Knowing how to negotiate is a pretty useful skill. We negotiate every day in many aspects of our lives. The negotiations can be as small as working out who is cooking dinner tonight or responsibilities for that project at work, working up to the big ones like asking for a rise. At the top end of the scale is negotiating for a property purchase, which is one of the biggest financial commitments people make in their lives.
Negotiating a property purchase can seem quite overwhelming, given what’s at stake so here are some tips to help you make that deal and secure your ideal property.
A little homework pays off
The first step is to do your research. If you are getting ready to buy a property, spend some time getting to know values in the area of your choice and what the market is doing. That way when you begin negotiations you are operating from a position of strength, and you have realistic expectations of what is a reasonable price to pay.
When it comes to strategy many people like to try a very initial low offer, but you risk annoying the person you are negotiating with and starting the negotiation on a sour note. Many take a similar approach when negotiating salary and start by ‘shooting for the stars’ with an extremely high request which runs the risk of getting your boss offside.
Clear, cool-headed communications
Emotions can run high when it comes to negotiations – especially when the stakes are high, and you are bargaining for something you feel very strongly about. Keep your cool. Take time out if you need to. It’s Ok to say to the other party that you need some time to think about their offer or counteroffer and provide them with a timeframe you will come back to them within.
It’s essential to clearly communicate what you’re hoping to walk away with and where your boundaries lie. You may not wish to reveal your cards too early when negotiating for a property; however, it is important to communicate to the agent any other considerations apart from the purchase price like timeframe for settlement or your available deposit early on.
Take ego out of it and aim for the ‘win win’
Too often a negotiation will become about ego. Rather than trying to get to a mutually acceptable outcome, it becomes about ‘winning’ and getting what you want.
There is sweet spot you are aiming for called the zone of possible agreement (ZOPA). Sometimes called the bargaining zone, ZOPA is the range where you and the other party can find common ground. A positive bargaining zone exists when the terms you’re willing to agree to overlap. A negative one exists when they don’t.
Deal-making requires give and take; think about what you are prepared to concede. And when it comes to a property purchase there are a few things you may find it easy to give – in order to get the price you want. For example, you can negotiate how long settlement will take, how much of a deposit you will pay, conditions for existing tenants or vacant possession, and any fixtures or inclusions you do or don’t want.
When negotiations don’t go your way
Sometimes you can’t reach that elusive zone of agreement and in that case it’s fine to walk away. Sellers may have a set figure in mind and just won’t budge, and that’s OK – if it’s not meant to be, there will be another home that will suit you better. Make sure you know your limit and resist the temptation to go a ‘little bit over’ to try to secure the property.
Confidence comes from being organised
Finally, the most important thing you can do to be a confident negotiator when it comes to property is to have all your finances in order. That means knowing how much you can borrow and having your pre-approval in place, so talk to us about getting sorted so you can put your best foot forward.