negotiable. The number one reason people sell and don’t care how the property is presented, is because they are over the property. Situations like; the tenant living in the property has been nothing but a pain, they are so tired being a landlord and are over dealing with the tenant and just want the property sold. The other common reason is that the owners have separated, it has been a nasty separation and they are desperate to move on. Sometimes the reason is the owners have moved elsewhere and have started a new life, maintaining the upkeep on the old property is a low priority.
For many people selling a property for the best price is not the top priority, moving on, is their top priority. This goes back to the paradox of negotiation, in order to get what you want you have to make sure that the other people can get what they want. As a property investor you are always looking for a discount on a property and in many cases people will give you a discount because they need to get rid of the property. Knowing what you want and being highly organised with finance puts you in the box seat for a successful negotiation.
Peter MastroianniPeter Mastroianni is a property finance expert and the co-founder of Loans Only, specialising in investment lending. He is the author of two top-selling real estate books and host of The Rentvesting Podcast. Peter is passionate about supporting the next generation of investors rethink the traditional home ownership model. He does this by championing the ‘Rentvesting’ strategy through www.rentvesting.com.au.
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