So, you’ve found the property for you and now comes the negotiation battle.
Get ready and brace yourself! It may be time to put down your shield and sword.
Not all negotiations are adversarial back and forth matches of strikes and sneaky jabs. Sometimes the softer approach is the winning one.
In episode 29, we discuss “Congenial negotiation tactics and how to apply them in the right situation”.
Listen as David Johnston, Cate Bakos and Peter Koulizos take us through how to build trust with real estate agents and get on their good side, why adversarial negotiations are not always desirable and how you can cut the competition off at the knees.
- Negotiate like a pro
- Top buyer’s agents reveal their secret sauce for negotiating a great deal
- How to negotiate a killer deal
- The art and science of removing emotions when buying a property
- Property Select Plus
- Bidding tactics 101 (Ep. 20)
- Property Cycle Management – why now is always the best time to buy if it suits your personal economy and you have a long-term property plan (Ep. 12)
- Why you need to plan for your future home when buying an investment property
- Why the land-to-asset ratio of a property can determine its future price growth
- Making the first move – why the first property you buy is the most important of all
- House hunting is a compromise so target the most important factors
- Why short-term investing has long-term consequences
- How our mortgage strategy helps us to hold properties
- Five mortgage strategies that can grow your wealth
- How to succeed with Property and Create your Ideal Lifestyle
- Mortgage Strategy 101 – YouTube video series
- We all have ideas of what a good negotiation is meant to be like – most common is a battle fought by hard-nosed opponents, only one can win and at the other’s expense! This style of negotiating is not the be all and end all of negotiation tactics.
- If you are in a position of strength, then possibly you can strong-arm the vendor into getting ‘the best deal’. But this card may not be in your hand and is not always appropriate to play. If you lose the support of the agent or vendor, it can all fall into a heap and be hard to turn-around.
- Get in quick – know what you want and why you want it. If it’s a fair price, don’t muck around. Normally the first person who comes along buys the property. Sometimes it pays to skip the negotiations and give the vendor what they are asking.
- Our current market – where there is a stock shortage and strong demand, real estate agents serve their vendors well by playing buyers off against each other. Where there is competitive bidding and buying, offering the asking price and closing quickly could ensure that you secure the property. If you offer below, a boardroom auction could be looming on the horizon and you risk losing out.
- Myth – a good negotiation is to buy the property below the asking price. You can haggle over $10,000 and miss out. Then haggle over $5,000 and miss out on the next purchase. The longer you leave the purchase, the more you have to pay in a rising market. Weigh up the risks of negotiating too hard and missing out on the property. If your plan is to hold the property for 20 years, what’s another $10,000?
- Reframe your thinking – negotiation is not always about getting the sharp outcome. Sometimes it’s about bridging the gap.
- The subtleties in negotiation that come with time in the role (which perhaps your 5 year old doesn’t have) – reading the play. For example, how do you find out what the other potential buyers are offering? Where you ask in the right way and the agent feels like they can trust you. It is a chess game, but consider the players.
- Understanding time and how to use it – some people need time to digest and think over an offer and others respond to a situation as it unfolds.
- Know your vendors – giving an elderly couple who is selling the family home a 6pm deadline to accept your offer will not work.
- Work with the selling agent on the best way to present the offer. Questions to ask:
- Is there anything I need to be mindful of with how I make the offer
- How do you want to deal with the vendors?
- What is the best way to get a positive response with my offer?
- Should I give a time frame?
- What format – signed contract or verbal offer?
- Picking a buyer’s agent – go with locals. Using a local buyer’s agent will give you the upper hand as they are experts in their geographical areas and have relationships with the real estate agents in that area.
- A worthy adversary – a buyer’s agent who is too adversarial can do a great job and intimidate the crowd. But if you annoy the agent, you look like a hero once and then it won’t go well for you from there.
- Where best and highest offers are collected and presented to vendors, an agent can influence the vendor on which offer to accept. You may have bid lower, but if your conditions are more favourable, it could swing in your way.
- Build relationships with real estate agents before you negotiate – let the agents know the phase you are in. Looking at auctions this week and I plan to get active after that. Talk about your observations and the agents will see that you are engaging, honest, friendly and serious about buying property.
- Answering the hairy question without giving it all away – what is your price range? At some point during your search, an agent will ask you this. Whilst it’s too early to lay everything all out on the table, you also want to make sure that agents are showing you properties that fit the bill. If your budget is $600,000, you can say something like “I can broadly look at $500,000, give or take, it comes down to the value I see, I have some flexibility.”
- Check the auction clearance rates regularly – become a local expert in the dwelling type you are after. Look at where it is on google earth, land size, condition of the property – why did it sell at that price point?
- Rising markets and pre-offers – properties are only on the market for a short period of time. In Melbourne and Sydney, auction campaigns buy you time but also builds up competition. Talk to agents and explain your brief. Ask if they can you tell you what they have listed and upcoming pre-market properties. This will enable you to have the first bite at the cherry and buy without competition.
- Negotiating for a development sites – first is plan! Work out what you can put on there, height limits and set backs, show it to your town planner to get their thoughts. Start talking with the real estate agent – they will know if developers have taken an interest who may require special conditions. For example: a longer settlement and the contract could be subject to planning approval.
Cate Bakos- The Property Buyer’s Golden nugget: Be conciliatory and fair all the way through. Remember that you may need that vendor to do you a favour if the unforeseen arises. You can be tough on them, push back on little things, throw your rights at them and charge penalties. Then if you have a hick–up at settlement, that’s when the vendor can punish you. There is nothing nicer than a lovely vendor that leaves a card or flowers or a note about the home when the purchaser moves in.
Peter Kouilzos – The Property Professor’s Golden nugget: the three R’s.
- Research – do your research.
- Relationship – form a good relationship with the agent.
- Respect the other party.