No matter how strong you may think your bargaining position is, there are many ways you can blow a property deal.
This can occur, even in a buyers’ market, when you may believe you have the upper hand and it’s either your way or the highway.
Screwing Up Before Negotiations Begins
Without lining all of your ducks in a row, you’ll be under-prepared and unsupported to negotiate sensibly and confidently.
Here are four ways to mess up negotiations before you even begin…
1. Not Doing your Research
When I refer to research in this instance I’m not talking about sales research (although that is important), instead I’m talking about researching the seller and the property itself.
The idea is to ask questions (usually of the selling agent) to learn as much as you can about the seller’s circumstances in the hope that what you glean will help you come up with an attractive proposition and strengthen your bargaining position.
For instance, you could offer a short settlement period or put in an attractive pre-auction offer if the seller wants a quick sale, or get a price reduction if you discover there are essential repairs to be done.
2. Not Setting your Limits
Whilst it’s important to understand the seller’s requirements, you also need to be clear on your own expectations and limits before you begin.
Without setting your limits you may offer too much (and buy a property you can’t afford or, with hindsight, don’t really want) or not enough and end up losing the property.
From the outset, you must be clear on things like…
- How much you’re prepared to spend
- Your maximum settlement period
- What you expect to be included in the sale (e.g. furnishings, plants, light fittings etc.)
- Any other matters that are important to you
These items will comprise your key negotiating points and I suggest you list them out so you can compare how what’s been offered stacks up against what you’re looking for.
3. Not Making the Selling Agent your Best Friend
The selling agent is the person you’ll be negotiating with so don’t put him or her offside – you don’t want to start the process on the back foot.
Make sure you’re polite, courteous and punctual at all times.
Your aim is to get the selling agent to view you as a serious buyer and someone they’d be happy to do business with.
4. Not Comparing Recent Sales
When negotiating on price, your position will be greatly enhanced if you base your offers on research, particularly recent sales in the surrounding area.
Using market evidence such as comparable sales strengthens your position and makes your offer more credible.
To help inform your offers (or your top price if buying by auction), you have a number of options to choose from:
- Monitoring sales results for similar properties
- Getting hold of free property reports from the major property research companies
- Paying for an independent property valuation
- Speaking to other selling agents (not involved in the sale) to get their take on what they think the property is worth.
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