3 Stress Points Of Any Property Negotiation
People have been negotiating – subtly, enthusiastically or fiercely- since the first fire was lit on earth. Each property negotiation brings a few critical pressure points to the surface. It is a different matter whether you gain at those points or lose at them. Michael Yardney for the Property Update talks about 3 such stress points.
Let the vendor know you have got options
Use the “option” weapon on the seller before he uses it on you. You know you have your best bargaining chances when the person on the other side knows you are looking at other options too.
Something like this- I like what I see but the other party is offering me in the CBD area for $20,000 less- can help.
Let the “other party” remain unnamed, citing reasons of protocol or confidentiality.
The vendor or his agent will also have you believe that he has two or more interested parties, and at least one of them offering more than your offer.
It is interesting to note that perception rather than reality is the more important factor during property negotiations.
Good time for buyers- Property market has well and truly picked up and so it is not too difficult to persuade a vendor that you have more options at hand; after all, there are plenty of properties on sale at any given time.
Play the ‘Time’ card on him
The vendor might be under some time pressure, which is made quite apparent from his moves. He may be looking for a distress sale, may have a divorce proceeding lined up, an interstate shift on the card, or committed to buying another property with the sale proceeds of the present one.
Use all your manipulative skills to find out what his pressure point is. You can either have him cough out the reason for you or you can trap his vendor to do so.
A few probing questions- How long is the property on sale? How many different offers are you considering? How have you derived your final selling price?
From your side, you can stress on the time factor by letting him know when your offer expires. Yardney believes that statements such as – I am afraid I can consider your sales proposal only till 6 pm this Saturday, post which I would have to pick up the property slated for the Sunday auctions.
Be adequately informed
Perform your Due Diligence so that you know more about the vendor. Learn how is the population growing? What is the job growth? How many diverse factors of growth are supported by the region? What is the rent to purchase ratio for the area? How is the place lined up against storm water or industry effluents? and so on.
Yardney thinks that any amount of knowledge about the vendor is welcome so try researching on him in depth. Do not rely on anything his agent tells you about him.
You can read the original article here.
My Advice: Use a Buyers Agent
My completely unbiased advice: There is a great chance of gaining the advantage if you use an experienced professional buyers agent.
First, the move prevents emotional attachment (many share traders can trade profitably for others but are much less successful when their own money is on the line).
Second, they bring a rare degree of experience on the table (having struck many property deals, they know how to play the game and how to send the right signals).
Therefore, there is a greater chance of having a favourable outcome in negotiations with a buyers agent representing you.