How to Prepare for a Property Negotiation
Property negotiations are complicated things, hence why we have written a few different articles on the topic. A property negotiation is a process in which both parties are vying for power over the details of a contract of sale. For many people, they feel out of their depth, especially when competing with real estate agents.
Well here is some advice to go into any property sale with, no matter the side.
“The most important part of any negotiation happens before you even sit down”
This may seem like a frilly piece of advice, but it is crucial to grasp. The only way to be successful in a property negotiation is to have done your homework. You need to know how to approach the sale, what terms are up for discussion , what to target and more. This is our breakdown of how to prepare for a property negotiation. Follow it closely and you will walk into any negotiation much better off.
How to Prepare for a Property Negotiation – Steps
1. Know Your End Position
The most overlooked part of any property negotiation is the actual goal. This may seem dumb, but Steve, I just want the best price.
What is the best price?
Don’t go in with some flimsy idea that you can get this best price. Most likely you will walk away feeling cheated or not knowing you have been. Instead, have a clear goal. Crunch the numbers on the property and decide what would be a reasonable goal/price. This doesn’t mean you lead with this price, but you have to have a number in mind. On top of that, you need to know any extras you need. Maybe you need a longer settlement period or no cooling-off period.
2. Sort the Wants from the Needs
Once you know your end position, sort through those things you need and those you want. Anything you want becomes a bonus to your sale, anything you need causes a positional change or for you to walk away. Hence, you have to be clear. You may need the lower price, but only want a longer settlement period.
This is crucial, our guide on how to prepare for a property negotiation hinges on your ability to know what to negotiate.
3. Know the Players
We have written on this before, so take a look at these couple articles for more information.
But simply, you need to know what parties are involved and what matters to them. This comes through a whole lot of due diligence in reviewing the property. How long has it been on the market, how many offers has it got standing, is the owner an investor, retiree, couple, family. Be very aware of the key people involved and put yourself in their shoes.
Remember, negotiation really means compromise. What can you give them out of their needs that can give you leverage.
Hence, the next point is leverage. In any negotiation there is a power shift to one side. One side will always need the other more. Work out who that is and remember, it isn’t bad if you need them more, that usually means its a good property. Also make sure you are aware of who the market favours, is it a sellers or buyers market. This can also help you determine your end position.
5. Create Removables
Removables is my word for anything extra that you can build into the sale, you want but don’t need. If you can find things that would be a benefit to you, but that you are willing to give up you have got removables. These things are a key negotiating tool. They are things you can shave off to put you in the favourable position. Now you just need to know when and how to sacrifice these things to get the best return. Maybe you ask for the furniture initially, but offer to let them keep it for a reduced pre-contractual agreement period.
Follow these simple steps before ever sitting down to negotiate. You will be in a far better position and likely way ahead of your counterpart in the sale.