TOP STRATEGIES WHEN NEGOTIATING · Top Strategies When Negotiating a Property Deal 5 A good agent will remember what you are looking for and you will potentially gain exposure to

TOP STRATEGIES WHEN

A PROPERTY DEALNEGOTIATING

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Top Strategies When Negotiating a Property Deal 2

As a professional property buyer I find doing the negotiations and stitching up the sale to be the most rewarding part of my job.

Whether you are negotiating on the sale of a house or with a builder for a big renovation project you need to be savvy and considered in your approach.

Your relationship with the selling agent is a big key to that front door.

It is their duty to get the most money out of you for their client so it is a funny relationship from the start. However building that rapport is vital.

At the end of the day, both of you want a sale.

It is a matter of meeting somewhere amicably, and with a deal made that has you both clicking your heels as you skip off into the sunset.

It is quite the rockstar moment when you call a client with a firm sale and an extra 15% off the asking price.

But realistically how can you negotiate a deal to provide you with a winning outcome?

The Aim of the Game is to win the property for a price that is right and anything south of that is simple awesome.

Networkingand communication


If you are new to property buying it might take a few Saturdays to familiarise

yourself with local agents but in that window of time, in your chosen area, you

will start to build momentum.

It is these relationships that canmake or break a deal.


Introduce yourself and get to knowwhom you are dealing with.

They will soon know you too an when they call back on Monday to

get your feedback (as all goodagents do) ask the

questions like:

What is the vendor’smotivation for selling?

Is there much interest inthe property?

Do you have anything else like this on your books (or coming up)?

ASKQUESTIONS?


A good agent will remember what you are looking for and you will potentially gain exposure to properties BEFORE they hit the open market.

It could be that you are added to a VIP database, or you are tipped off of a pre-market listing, or an off-market one.

Off-market properties garner a lot of interest from would-be investors.

Realistically some vendors do not want to be exposed to a myriad of open homes, they might have 4 kids under 8 and just cannot muster the show home finish twice a week for opens.

They might not be well enough, or it could also be they want privacy and arenot open to neighbours taking a walk through their home in the name oflocal research.

Some off-market propertiesrepresent great value,a swift fast sale, little to nocompetition and with nomarketing expenseto the vendor

– tick, tick, tick!


WHY ASKABOUT THE VENDOR’S

MOTIVATION FORSELLING?


I want to know why and it can be because I can help that vendor.

The offer I make might draw more appeal based on its terms and not the actual final amount.

Take these scenarios for example:As people downsize and put their family homes on the market we are buying off a generation of people who never really moved house from the day they were mar-ried.

They stayed in the same home, raised families and have decades of memories but are unable to maintain the upkeep or the stairs.

These are the vendors that welcome flexible settlement terms.

In NSW it is typically a 42 day settlement for a property however I have alsosecured a sale well below the top offer simply because I extended the settlement terms to accommodate one final Christmas in a much loved family home.

The vendor saw value in staying on, even at the reduced sale figure.

It meant more time for them to declutter, to not feel pressured to move at a busy time of year. The emotional stress of leaving a home takes a big toll on people.The reasoning behind people wanting to manipulate a settlement to suitthemselves is vast.

It could be trying to sell an asset within a financial year or to marryup a sale date with another house settlement.

It could be to minimise any bridging finance, a new schoolyear looming and enrolments are dependant on a newaddress.

Vendors who are returning overseas or have new jobsinterstate often want to settle up fast to reduceunnecessary mortgage payments.

Another big one is the due date ofnew baby or (drumroll) the numberone reason sellers want a swiftsale – divorce!


KNOW YOUR MARKET

When you are really familiar with a market, you know what homes sell for,

what the demand is like, how inflexible pricing is or isn’t, it provides you with

a platform to negotiate.

You will fast learn when a deal is good, you know when its time to pull back

on the negotiations and take a pen and sign that contract.

In a rising market the window of timefor negotiations is diminished.

You want to come in and have yourducks lined up and ready to go.


This is the team that will help you pull a deal together.

