62 Negotiation is a process

It pays to remember that negotiating is an incremental process. It is about offering a bit more, then discussing the settlement terms, then maybe offering a bit more while pointing out comparable sales, and so on, until you get to a point where the vendor really believes they have got the win.

61 Educate the vendor

Vendors often don’t know what their property is really worth. To get the listing, agents tend to tell them it is worth more than it is. And it is only when they go through the selling process that the vendors realise this. As a result, it’s the buyers who have to educate them. This means you need to chip away at them until you get a deal where they feel like they are getting a win at a reasonable price.

60 Play the middle man

Employing ‘the mumble’ can be a very effective negotiating tactic. It involves pretending you are the middle man between the vendor and your partner. You then literally mutter under your breath about what they might want. Essentially, it is about positioning yourself as the middle man. This makes it seem as though you are on the vendor’s side of the fence and not yours.

59 Never put a stop to communication

Don’t try the ‘that’s my last offer and I’m not talking about it anymore’ tactic. It’s a matter of being firm but never closing the door. When you say it is your final offer, a vendor will believe you and move on to the next buyer. Always have a reason to keep communicating, because once communication breaks down the deal will fall over.

58 Keeping up appearances

The outcome of a negotiation must seem worthwhile to the seller. Therefore, offer a price that appears to be above market value, even if it is perhaps not. Present sales data that allows you to say, “Here’s what some similar properties in your area have sold for, but yours is nicer and that is why I want it from you for XX amount more.” That XX amount more will obviously be under your budget cap. It’s all about the perception of getting a good deal.

57 Deal with the listing agent

Find out who the listing agent is and deal with them, as opposed to one of the other agents in the company. Firstly, it is the listing agent who actually deals with the seller. And if the lister sells the property, they also get the whole commission rather than having to share it. This means the lister will favour buyers who approach them.

 

Enjoy the process
Negotiation can be good fun, says Open Wealth Creation CEO Cameron McLellan. Those wanting to make a deal should keep that in mind and also take note of the following hard-earned negotiating suggestions.

56 Don’t spoil your relationship with the agent

Agents are only interested in making a sale, so don’t waste time trying to befriend an agent. But don’t spoil your relationship with them either, because only they have access to both the buyer and the vendor. Don’t be crude, rude, or arrogant. Be respectful and courteous.

55 Losing is not the end

Remember that it doesn’t matter if you miss out. There are plenty more fish in the sea. Investors usually have more options than vendors, so don’t give in to the idea that losing out on a particular deal will be devastating for you.

54 Don’t succumb to time pressure

If you feel under time pressure, you won’t negotiate as well. It is easy to feel that pressure. But for investors it’s really just a perception. You don’t have to buy right away, yet the vendor usually does have to sell within a certain timeframe.

53 Anticipate passing in

If the property is going to pass in, always make sure you’re the highest bidder at the end of the auction. This gives you first right to negotiate with the vendor post-auction.