No buyer wants to miss out on a property they have set their heart on (or a seller a sale) because negotiations have broken down in the heat of the moment. Negotiating know-how is crucial if you want to buy or sell well.
1. Coping With Emotion
You are in a stronger position if you keep your feelings under control or at least hidden from the other party in the negotiation. Even if you are desperate to buy or sell the property, it is better to play a waiting game and not go higher (or lower!) just because the other party is taking too long to get back to you. If you are a buyer, this technique works very well when there aren’t many buyers. It is harder to do when there are more buyers than properties and the market is going up in leaps and bounds. The opposite is true for sellers.If you are a seller, let your agent guide you as to when to hold out for a high price and when to come down. Professional agents understand the market and are in touch with buyers. Be sure you have some market knowledge yourself as this makes it easier to know what the agent is talking about and helps with issues of trust. Sometimes lack of faith in your agent can lose sales too. The agent is working for and paid by the seller.
If you are a buyer, offset emotion by arming yourself with as much knowledge as possible. Get to know recent sales in the area and keep the the negatives as well as the positives of the property in your mind to help you keep things in perspective. Find out as much as you can about the seller too – if they have already bought elsewhere or are under pressure financially you may gain the upper hand in any negotiations more easily. Remember who the agent is working for when they try to create urgency by saying things like: ‘There are other buyers interested’. Know the market well enough to know if it is likely to be true or not, remembering that they are trained to create pressure.
If you are a buyer and you don’t feel up to the task of negotiating your own purchase, there are people who can negotiate the property for you. You could use a trusted friend or pay a buyers’ agent.
2. Length of Time on the Market
If you are the buyer, find out how long the property has been on the market as this may influence your bargaining power. If the property is a new listing, some owners are so flushed with success at the thought of having a buyer already that they try to hold out for the asking price or a much higher price. Be aware that you are more likely to miss out on a property if you are making an offer early in the marketing programme. Sadly many vendors turn down early offers that turn out to be the best they will actually get. (If you are a vendor, this is where you need to ask the advice of your sales consultant). If you are making an offer early in the marketing programme, make sure you show evidence of your research and knowledge of prices e.g. 39 Smith Lane sold for $x and it had 2 bathrooms or 45 Jones St might be on the market for the same price but it hasn’t sold after 6 months etc.It is generally easier to get an offer accepted if the property has been on the market for a few weeks – and even easier if the property has been marketed at too high a price and is still for sale months down the track. Sellers need to remember this when considering how to deal with early offers as buyers can sometimes be reckless in the competition for new listings but are very pragmatic about old ones!
3. Good Cop, Bad Cop
Those who have watched crime shows will instantly understand this buying strategy. If you are a couple, one person seems very keen and the other person shows little interest. This can work for sellers and buyers. In this situation, showing some emotion is OK as each of you is displaying a different emotion. As buyers, one of you might try seeming very uninterested and say that the property is not what you are looking for. This puts pressure on the agent to get the deal done fast while one of you is keen in case the other person finds a house they prefer! Even as a seller, indicating that you are not the sole decision maker and the other decision maker is out of contact means it will be difficult for the agent to close the deal for a lower price. Naturally it’s not worth playing this game so hard that the sale comes to grief, especially in the seller’s case if the agent is indicating that the offer is market value.
4. Don’t Go Up as Fast as the Seller is Coming Down (or Vice Versa)
When negotiating, there will usually be a ‘money gap’ between what the seller wants to receive and what the buyer wants to pay. When making offers and receiving counter-offers, try moving up (or down) in smaller increments than the other party. The increments shouldn’t be so small that the seller (or buyer) doesn’t take you seriously though. A seller who feels insulted may refuse to continue negotiating. Buyers sometimes walk away if they feel a seller is not going to be realistic about the market.
5. Call Them Back
This is particularly relevant to buyers. It’s a good strategy to fall back on when an agent calls you and you haven’t composed your thoughts and may not say things the best way. If you say that you are in a meeting or the supermarket and ask the agent if you can call them back, you will have a chance to get your responses ready, perhaps even make notes. A good agent who is working hard on the seller’s behalf will want buyers to do the talking as they try to get them to provide information that they can then use when negotiating. When you call them back, you can be ready with what you want to say not what they want you to reveal.
6. Have Other Options in Mind
Once again this tip is particularly relevant for buyers. When you begin negotiating on a property, make sure you don’t feel emotionally that it’s an all or nothing scenario. As a buyer, if you have identified several other homes you’d be happy with – even if they are not quite as good – you won’t feel as if everything rests on this negotiation. It also helps if you can say this to the agent. Make sure you only say it if it’s true – people lack conviction when they make things up as they can’t add any corroborating details when questioned.
7. Drop any Feeling of Win/Lose
Never lose sight of the fact that your goal is to buy (or sell) a home not beat the other party. Losing a house you like and can afford or a sale at the right price over the last few thousand just because you’ve turned against the other party because they wouldn’t cooperate with your plans doesn’t make sense. What’s more it could actually cost you money in the long run if the market is going up (buyers) or down (sellers) or if your timeline is out of whack as a result. Ask yourself whether it’s just ego stopping you from budging the last few thousand to get the deal done.