They can make or break a deal in a hot market so choose them wisely.

Be sure your solicitor isready to go for a contract review

and that you are pre-approved forfinance.

Clauses are something to tamper with ONLYwhen you have done your homework. Know your

risks,and understand what you are committing too.

In Queensland many contracts have finance or pest and building clauses but if you know the numbers stack up

and you are onto a great deal you also need to recognise

HAVe YOUR POSSE LINED UP


that the more obstacles in that contract of sale the more likely a trigger happy buyer can come along and take the deal with a clean clause-free offer.

In NSW we call that weapon the 66W.

The 66W is when you buy a property under auction terms.That means no rescinding of the contract.

It is a 10% deposit and a 66W requires a Solicitors signature and for you, as the purchaser, to understand the risk you are undertaking by signing off on Auction terms.

Why do sellers and agents love the no clauses and the strictpurchase terms?

Simply, it is almost always a done deal and if it doesn’t proceedthere is a financial loss to you, the purchaser.

There can’t be any further negotiation, and no onecan take that property off you, however, youcould stand to lose the 10% deposit if youhave a change of heart as you leave theagents office.

THE OFFER


Short, sweet, clear, in a written format and something the agent could forward to their client.

You can add some closure by reiterating your affairs are in order, all due diligence conducted and you are able to move ahead that day.

Good agents will often extend the courtesy of calling any other contract holders (in NSW) to let them know an offer has been received and will be accepted un-less that contract holder has a counter offer.

Some agents will share the figure given, some won’t.

Dear Agents Name,

I would like to put forward an offer of $XYZ,000 for 42 Example Street.

We have had our Solicitor review the contract and are finance ready and able to provide you with a cheque for 10% before 5pm today in your office.

We are in a position to offer flexible settlement terms to the vendor if they would like to amend the date.

The 42 days works for us and we would like to move ahead before close of business today.

Kind regards, Someone About-to-buy


PEST AND BUILDING REPORTS

I have purchased properties that didn’t fair so well in the pest and building stakes.

Just one little point on these reports – when you receive the written report you might fall off your chair.

Always speak to the builder whoconducted the report or be present whilst

they are climbing in roof cavities or under the porch to ask all the questions you want.

These reports have a large number of disclaimers.

Some of the maintenance work itemised in the reports is simply just part and parcel of running a building that is of a certain age.


In fact new properties also get cracks and need work here and there.

Be realistic about what you are about to get into. I have been known to ask the builder - would you buy this house?

It is a good indicator of just how major the issues are!

If you are dealing with rising damp issues, or the house visibly leans to one side and the ceiling needs replacing plus you just fell through a floorboard – well that is a big deal – you need to know when to walk away and when to run.

You can ask for some of the repair work to be done by the vendor.

True story. I have done this a number of times with varying success.

Always, always, always, get any repair workinto a contract before you sign anything.

Another negotiating tool is to ask for furniture to be included.

Some properties have odd shape rooms with custom furniture or inaccessible yards.

If you want the outdoor furniture or the grand piano that could also be afactor in the price you offer or a sweetener for you to come up to the price they want.


HAVE A WALK-AWAY PRICE

Before you get into a counter offer scenario have a dollar amount you know you need to stop at.

Try your best not to fall in lovewith the property.

Even though you think you have found ‘the one’ keep an eye on what else is coming up in the local market. It makes walking away easier, and it prevents you from blowing your budget because emotion got in the way of logic.

Don’t let the agent know just how much you love the house.

Show enthusiasm and let them know you want to progress to purchase but remember an emotional buyer is like putty in the hands of a shrewd negotiator!

Best and final offers can be powerful. Use these if you have reached your jus-tifiable upper limit.

The offer we would like to make is $X and this is our best and final figure.

The thought of losing a keen buyer stirs action!


Early in my careeras a property buyer I

represented a lady who keptsuggesting we make timing

deadlines on offers.

‘Tell them we are offering $XYZ,000 but if they don’t take it by 5pm, we walk’.

We had no back-up property, and the agent was beingvery compliant and pleasant to deal with. I didn’t have any

radar of warning about losing the deal.

