Are you afraid your emotions will take over on your next property purchase?
Follow our 11 golden rules of negotiation to save yourself time and money.
When it comes to buying property, being a skilled negotiator can result in savings thousands – even tens of thousands – of dollars.
But emotions can often get in the way and ruin a great deal. Negotiation is an art form and it isn’t just about price – it’s about understanding how to negotiate the whole deal.
I recently saved at least $15,000 for a client on a purchase in inner Brisbane by negotiating their contract terms. The terms I negotiated gave the vendors certainty, so they accepted our offer over other higher offers, even though they originally wanted more than $600,000 for their property.
As a buyer, remember negotiating is a skill that not everyone has mastered, but if you’re looking to buy, it’s handy to remember these golden rules:
1. Don’t get emotional
When dealing with money, it’s 50 per cent money, 50 per cent emotion, and emotions can easily cloud your judgement when it comes to real estate. To avoid this, do your due diligence, don’t get frustrated or mad. Recognise you’re at your weakest when you’re about to make a deal – this is where most buyers make mistakes and compromise on what they want. If you can’t help but be emotional in your decision-making, get someone who doesn’t have any emotional investment in the home to negotiate on your behalf.
2. Avoid the ‘battle’ mentality
“One who excels as a warrior does not appear formidable.” This Zen saying means that if you, as a buyer, think you’re going in for a battle you’ll send off certain signals and put people offside. This will disadvantage your negotiating position as you won’t appear willing to hammer out a deal. Ideally, be congenial, and be prepared to engage in discussions with the real estate agent. On the flipside, don’t want to be a lamb to the slaughter; don’t roll over and say yes to their every demand.
3. Understand negotiating isn’t just about price
When most buyers think about negotiating they think about price. But there are other terms in a property contract, all of which can be negotiated. Often offering the most attractive terms to the vendor will make you the winning bidder, whether you’ve made the highest offer or not.
Concessions can be an important part of the negotiation, and as a buyer, you must always trade concessions – never give them away. For example, I often negotiate for my clients to pay a particular price, but in return, I will ask for particular conditions. We have often purchased homes for less than the highest bidder because our conditions were smart and favourable.
4. Do your research
Knowledge is power, so make sure you’re armed with it before you enter into negotiations to buy a home. It’s important to know who and what you’re dealing with, so ensure you understand the vendor, their motivations, and the property’s sales history, including how long it has been on the market.
5. Make a smart offer
Never make ridiculous offers as a buyer – if you lowball the vendor, 99.9 per cent of the time you’ll annoy them and they’ll dismiss you as a serious buyer. Be a smart buyer by justifying your offer with data that justifies your offer. The only time it’s acceptable to make a lowball offer is if the market conditions allow for it, and this would only be in exceptional circumstances.
6. Never overlook overpriced homes
A lot of buyers tend to steer clear of overpriced homes or those offered for sale by expression of interest. It’s natural to think there’s no point bothering with overpriced homes, but if other buyers feel the same way you might end up being the only one to enter into negotiations putting you in a stronger position, with no competition. There’s a knack though to delivering the right message and offering the right price so it’s received well.
7. Act quickly when you find ‘the one’
Many vendors are motivated to sell, as they’ve committed themselves elsewhere. This means a buyer who has finance in place and is ready to move will be attractive to them. It may mean as a buyer you’ll have more room to negotiate on contract terms as they won’t want to lose a sure thing. Taking your time to make an offer can sometimes work to your benefit, but the reality is that homes can sell quickly, so acting indifferently will not necessarily put you in a better position to negotiate.
8. Be prepared to walk away
Avoid F O M O – fear of missing out. If it’s meant to be, it will be. If not, there’s always another house on the market that will tick your boxes. Creating urgency is a sales technique agents use, and it can be very effective if you’re emotionally invested – don’t get caught in the trap and end up paying more than you want or can afford to.
9. Be a good poker player – keep your cards to yourself
Have your poker face on when you go to inspect a property. Even if you love the home and instantly know you want to buy it, don’t gush about it in front of the seller or selling agent. Don’t do something as overt as openly discussing where you’ll place furniture! You’ll be in a stronger position to negotiate if the agent doesn’t know how emotionally invested you are.
10. Be completely present when negotiating
Negotiating is an art form, and it should be taken seriously. Understand what’s at stake in the negotiation process – it could be thousands or tens of thousands of dollars. How you negotiate could make the difference between you securing a property or missing out. Never take an important phone call unprepared. If you’re cutting the vegies for dinner, you’re not focused. Step away, sit down and concentrate, or arrange another time to talk. It goes without saying that all your attention should be focused on an auction if you’re bidding – a lapse in concentration can see the property slip through your fingers in no time at all.
11. Focus on your budget
Did you know most buyers spent 20 per cent more than they planned? Don’t be one of these people. Before you start looking for homes, do your sums and decide how much you can afford to spend, and then stick to this budget. In a negotiation, or at auction write down your number on your hand if you need reminding, and focus on it when you’re feeling pressure to pay that ‘little bit more’.
You might find that despite your best efforts, your negotiation skills aren’t up to scratch, or you don’t feel confident to even engage in the negotiation process. In fact, it might seem downright daunting and scary!
If so, seek help – that’s what professionals are for. Buyers’ agents successfully negotiate to buy properties for their vendors every day of the week, so our skills are fine-tuned.
Since we dealing with sales agents so often, buyers’ agents also have the benefit of having developed good relationships with them. This makes it easier to negotiate, especially since sales agents are more candid with buyers’ agents, and it also means we have the chance to access off-market deals.
Never heard of a buyer’s agent?
A buyer’s agent is someone who will do the research and hard work to find you a sound investment property that will meet your brief, negotiate on your behalf and help you build your property portfolio. A buyer’s agent acts as your advocate in the buying process and can manage the whole transaction on your behalf.
What makes a good buyer’s agent?
- knows their local market – they must live and breath the property in their area
- can show you the hidden issues that could turn into nightmares after the property is purchased
- understands the true value of a property and the fundamentals for capital growth – rather than repeating what is said by the media and sales agents
- can find you smart buying opportunities
- understands the power of negotiation and can successfully negotiate on your behalf
- has experience in the property industry.
At Brisbane Buyers’ Agency, we help our clients make smart property decisions as easily as possible. We are focused on the Brisbane market. We have a proven process and are highly experienced negotiators who regularly save our clients money, time and frustration using our proprietary property analytics tool, the Brisbane Buyers Agency Smart Buyers Index. We work on a flat fee arrangement, we do not work on commission, so you know exactly what your costs will be.
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