5 Tips On How To Negotiate In A Buyer's Market
Negotiation is a craft. A valuable skill that is usually developed over time and through experience. While there are many tips and rules to follow, each transaction is different. Knowing how to navigate through the various options will be a critical component to building your property portfolio.
Real Estate Agents in Australia that have enjoyed the luxury of being in a seller’s market for many years, now must also hone their negotiation skills. There is little to no negotiation required to run an Auction. The tide has now turned to a buyer’s market, if you want to get ahead of the game and potentially save thousands of pf dollars in your next purchase(s), you’ll want to brush up on your own negotiation skills.
Here are 5 Tips to help you get the best result when purchasing your next Investment Property:
This means not only doing the due diligence on your selected property but also knowing your goals and numbers intimately – and sticking to them! You will also want to……
• Get plenty of interior photos at the inspection, and check out the local neighbourhood for noise and unsightly distractions.
• Have clear understandings around the Vendors needs as well. What’s the most important thing to them? What is their preferred timing for Settlement? It is not always the highest price offered that buys the property.
• Know about any recent sales in the area. Speak to other local agents – there’s a good chance they’ll know about the property that you’re interested in.
• Find out how many other buyers are interested.
• How many days has been it been on the market? This should be one of your biggest signals on how to approach the negotiation.
• Select a good local legal representative to review all documents.
• Do your due diligence around Council Rates, Building Permits, Caveats, Easements, Owners Corp. fees, area rental yield averages and tenancy percentages.
You cannot afford to enter the negotiation underprepared because every fact, every point, could be a pivotal factor in completing the negotiation in your favour. This point alone could save you thousands of dollars on your next purchase. You cannot be too prepared.
This element of negotiation is what has changed the most dramatically as we’ve entered the 2019 buyer’s market. In 2017 our team of Buyers Advocates in Melbourne were successfully securing properties prior to Auction at Market price about 80% of the time. During that “Boom” time (the seller’s market) competition at Auctions was often driving the price up – which meant our clients would potentially pay more by waiting for the competitive Auction day to bid and buy. This strategy ended in 2018 as the markets in the major cities cooled dramatically. Now the opposite is true, which is why we are seeing more and more properties being sold as private sale. Our advice would be this, “If it’s going to Auction plan to go and bid at Auction with a firm – predetermined – final, walk away, price”. Be patient and make your numbers work for you.
If it’s a Private Sale then inspect as early as possible in the campaign, lodge serious interest if it meets your criteria, get legal documentation and contracts emailed to you then wait and watch. Keep in regular communication with the Real Estate Agent while you’re doing your due diligence. In a buyers market time is on your side, do not rush.
For the most part, the days of the loud, bullying, intimidating and sometimes dodgy tactics of property sales and negotiations are gone. The world’s most successful negotiators are usually softly spoken and polite. By remaining polite, focused and clear, you are likely to be treated the same way. Becoming a professional negotiator requires you to have a calm, positive and relaxed demeanour. By remaining calm, you are more likely to turn a difficult negotiation into a positive result.
It may be your first time and you may be new to learning the skills of negotiation, but what you are actually learning about is leadership. Every great leader knew how to ask great questions that would LEAD their audience to the point they want. Asking great questions is a vital part of any successful negotiation. Great questions are simple questions that isolate the main issues. Simplicity leads to success.
5. Lenny Kravitz
Last but certainly not least always remember “It ain’t over til it's over…..”! Until contracts are signed and initialled by both the Vendor and you (the Purchaser), all of the Terms and Conditions have been met, and a deposit has been paid, the negotiation is not over. People change their minds, situations change. Be prepared for this and understand that you too may need to do some more work to complete the transaction. Stay calm, clear and focussed until the property has been “unconditionally sold”. Do not celebrate until this has been achieved.
While there are many tips and techniques to learn in mastering the art of negotiation if you can remember these 5 tips you should be off to a flying start. This skill, over time, will also add to your wealth accumulation and leave you personally expanded and empowered. Above all, remember to enjoy the journey!