A common trait of successful people in property investment is a good ability to negotiate. The most successful people in our industry have the gift of the gab and can talk their way through any sort of negotiation. However, it’s not just about talking the talk…
Over the years I have negotiated on thousands of properties and experienced almost every possible situation that there is to experience, both as a buyer and as a seller. I thought it was time to summarise the most important Tips & Tactics for you to keep handy before you decide to go into your next negotiation. Grab a coffee, have a read and consider applying these tips in your next negotiation:
1. Know the value before you negotiate
Be prepared before you start to negotiate, research online for similar properties in that area that are cheaper, better or both. When you chat with the agent or vendor if you know the area and the market you will command a lot more respect. Do your research, do your feasibilities, it’s worth tens of thousands of dollars.
2. The agent is never your friend
The agent represents the seller. They are paid to achieve the best possible outcome for the vendor. A good agent is highly skilled in extracting the highest price from the market – which means you. Be guarded in what you disclose or better still have someone represent you who are skilled at negotiating.
3. Respect the vendor and seek a win-win
You catch more flies with honey than you do with vinegar, so it’s important to maintain a good rapport with the other side. Look for common ground and give the vendor an incentive to accept your offer. You can often trade off terms favourable to the vendor, such as a shorter settlement, for a reduction in price.
When your offers are rejected, don’t take it personally, and don’t make negative comments about the property as this will only offend the vendor. Remember, they are influenced by their emotions too – especially when selling their own home.
4. Know the Market
Ask almost any buyer’s agent around Australia about the key to buying in a hot market and research will almost certainly be among the first words they utter. You should view 100 properties before you even start thinking about making an offer.
The important thing is to monitor what the advertised price was and then versus what it sells for. Comparable sales should always be based on confirmed sales rather than on the advertised price.
5. Be prepared
Have your finance pre-approved and your solicitor or conveyancer ready to act.
If you find a property you like and you all of a sudden have to go and arrange your finance you can lose competitive advantage and the ability to move quickly.
Use a Research Checklists when you’re out looking at properties, that actually has all your details on it so you can fill that out on the spot and head off to the next open house, it makes you seem very efficient.
6. Beware of panic buying
Missing out on properties is part and parcel of a hot market. It’s important not to get frustrated and pay too much for a property just because you’ve missed out on a few others. Remember the opportunity of a lifetime comes along every 14 days.
7. Be ready to negotiate after an auction
At auction, the aim is to either have the auctioneer hammer the property down to you or to hold the highest bid when the property is passed in. This will generally give you the right to negotiate with the vendor after the auction.
Find out what the reserve is once the auction finishes and then to challenge that figure, asking the agent and vendor to justify it. It’s also vital to lock in the terms and conditions you negotiated before the auction because these won’t carry over automatically
8. Check your ego and emotions
You can’t afford to be emotional or egotistical when buying in a hot market. This is particularly true on auction day but applies to all circumstances. If you’re at an auction and thinking, “I’m not going to let that guy beat me”, you’re in trouble because you could end up paying tens of thousands of dollars too much for the property.
9. Use a Buyer’s Agent
If all this seems a little (or a lot) overwhelming and if you haven’t got the time, the dedication and the energy to do it properly then you’d be well advised to pay someone to do that for you. A good buyer’s agent will save you time and money and in a lot of cases get access to properties that you may not have.