In my recent article Four Ways to Screw Up a Property Negotiation, I talked about the ways you could mess up a property deal before you even begin negotiations.
To recap, if you are under-prepared and unsupported to negotiate sensibly and confidently, you could mess up negotiations before you even begin by:
- Not doing your research
- Not setting your limits
- Not making the sleeing agent your best friend
- Not comparing recent sales
Following on from this, when you don’t establish the framework and ethics of how you will conduct your negotiation, it is possible to mess up a property deal during the negotiation and finalisation period.
Here are six ways you could screw up during negotiations…
1. Not Being Truthful
In order to enhance your negotiating position you might decide to “stretch the truth” a bit to give yourself the upper hand.
This may take the form of overstating your financial capacity (suggesting you can afford more than you really can) or your level of interest in the property (appearing disinterested to try and get the selling agent to cut a deal).
Whatever your approach is, if you embellish your true situation, you’ll probably come to regret it because you’ll inevitably be found out.
And when this happens trust goes out the door, as does your chance to buy the property you want.
Remember, selling agents have long memories which may come back to haunt you down the track should you look to buy another property from the same agent.
2. Not Trusting the Experts
If you appoint a third party expert to advise and guide you, trust their advice.
This doesn’t mean you shouldn’t question it or get them to justify and explain their recommendations, but unless there’s a standout issue, let them do their job.
An example could be the use of a buyer’s advocate – someone who researches the market and specialises in negotiating on your behalf.
If your advocate recommends a course of action or strategy then under normal circumstances it should be followed, especially if you’re a first time buyer or investor.
The key here is to do your due diligence on the expert beforehand. And once you’re comfortable and they’re appointed, leave them to do what they’re good at.
3. Not Being Realistic
When negotiating you have to set realistic expectations about what you want to achieve, whether this be about price, making good on defects or what is and isn’t included in the sale.
In order to be realistic you need to set benchmarks on things like…
- The market value of the property (by doing your research)
- What you can afford and therefore your top price (by working out your spending power)
- What the seller may be looking for (by asking questions of the selling agent)
It’s important to remember that if you make unreasonable demands this will undoubtedly turn off both the seller and the selling agent, which could result in them refusing to do business with you.
4. Not Truly Negotiating
A simple definition of negotiation is where two or more parties enter into a discussion to come to a mutually beneficially outcome.
In particular, it’s about resolving points of difference so that everyone’s interests are satisfied.
To put this into a property context, the seller usually wants to get the highest price possible while the buyer wants to pay the lowest price possible.
And if there’s a successful discussion, the end result will be a price perhaps somewhere in the middle but certainly where all parties are happy.
In order to achieve this you have to be prepared to give something in order to get something in return.
The trick of course is to give something that has a high value to the seller, but a low value or cost to you.
If you can’t do this, then you’re going to find it hard, if not impossible to negotiate to your advantage.
Screwing Up When Finalising a Negotiation
5. Taking Rejection Personally
If your offer or suggestions are knocked back, while you might be disappointed, don’t take it as a personal affront.
And you should never make negative comments about the seller, the selling agent or the property if things don’t go your way.
Remember a “no” is all part of the process and you don’t want to burn any bridges as this may result in you being excluded from further discussions.
Instead, stay calm and take everything in your stride.
Remember, you can always make a counter-offer to see where it leads.
6. Not Looking for a Win/Win Outcome
The final point is about something that I alluded to earlier – having everyone walk away happy.
This means you and the seller need to be satisfied that you both got a good deal.
To achieve this, you need to understand what the seller wants and how to deliver it.
Importantly, it also means you have to be clear about what you want and that the seller understands this as well.