There’s a saying in real estate that you make money when you buy.
What this means is that after selecting the very best property for your individual circumstances, at the end of the day, it’s about how much you end up paying for that piece of real estate.
It’s really about how much that property is worth to you but, also, that doesn’t mean that you want to overpay for it – the numbers always must stack up.
If you let emotion get involved in price negotiations, well, you’re really not off to a good start and the agent will definitely use it to the seller’s advantage.
As buyers’ agents, we negotiate on behalf of clients constantly to make sure they get the best deals every single time.
Over all of the decades that we’ve been involved in the property investment sector, we must have negotiated on hundreds of deals and experienced every trick of the trade along the way, too.
So, we’ve learned some key non-negotiables when it comes to negotiating like a pro. First up, you must completely understand the terms of the deal – such things as the deposit amount, method of sale, settlement period, tenancy situation, whether you can obtain early access to the property as well as agree on the vendor fixing any issues identified during inspections.
It’s always important to remember that buying property can be about more than price with the number of conditions (or lack of them) also part of the negotiation mix.
One of the most important attributes for any successful negotiator is that they are nice. It’s a pretty simple concept but no one likes to do business with an idiot – and let’s not forget that property investment should be treated like a business.
So, keep your cool (like Fonzi), take your time, don’t give away your price position and don’t hold grudges if you’re not successful because that agent may soon be selling a property that you’re keen on and you don’t want to be the buyer that is stonewalled because of a previous bad experience.
You must also understand, and stick to, your break-even point. If you don’t know your bottom-line then you’re possibly headed for a future financial headache all of your own making!
You should try to learn the vendor’s motivation for selling. That is, if they’ve already purchased another property they may be looking for a quick settlement, which is information you can use to your advantage in the negotiation process.
Depending on the property, a negotiation tactic might be to submit a low-ball offer initially but you must have reasons and comparables to back up why you’re doing so.
In some negotiations, especially if the vendor is chasing a quick sale, a low offer can be accepted but you have to keep your game face on if it is. Negotiation is as much about perception as it is about the numbers.
From the very first inspection you must also listen to the information that the agent is giving you and ask questions in return, which will help you understand more about the property and the seller, too. Sometimes the agent (especially inexperienced ones) can disclose more information than they should about price expectations or perhaps the seller undergoing financial hardship, which again you can use during the negotiation.
Being thoroughly informed about the deal and the market before negotiations begin will ensure you’re starting from a strong position – preparation is 90 per cent of successful negotiation every time.
If the vendor has unrealistic price expectations or is asking for conditions that don’t fit with your strategy, then have the guts to walk away. There are literally thousands of other good properties out there.
Never let emotion or your desire to “win” make you do something foolish because you might end up the “winner”, but you’re really the loser when the property doesn’t grow in value for years because you paid too much to start with.
It’s also a good idea to let the agent know that while you’re not interested in negotiating on the property under the current pricing and/or conditions, you may reconsider if the situation changes.
During the actual negotiation keep your body language and tone in check and understand any cultural differences which might play a part in your chances of being successful.
Negotiation is a skill that must learned and the best way to do that is through real life experience. Of course, the best way to increase your chances of negotiating like a pro is to engage a professional buyers’ agent to do it for you – but we would say that wouldn’t we!
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