"One critical lesson I have learned is: never meet in the middle.
Property investors always think that negotiation is about starting at a lower price than is being asked and meeting in the middle. The problem with this is that successful property investing is about buying at market value – and the listed price is rarely market value! If you pick a price lower than the vendor is asking then negotiate until you hit the ‘middle’, using the mistaken notion that this results in ‘win/win’, you may end up paying way over market value.
And so, when negotiating on property, the trick is to research the market well enough so that you are quite confident you know what the true market value should be for that property you’re negotiating on. Then, you make an offer below that market value, and negotiate until you hit market value, or secure the property at less than market value. Once those negotiations take you over this market value, stop and walk away. If you pay more than a property is worth, it can take you years to recover, and eat into your capacity to leverage into more property. If you end up successfully negotiating a price below that market value, you will end up with a property worth more than you paid for it as soon as you settle!" - Margaret Lomas
"For me, all negotiations should be mutually beneficial and investing with this in mind can give you the edge you need to secure your dream home or your desired investment.
The steps I take when negotiating are:
1. I attend a Saturday and Wednesday open - this helps me gauge the level of interest.
2. I ask the agent why the vendor is selling - this helps me to understand the level of urgency the vendor may have.
3. Request a contract and put in a low offer - this enables me to gauge a more accurate figure on what the owner will settle for.
4. Do your due diligence - If I'm really keen on a place, I'll secure it for a 0.25% deposit which gives me 5 days to finalise my due diligence.” - Stephanie Brennan
"Get an independent property valuation.
To ensure you don’t pay more than a property’s true worth, it’s essential to obtain an independent property valuation before entering into any negotiation. Many property buyers fall into the trap of making an emotional purchase decision, especially if they plan on living in their investment.
A professional valuer is emotionally distanced from the purchase and will be able to provide an independent appraisal of a property’s worth today and in the near future. While professional valuations can cost $500, they have the potential to save you thousands of dollars off the final purchase price.
Generally, it’s best to select a valuer with experience in the suburb you are considering investing in, as they will have a good idea of the local market and prices of similar properties." - Chris Gray
"Know when to stop talking and listen.
When you listen you’re able to gain crucial information. Listening and processing this information allows you to adapt your negotiation strategy if necessary, and identify prospective bargaining points as they arise."
- Charles Tarbey
"Give some power away.
One of the most effective tools in negotiation is the open-ended question. The secret to gaining the upper hand in negotiations is giving the other side the illusion of control, and that’s exactly what an open-ended question does. It makes people feel powerful and in charge, and they have no idea how constrained and bound they are by it. You really frame the conversation for them, but they feel very powerful."
- Chris Voss
"Be comfortably uncomfortable.
Negotiation is uncomfortable – you can feel inclined to talk a lot or start selling, justifying, explaining your reasoning and creating problems for yourself. You have to recognise that talking when you don’t know what you’re going to say is only going to involve giving away information.
Become controlled and considered, or you’ll become a danger to yourself. If you’re dealing with a trained, experienced negotiator, they will be watching and listening to absolutely everything, and working on the basis that everything that happens in that room will happen for a reason. Don’t try to relax – most people don’t find negotiation comfortable. Instead, try to become comfortable with being uncomfortable."
- Steve Gates
"Don’t start too low.
Purchasers often think that negotiation is about starting with a low offer and trying to fleece the vendor. However, the problem with this tactic is that you may quickly isolate the vendor, the agent and actually decrease your chance of securing your desired property.
If you do start too low and then get into negotiations, the total amount you may have to increase from your initial offer creates the perception that you have no problem in coming up a significant amount. It may also result in you having to make too many offers, as too many adjustments are not advisable. So, if you want the agent to take you seriously and maximise your chance of securing a good property, complete your research and reach an opinion of fair market value, then start with a reasonable offer below your estimate but at a level that the vendor should consider making a counter offer to you.
From here, any increases you make will appear minimal and will therefore create the perception that you are close if not at your maximum level. Let the vendor think they have squeezed every dollar out of you and that they have won the battle. After all, it’s who wins the war that counts!" - Matt Corbett
"Always to be adaptable.
You can have many tactics but you must know when to adjust to the changing market, vendors motivation and agents proficiency. Always be polite and firm with you offer and be in a position to exchange immediately on acceptance. Holding your nerve in some circumstances is best left to the professionals and they can read a situation much better than a buyer who will only do this a few times in a lifetime." - Anna Rorke
"Understand the process of negotiating.
My best tip for negotiating is to understand the process of negotiating. Your approach and attitude to the negotiation will largely determine the outcome. If you go with an attitude of "I know best and have to win" then you are likely to fail. If you go with an approach of "I fear missing out and I'm ready to compromise most things" then you'll get a very poor outcome.
In negotiations there are three distinct phases.
1. Research. This means you need an intimate knowledge of the market place, buyer demographics, median price movements, supply and demand and a host of factors that determine the level of competition for properties in the location.
2. Planning. This step means working out an agenda for the negotiations, the terms and price and context for the meeting. It's about how and where you negotiate, the timing of offers and how quickly or slowly you need to move to get the outcome you want. It's about understanding the other side, why they are selling or what they desire as an outcome and finding the common ground.
3. Mental preparation. This is where most people fail. They don't have the mental fortitude to stick with negotiations and buckle at the first objection. You need to become unemotional and be aware of how your emotions may impact your body language, voice tone and way you react to things.
Finally, I recommend you have alternatives. You can't negotiate with a gun to your head and only one option. Keep other doors open." - Rich Harvey
"Strike with a good offer that gets the agents attention.
- Establish a good rapport with the agent and find out the motivations of the vendor for selling and any serious level of interest in the property.
- Have all your due diligence done in a timely manner.
- Know the best sales evidence and ‘strike’ with a good offer that gets the agents attention." - Nicholas Taylor-Fick
"Have detailed knowledge of the market your working in.
Being a good property negotiator requires a range of skills including having a detailed knowledge of the market you are working in. If I had to nominate one factor that is really important it would be relationships with the agents. This doesn’t mean socialising or being friends on Facebook – a distinct line in the sand needs to exist for it to be a professional business relationship that is mutually beneficial.
This is the difficult part for most property buyers, they simply don’t have the time to invest or the ability to maintain a long term relationship as they are only in the market for a short time.
I can obtain information about a sellers motivation and a bottom line price they will accept that an agent would not generally share and my clients benefit from this information. It’s a bit like children - you need to be firm and fair at all times plus be consistent to get the best results. Don’t play games and disrespect them if you want the same in return." - Stewart Fraser
TIPS FROM EXPERTS