Negotiation: “The Art of reaching an agreement with another party to a favorable outcome. “
This is a part of the investment journey that can either have a long lasting detrimental effect on your property portfolio or if done right-can put you in front in a number of ways.
Thoughtful and well-played negotiation is critical for buyers and sellers of real estate and when it comes to property investment, knowing how to successfully parle with a seller’s agent can save you thousands of dollars.
Being a skilled negotiator means maintaining a strong sense of purpose and direction; employing logic and reasoning over emotion and desire. Just remember – when negotiating – every move you make has to have a reason and you must be mentally prepared before you go into battle as well as financially prepared. If you can negotiate a price that you consider less than market value then this will give you immediate equity but there are ways that this can go horribly wrong so I have detailed what I think are the top 7 tips for successful negotiating. These tips can be assisted with an auction negotiation on the day or a contract negotiation with sales agents.
1. Have a clear sense of direction and focus on the end goal
Preparation prior to negotiating is crucial. Make certain that you have sufficiently researched the area and the sales of comparable properties in the surrounding streets. Understand what it is that you are negotiating for and set a target value that you are prepared to allow the seller to drag you (willingly) towards. Establish the mark and then you’ll know when to concede defeat and when to stand firm.
2. Be confident!
Know exactly what you want and plan the negotiations on how to get it. Be strong and assertive with your words, as well as your body language – speak in a clear, strong voice and maintain a body posture that says “this is mine- I’m going to have this”.
Never try to dominate or intimidate, as this will make the other party shut down and bring the process to a standstill. Understand that at Auctions it is not always the aggressor that is the victor.
Employ an appropriate bidding strategy- bid low against an aggressive high bidder and bid a higher multiple when they return the bid – but place the return bid straight away. Some of our most successful auctions have been well below target goal because we bid with a strategy that disempowers the other party because we always bid with confidence.
As the old saying goes, “Silence is golden- shut up and be rich”
Knowing when to be quiet is an art in itself, and will often move negotiations in your favour.
When actively negotiating with an agent – use the art of “pausing” just after your “intent” statement. This often entices the agent to open up in an attempt to fill the void created by the pause. Good negotiation requires collaboration and as such, you need to hear what the other party is telling you – with their words and their silence and don’t be too hasty to respond either.
Quite often it is what we are not told in answers to the questions that we ask that tells us what we really need to know. During your discussions with the agent listen for key words and seller statements like What they are trying to achieve?
What is the real motivation behind the big lifestyle change?
What are their most favorable terms?
If this information is not volunteered then ask—When you know the answers to these questions you will be much closer to that win-win outcome required for truly successful negotiations.
5. Be prepared to walk away
Have that clear goal at the front and center of the negotiations and If negotiations stall and all the pausing is done and you’re no longer making any headway toward a positive resolution, back out gracefully. There will always be another deal to be done, so resist the urge to dig your heels in when it comes to time wasting, no-win battles. Give the agent another day and if they have not contacted you.
Again then call them to ask if the seller has had a change of mind.
6. Less is More—
The power of leverage in a negotiation is often a winning combination of terms, price and conditions. The less terms and conditions you have in a contract situation the more power you have to influence the outcome with the seller as it will certainly be more attractive to them.
But we often start negotiating with much looser terms and conditions in a contract and then concede on these bit by bit to replace an actual $$ value. So we are being perceived as conceding some things to get something in return without actually having to start increasing the price value yet.
For example if we start with a 21 day finance clause in an offer but conceded down to 7 business days can be shown to the seller that they get their “certainty” sooner and also work this with the settlement date. If you don’t need a finance clause then at a critical point in the negotiating you can remove this instead of increasing the price.
7. Two peas in the pod.
A tactic that we use often in negotiating deals that appear to have reached an impasse –is the time sensitive request to the seller.
Tell the agent that the seller has only the rest of the day to accept your offer as you have inspected another property and you are about to begin negotiations on this one.
Let the agent know what the address of the property is and the sales agent that is marketing it- as this gives a little bit of authenticity to your statement. This may instill a fear of losing you altogether into the seller and sales agent and is often the catalyst for negotiations commencing again.
Talk to National Property Buyers Brisbane about your property purchase – free consultation available now.