When I pressed on why the pressured offer my client disclosed that shehad learnt about the ‘time limit threat’ from doing a course years ago on

negotiations. There is a time and place for a deadline.

They should be delivered in a non-offensive way and always in writing.For example, if you have 2 interesting potential properties on the go you might need to try your luck with Property A before eliminating this and turning your attention to

Property B.

Sometimes a timing perimeter is important, and potentially necessary. You can set a deadline without sounding like an arse.

THE TIMINGDEADLINE


Okay, this one is going to sound strange but it hasworked for me several times.

At some open homes the vendors are present. It is notcommon and it is not a favoured scenario by the agentsbut it happens.

When I meet the vendors I always introduce myself andpay the property a compliment.

I love what you have done with the garden…What lovely natural light.It is so whisper quiet here etc.

You catch my drift.

Now I am not talking about being insincere, I am talking about being remem-bered. Agents will sit down with owners and say we have 2 offers, remember the buyer’s agent or that nice young couple or the developer who wants to pull the house down.

Don’t kid yourself if you think that letting the vendor know their home will con-tinue to be cherished and not demolished doesn’t work.

We all function differently and some people want the most they can get and will leave a house without a seconds thought providing the number was right.

For a lot of homeowners, they have emotional strings attached to the property.

In my offers I have stated my clients love the house, can see themselves raising their family there.

The agents will often share those words with the owners.Always leave a negotiation on a positive.

The property you are discussing with the agent might not be the one you buy but the next best deal has you negotiating with that same agent.

Tip: people like doing business with people they like!

THE COMPLIMENT


COMPARABLEPROPERTIES

Go to open homes within a 10% range of your budget.

It is powerful to understand what has sold for less, and to also know what might sell for more.

Get an idea on renovation tips and ideas that clearly appeal to the local buyer.

If the agent laughs at your offer and subsequently quotes a house that sold for ridiculous dollars around the corner, it pays to have done your homework.

If you can counter with, yes but that house had a 45sqm rumpus room decked out with BOSE speakers and unencumbered city views hence this house we feel is worth $X.

Having access to hard data will help your cause.It will also help the agent justify to the seller why your offer is a good one.

Agents get busy, plus they sometimes deal with vendors that are inflexible.If you can do some of that homework then the agent can leverage off this to make a vendor recognise why a price is good.

GOOD COPBAD COP


Good cop, bad cop routines are a big one when it comes to negotiations.

Some examples you would use:

• I can’t go any higher as my finance is at the limit• My partner will not come up any higher for fear of over capitalising

in the area• My husband feels there is just too much work and this is as far as

we will go•

Blaming someone or something else for a strict offer limit can sometimes allow you to play hardball without being confrontational.

In Summary –nailing the negotiating!Build rapport with the agents

• Ask open-ended questions to explore potential negotiating nuggets of gold

• Find out the motivation behind why they are selling and see if you can help them with flexible settlement terms

• Always put your offer in writing• Be non-offensive in your discussions and negotiations• Look at comparison sales in the area and leverage off these• Have a walk away price you are prepared to uphold• Don’t fall in love with the property and if you do, don’t let the

agent know just how much!• Have a good team around you – a buyer’s agent (who will do

all of this on your behalf), your broker, solicitor, accountant etc.

Leave every negotiation on a positive note; you might be dealing with the same agent on subsequent deals.

And lastly, don’t lose heart.

Once rejected offers have been known to languish on the table but not be for-gotten.

You might just get that phone call 6-weeks later from a sheepish agent asking if you would still be willing to complete the sale!

HAPPY INVESTING!

Reduce the Stress in the Property PursuitGet in Contact With The Team At

Advocate Property Services

WE CONNECT PEOPLE TO PROPERTY

P h o n e + 1 3 0 0 1 3 0 9 0 7www.advocateproperties.com.au

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TOP STRATEGIES WHEN NEGOTIATING · Top Strategies When Negotiating a Property Deal 5 A good agent will remember what you are looking for and you will potentially gain exposure to