Negotiating the best deals is one of the biggest skills to have for successful property investment. Because when you think about it, getting something for less than market value means you can make instant equity on the way in and safeguard yourself from any market falls.

But unless you’ve been investing for a long time, it’s pretty hard to know what to do when you’re up against selling agents who do their thing week in, week out to earn a living.

Understanding market dynamics

It’s important to know the market you are dealing in before trying to negotiate. This will stop you overpaying, but also means you are seen as legitimate by selling agents. There’s no point offering $500,000 less than market value, because an agent then won’t take you seriously. If you are looking in a local area, get across the recent sales data, trends and whatever economic factors might influence the local property prices; for example, is there a major employer in town that would send values plummeting if it closed down? Or is there a diverse range of industries that are growing?

The more you know, the better placed you are to negotiate.

Understanding sellers and their properties

Most people selling their properties don’t really know what to expect. There has been enough uncertainty around in recent years that they may be extra keen to get a deal done and will forsake the stress of a drawn out campaign and auction process if you can make an offer that they find acceptable. This will be easier again if there is something not quite right with the property they are selling.

Maybe there is superficial work that needs doing, or existing damage to the asset. In a booming market, this would not affect their sales chances, but in a more balanced market, they are going to have a hard time attracting buyers and will be more open to making a deal that suits you.

Remember, your purchase is all about whether the numbers stack up. You’re not going to be the one who lives there.

Working with real estate agents

Real estate agents may be sitting on the other side of the negotiating table, but at the end of the day, they need to make deals to earn their money. And if you’re buying an affordable asset, a discount won’t hurt the agent’s commission too much. They may be happy to take $5000 less commission and move on to the next listing, rather than spend another 6 weeks trying to sell the property for a slightly higher price.

Their job may be to represent the vendor, but they will often talk a vendor down in price to get a hassle-free deal done.

Give them something to work with

It’s not always just the price that sets you apart from other buyers. If you have done your due diligence, you may be able to make an unconditional offer, which agents and vendors like because they don’t then have a cooling off period to wait out while you do building and pest inspections and other checks.

You might also offer a shorter or a longer settlement term to suit the vendor, or other sweeteners that may be revealed as ideals in the negotiation process.

Leveraging buyers’ agents

It’s unusual for a regular investor to be an expert at finding and negotiating deals, which is why you can also engage a buyers’ agent to do so for you. Nathan Birch founded B.Invested after making hundreds of property deals and gaining all the experience needed to be able to help others.

B.Invested is able to do the research and find discount deals for clients, do all the negotiating on their behalf and even introduce them to the best conveyancers and property managers to help with the post-purchase phase of the investment.

Often, B.Invested staff will know about deals that never make it to market, in locations that you may have never heard of, so engaging a buyers’ agent can open up a whole world of wealth you otherwise would not have had access to.