SERIOUS BUSINESS Negotiating is a N

egotiation is an important skill that is usually developed over time and via experience.

Homeowners have enjoyed a seller’s market for the past few years, but as the market starts to shift and the pendulum swings towards a buyer’s market, both sellers and purchasers need to hone their negotiation skills.

Do your due diligence

Know your goals and your numbers and stick to them.

Ask the agent’s permission and take plenty of interior photos at the inspection, while surveying the neighbourhood for noise and other distractions.

Find out why the vendor is selling and what’s important to them including price or settlement terms.

Research recent sales in the area and find out how many buyers are interested in the property including any other offers.

You also need to know how many days the home has been on the market and ask the agent about council rates, building permits, caveats and easements. You can’t afford to enter into negotiations underprepared.

Stick to a plan

During boom times competition drives up the price because buyers are worried about missing out, but now the opposite is true.

Be patient, stick to your gameplan and don’t exceed your ‘walk away’ price. It’s also important to keep in regular contact with the agent about your due diligence.

Be nice

The days of intimidation and loud communication are gone.

The most successful negotiators are softly spoken with clear instructions. If you remain polite and relaxed, you’re more likely to be treated the same way which will lead to a positive result.

Also, until contracts are signed and initialled by both parties and all terms and conditions have been met including paying the deposit, the negotiation is not over. People can change their minds so be aware of this and stay calm and focussed until the property is unconditional.

What are you prepared to pay

Ask yourself a series of questions including ‘can I afford to buy this property’, ‘what price am I prepared to pay’ and ‘what settlement terms do I want’.

Determine your price range in consultation with your mortgage broker and bank and don’t go higher than your finance pre-approval.

Knowing what you are comfortable spending and being prepared to walk away if the price is too high will give you confidence when shopping for a home.

However, you also need to be a little flexible because the last thing you want is to miss out on your dream home to another buyer over a few thousand dollars.

Is your offer compelling

Low balling a property with a really low offer doesn’t work.

You need to ask yourself ‘will the vendor see value in my offer’ and if I was selling my home ‘would I sell it under the conditions I’m offering’.

Getting carried away trying to win hard-nosed negotiations rarely paysoff and quibbling over minor items is nowhere near as important as potentially owning the home.

Negotiation is not a winner takes all contest and the most effective way to negotiate is to create a win/win situation where both you and the seller feel like you are getting a good deal.

Head versus heart

Negotiate with your head, not your heart and be prepared to walk away. Sometimes this is easier said than done when we see a home that we really like or you’ve been in the market a long time and missed out on other homes.

You can fall in love with a property and let your emotions get in the way and it’s easy to lose control of negotiations.

It’s easy to get caught up in the moment but once you start negotiating, try not to let your emotions get in the way or cloud your judgement.

If you want something from the negotiations including a lower price, try giving the seller something in return such as a shorter settlement, paying a larger deposit, waiving your cooling off period or finance clause.

Remember, if your offer isn’t compelling there’s a chance it won’t get you far with the seller and the agent might think that you’re not serious about the property and pursue other leads.

This can be a significant problem if other buyers are making more compelling offers.

Summary

We are entering a market where the buyer can truly leverage their power and exert their influence at the negotiating table. However, it’s important to recognize that if something is priced correctly it will move quickly and the more competitive a property, the more likely it will achieve a premium.