Finding your perfect investment property is definitely cause for celebration (go on, crack open the bubbly!) But it’s important not to get too ahead of yourself. You still have one giant hurdle to get over first – your offer! Getting yourself the best deal is essential. I often refer to negotiating as an art form, as it’s all about perfecting the right strategy. There are a few handy tips and tricks I have for negotiating… keep reading to find out what they are!
Understand The Process
When it comes to negotiation, you need to understand that each party, that is the buyer and the seller, need to gain something and be happy with the outcome.
You need to be prepared for give and take! If possible, knowing the circumstances behind why the seller is selling may also help. Do they need to sell up quick? If so, they may be more open to lower offers.
Know The Market
Remember that what you’re willing to pay for a property might not be in line with what others are willing to pay.
Prices are influenced by demand and how much others in the market are willing to pay. So you don’t get caught out making an offer that’s way off, make sure you research current sale prices for similar homes in the same area!
Utilise Real Estate Agents
In most property sales, the seller will have a listed real estate agent to handle the process for them.
Make sure you are polite, professional and respectful. Remember that most real estate agents have been in this game for a long time, so they know every trick under the sun.
Resist too much game playing, as they won’t look upon it favourably. Always be open and clear in your communications.
Have Confidence In Your Negotiations
Being confident (even if inside you’re shaking!) is a super important part of the negotiation process.
You want to appear unshakeable and confident that the offer you have presented is the right one. If you come across as timid or scared, you will be considered easy prey.
You should always make your first offer slightly lower than what you’re prepared to pay, as it gives you more room for negotiation.
Starting off with your highest bid may backfire if the seller wants to push for more.
Avoid Low Balling
While we all might hold out hope of snapping up an amazing property for a fraction of its real value, the truth is, most sellers aren’t naive or desperate enough to fall for offers that are obviously well below value.
Deliberately putting in an offer that is too low runs the risk that while you’re waiting for the seller to come back to you, they’ve been made and accepted an offer from someone else that was much closer to their asking price.
If you’re making a low offer for legitimate reasons, (such as the property requiring renovations or repairs to make it more liveable for you), it’s best to let the agent know at the time you make your offer so they can communicate your reasoning back to the seller.
Know Your Budget
Purchasing property can be an incredibly emotional experience for many people.
It’s quite easy to get attached to a certain property and lose sight of the bigger picture. Before you enter into any negotiations, you should be very aware of what your upper purchase limit is and stick to it.
Don’t allow yourself to be caught up in the emotion – particularly at an auction. If you think you might get caught up in the excitement of an auction, having someone else bid on your behalf may be a good idea, to ensure you don’t exceed your limit.
And there you have it! My top tips for negotiating… I hope you’ve learnt a thing or two!
Until next time,
* This article was first published on The Property Investor – http://www.tpimag.com/smart_money/the-art-of-negotiation/