I don’t get a lot of time to watch television and when I do it is most likely a documentary or some the discussion style television, but I have a hidden shame. Occasionally I like to watch some of those semi-reality TV shows from the United States that are part reality and part Jerry Springer.
My favourites are based on a pawn shop and two guys who travel around buying antiques from people who have them just sitting in a shed or barn.
What has spiked my interest recently was the fact that while apparently both these shows deal with different sorts of people and have different target markets.
There are some clear guidelines that start to appear when you’re negotiating to buy.
As a result, I been able to notice the following 5 tips
Number 1; Treat the seller with respect.
One of the things that become apparent very quickly is the necessity to treat everyone with respect. A great question can be ‘why are you looking to sell?”
While you might be a long way apart in the negotiations nothing is going to slow things down and limit interaction faster than telling a seller that they are wrong. Remember that one of the keys to negotiation is the conversation and finding common ground.
Rather than telling the seller they must be dreaming. Ask them “how did you arrive at your selling price?” This question allows them to feel like they can justify the price they are asking and enables you to obtain valuable information about why they want the expected price.
On both the reality shows it amazing how many times, people mention how they saw one that recently sold for a specific amount.
But when asked about the condition of the item quickly say theirs is not quite as good. By respecting the seller’s opinion, you give yourself the opportunity to keep the conversation going.
Number 2; Do your homework.
Before you walk into any negotiation, do your homework. Conducting some research like visiting other open houses or online, for example, you can ask Awesome Lending Solutions for a property or suburb report.
This will allow you to find quickly the average sale price of similar properties and potentially how long the property you’re looking at has been on the market.
That way when the seller mentions the house three doors down that sold you will be able to comment on why you think it went for that price. For example, it had a pool or large entertainment area.
Being ready with this knowledge in the negotiations can be a great help.
Number 3; Be clear on what you are willing to pay
Set yourself a clear bottom line that, if you have done your homework, should be very clear when you enter into the negotiations.
Start with a realistic offer so that the seller has an opportunity to keep the conversation going and come back with a counter offer.
Throwing out unrealistic numbers wastes a lot of time and tends to upset the seller because of their emotional attachment to the property. Be realistic.
The negotiation will move faster, and both counterparts will leave with positive feelings about each other.
If the seller comes back with a figure that you feel is unrealistic, one great question to ask is – “What would you accept”.
This lets the seller know that the figure they have mentioned is still too high but that you are still ‘in the market’ to buy the property.
Number 4; Be willing to comprise or haggle.
In the world of negotiation, it is common knowledge that you should never say “yes” to the first offer.
Whatever you are offered, be willing to counter, even if it is a small counter offer.
This can be an excellent way to ensure the seller doesn’t start to get the feeling that they could have, and should have done better.
For example, think about asking the seller to leave behind something that might be of interest to you. I know of one particular client who asked the seller to leave behind a swing set because he knew that it would make the property easier to rent to families.
The couple selling the property were moving to a unit and had no interest in the swing set and were arguing about how they get rid of it.
Donate it to charity or just send it to the tip. This simple counter offer of only being willing to pay the asking price made them feel like the price the asked for was the right price and closed the deal without any further negotiation.
Number 5; Be willing to walk away:
Too often, people enter into negotiations with only two outcomes in their mind–winning or losing. It becomes a test of wills to see if a compromise can be finally negotiated.
Often this comes with the emotions of the time spent researching a particular property or the feeling of missing out after seeing ten other properties that were just not quite right. So having a clear idea on what you are willing to pay is just as important to be able to walk away altogether.
In a negotiation, the person who holds the most power is the person who is least committed to the relationship.
As a result, the ability to walk away and manage your emotions can be a great way to show the potential seller the downside in the possible loss of a buyer if they cease to negotiate.