Property Negotiation Tactics Buyers Should Know About
When it comes to buying, b Invested founder Nathan Birch says if you want to get the best result, you need to be able to listen to sellers and what they want.
If the real estate agent is saying no, you need to think about how to get around the roadblocks in place.
In a hot market like the current one, the agent might be saying they can’t get you through to see the property until after the weekend. But if you know you want the property and it’s going to be a good deal for you, you need to think about how you can make it happen.
Path of least resistance
As Nathan points out, you may not need to see the place to know you want to make the deal, so show the agent you’re ready to go. Tell him you want to buy, you don’t need to see the property and you have finance approved and a deposit ready to go. You can ask to see the contract straight away.
Once they send you the contract, get back in touch and say you’ve filled out the contract and you are ready to proceed. You are happy to buy sight unseen.
You are letting the agent know that all he needs to do is take your contract, sign it and he’s got himself and his vendors a deal. You’re already trying to push the deposit into his bank account.
It doesn’t get much easier than that for the agent. He knows you’re not one of those annoying buyers that insists on multiple visits to the property, bringing different family members through for advice and so on. You’re saying here’s the deal, I’m ready to do it, let’s make it happen.
Leave a few crumbs in the forest
Nathan says it’s important that when you’re making those hassle free deals, you leave some crumbs on the trail so you can go back, follow your tracks and protect your investment.
He says that buying upfront and sight unseen might be taking away your protection, so you want to make sure you’re putting in a cooling off period, or a finance clause, or a due diligence clause.
You may do a contract straight up, which means you’re not going to the open home on the weekend and therefore saving $100,000 because there might be 20 other people competing there. But you’re taking a gamble on the property not being okay.
It might cost you $500 for the pest and building report, but be comforted knowing you’re buying at a much cheaper price. And while undertaking that pest report, you then have the opportunity to pull out if there’s a problem.
Find an extra discount
Plus, in that period you also have the opportunity to renegotiate to get the price cheaper. But when you renegotiate this time, there’s not the 20 other people at an open home that are going to offer more money. You have created an isolated situation, where you can go back and say everything’s looking good but you’ve been told there are critical issues with the property, and it could cost you tens of thousands. You’re happy to look past that but you need an extra five grand off to cover some of the really urgent things.
You might end up getting a few grand off the original price, but if you’d tried to do that on the day of initial negotiation, when all the other buyers were still in the picture, someone else would likely just pay more. It pays to isolate the situation and do the negotiating on your own terms.
Don’t lowball too much
All the negotiating tactics and forthrightness aside, if you don’t make a reasonable offer up front, you won’t even get a seat at the table. You need to be able to show why you are making the offer you are making and don’t insult the intelligence of the agent or vendor.
One tactic is to look at the comparable sales in the area and make an offer that aligns with the lowest of the comparable sale prices. You then need to be able to explain why you have made that offer. For example, the place might need a few grand worth of repair work, or a minor renovation to bring it up to the standard of the other comparable sales.
Clear and calm
Finally, you must treat property investment like a business. Maintain clarity on your final goals, keep a calm and level head and be prepared to walk away from a deal that isn’t going to work for you.
If you spit the dummy at an agent because they won’t meet your price, they are unlikely to want to negotiate with you in the future. You’ve burned your bridges.
If on the other hand, you make it clear that it’s a business conversation and negotiation and that it’s nothing personal but you politely decline going any further, you will have more credibility and perhaps the agent will come to you directly with the next deal.