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6 Negotiation Tips To Employ As A Property Buyer
Before entering the negotiating colosseum ready for battle, you must already decide on your position so that you know the boundaries that a deal has to fall into for it to take place. These positions are:
- The price range that you are willing to pay for an option to purchase.
- The maximum price you are willing to pay for the property.
- The terms of the option that you are willing to accept or compromise.
- The terms of the purchase that you are willing to accept or compromise.
If you walk into the negotiation room without having a clear and specific answer to these positions, it is like walking into a battlefield for the sake of battle. Know your end game. Here are 6 useful tips to negotiating with sellers.
1) Create a good lasting impression. It can be useful to create a good first impression. But to take it further, you should be consistent in your image and presentation. No point having a professional image on the first meeting but reveal yourself as a grumpy man full of expletive language on following meetings. An impression is not just about how you look in your designer Armani suits and expensive leather shoes. It is more about presenting your personal values and what you represent. Be groomed, well-mannered, confident and authentic. If you somehow present yourself as an immature investor, a seller might not take you seriously. A home owner who is emotionally attached to his home might see it as an objective to get a good new owner for the place.
2) Be a listener. People who watch variety and game shows may think that the best attribute of the hosts of these shows is the ability to talk. But in actuality, their best attribute is their ability to listen. Being a good listener is a characteristic that every negotiating specialist has. It helps you find out what are the underlying motivations of sellers and identifies what types of questions will work best in different situations to uncover information. Look out for meanings in between words and respond by asking neutral questions in an unoffending manner.
3) Avoid gimmicks and fabricated stories. If you have ever been in a sales pitch from an insurance agent, you would have heard of their stories of how a friend of a friend got into an accident and that they are relieved that they have bought insurance. It is a good story-telling sales pitch that works. But leave that off the table when negotiating as a buyer. The drawback of these strategies is that it opens yourself to being caught as a liar, even if it is just a white lie. It puts your credibility into doubt and for sellers that are not really cash-strapped, it can be a dealbreaker. A property concerns serious business with serious money involved. No one likes to deal with monkeys who treat his home transaction as a game.
4) Keep the main terms simple. A transaction agreement can be complex and take days to draw up. But the main terms that underlines the agreement is the price and time aspects. Little terms and compromise can be discussed after the price agreement. Because once the price is agreed, these little terms can be easily ironed out from simple conversations. Throwing up little insignificant terms into the initial negotiation just makes everything more complicated and makes your challenge bigger before even agreeing on a price.
5) Talk to the correct person. If you are negotiating with a couple, there is a tendency that one of them will call the final shot with authority. The other party will be the one that gathers all details and absorb all the hassle. These information will then be passed on to the decision maker. The person you want to talk to is the decision maker. Learn how to identify who this is and attempt to reach him directly. It can save you a lot of time and extra stress you have to put into negligible terms.
6) Allow a cooling off period. The most devastating negotiating strategy is silence. It is appalling how so many negotiators have failed to identify this. Once you put forth an offer, allow the seller time to think about it and consider. Set a deadline. Buyers often lose out when sellers do not respond and they compromise the price. In this instance, do you notice that a seller is using the same silence strategy to get buyers to compromise? Use this to your advantage.
Common items used by buyers to challenge asking price include:
- Physical condition
- Proximity to undesirable places
- Financial performance of the property
- Market perception of property type
- Not compliant to building and zoning codes
- Market trends
- Recent transacted prices in the area