What to negotiate in a property purchase other than price
Regardless of the condition of the property market, experts believe that there’s always a bargain for smart investors to snag. How can investors negotiate smartly in today’s market?
While most people have the idea that negotiations are often “hard and heavy”, with two sides being incredibly deliberate and forceful, buyer’s agent Robert Skeen said that maintaining a respectful atmosphere throughout the purchasing process is critical to the success of determining a fair value for an investment property.
Whether negotiating a property purchase directly with a buyer or through a real estate agent, he deems it important to be open to counteroffers and avoid being too aggressive.
“You want to be respectful about it, so you just open the channel of negotiations… It’s a starting point,” Mr Skeen highlighted.
“If you can put theatre into any negotiation, if you can make the person you’re buying the property from like you and enjoy spending time with you, that’s a great vehicle for manoeuvring a price in a way that you want it.”
The buyer’s agent also encouraged investors to be transparent when negotiating in order to make the most out of the purchase.
Negotiation strategy
While a negotiation strategy is formulated “simply for securing the property under market value”, Mr Skeen said that the property price is only one of the multiple components to consider when negotiating.
Among the most important points of negotiation are the terms and conditions of the purchase.
According to him: “Terms are important… For example, if they need a longer settlement, that might enable you to get the property cheaper. This brings us back to the fact that knowledge is power when purchasing a property.”
“In Bronte, a few years ago, there was an offer that was $85,000 more than ours, but they ended up going with us because we were able to offer them a longer settlement… She had a little family day care centre and they haven’t relocated that anywhere yet at that time.”
As part of the negotiation strategy, Mr Skeen reiterated the importance of learning not just about the values of comparable properties in the area but also, and more importantly, about the current condition of the vendor and their motivation for selling.
“That longer settlement enabled them to relocate, so they took our offer even if it was $85,000 less. Terms are very important.”
Take the time to talk to the vendor or the real estate agent representing them to get a good read of the person on the other side of the negotiation.
According to Mr Skeen, the more the investor knows about the negotiating parties, the better prepared they can be to negotiate a good price.
He said: “Question the agent: Where the owner’s going? Why do they need the money? How long has it been on the market? Why are you asking this price? Get them to justify it, especially now that the market’s come down. They might still have expectations off of last year where the markets were a bit higher, or even the owner’s got higher expectations.”
“Just question, question, question.”
Tune in to Robert Skeen’s episode on The Smart Property Investment Show to know more about the winning strategies in today’s property market.
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