The art of negotiating a real estate transaction is something you will develop over time but perhaps the easiest way to look at a transaction is to put yourself in the shoes of the other party. If you are buying, imagine you’re the seller and think about what would you do, and vice versa. This may seem very simple advice but if you sit back and think about it then it could save you time, money and effort in the future.
Ready cash available
Any property expert will tell you that a buyer with ready cash available will have much more power than those having to raise finance or perhaps in a property chain. The simple fact is that the majority of property sellers want to sell their property yesterday and therefore long drawn out negotiations are not in their best interests. It may seem cheeky, it may not seem natural but if you have ready cash available you would be foolish not to try and arrange a discount with the seller.
Imagine, if you are the seller and rather than having to wait months to receive your funds you could have them within just a few days, would you be willing to shave a little off the price? Remember, every pound you save is a pound in your pocket.
When markets are flying high very often sellers will attract offers over and above their quoted selling price although unfortunately this works the other way in difficult markets. There is no point trying to haggle if the market is flying high and there are many other potential buyers around, you’re wasting your time and the seller’s time. However, if the market is starting to drift back and interest is waning then by all means enter negotiations. If you are looking to maximise your potential return using local market conditions (and indeed worldwide market conditions) as a negotiating tool you may have to act quickly before the market turns again.
It is always best to have a price in mind for any particular property you are looking to acquire because if you go over and above that price then the potential return on investment reduces while the risk factor increases. There may be times when you let your heart rule your head although successful long-term property investment is based upon cold hard facts and negotiating the best deal.
Do not be afraid to ask!
History tells us that the majority of property buyers are often afraid to offer a “cheeky price” for fear of upsetting the seller and eliminating themselves from the sales process. The fact is that each and every property sold will attract its fair share of “cheeky offers” many of which will never get any further than the estate agent acting on the seller’s behalf. If you believe the property is worth a specific price, and that is possibly below the quoted selling price, there is no harm in testing the water. As we touched on above, if you also have cash readily available then this will further strengthen your position and your negotiating power.
There is a balance between losing a property over a few pounds and overpaying slightly. However, on the whole you should look to underpay where possible, or pay the fare rate for a property, rather than get sucked into an extravagant and expensive bidding process.