Negotiation is a natural part of life. You learn how to trade one thing for another very early as a child. My first memories of negotiation were in the playground trading my lunchbox home-made food for someone else’s junk food and learning that some items had low value to me but a high value to someone else. As an adult, I can now appreciate the value of my mother’s homemade food over any junk food, so my priorities have changed! And this is important. Negotiation is all about understanding someone else’s perspective and priorities, and finding where you can add value.
Surprisingly, when we mention the word ‘negotiation’, most people instantly think about price, because it’s hard not to. It’s a lot of money to spend, right?! But, there are many other variables involved in a negotiation where you can get value out of your purchase, and it’s a mistake to ignore these.
So, to avoid making costly errors and missing out on that dream home, let’s consider doing some preparation beforehand. Here are some key points to consider before you start touring properties.
1. Start by knowing your budget
You have to understand your budget, your real budget. As an estate agent, it’s quite common to only truly understand this of our clients, after the first round of viewings because price often takes a back seat to emotions when looking at a house, and we all love to shop and dream!
But we couldn’t stress more, how important this key variable is. Keeping your feet firmly on the ground will save you time and ultimately money. If you are using an agent, talk to them about your finance capabilities. They are there to help you search properties that fit your true budget so that when it comes to negotiating, you have the power and flexibility to trade this variable successfully.
2. Research the market
As agents, we are constantly researching comparative properties for our clients. This doesn’t stop you from doing the same. Don’t leave it solely to the professionals and educate yourself. Get involved and research online so you can understand variables like property sizes in square metres, inside and outside living spaces; parking and storage; and the value of certain locations i.e. beachside, inland, or city living. Knowledge is power and this will also make the conversation easier with your agent and with vendors when you start talking turkey!
3. Identify your priorities
Ask yourself what your top three priorities are. For example, if you want to buy a holiday home, what are the three top things that would be deal breakers for you, that you simply cannot compromise on? You might say you need to be able to walk to the beach which could be your No.1, the property needs a minimum of three bedrooms could be your No.2 and parking space for two cars might be your No.3. Whatever it is, make sure all your people agree about what these top three deal breakers are and communicate that to your agent.
4. Understand seller motivation
Find out why the vendor is selling. This is very important. Talk to them and get a sense of how they are feeling about selling. You may be able to help by offering a sweetener to the deal that could help them make a favourable decision, such as if you can buy without a mortgage and complete the sale fast. A priority might be that they want to leave all the furniture (or maybe not), which can have an overall effect on the negotiations. Repairs may need doing that could further reduce the price if you took that job off their hands. Think about all these different variables you can bring to the table and write them down.
5. When are you willing to walk away?
Walking away from a deal can be difficult for some. But once you have used up all your bargaining chips and can’t see a way forward, sometimes a firm decision on when it’s time to walk away is necessary. The positive outlook to this is there will be other houses and they will come along at the right time. Buying is a journey, and walking away from a deal is not the end of the world. If you have done your preparation, it will make these sorts of decisions much easier, and you can feel confident you have done everything within your power before it’s time to call it quits.
To summarise, negotiation can take time, and it can be a tug of war, but keep calm and focus on the values and priorities of both parties. Write everything down so you have a clear picture of how the sale looks and whether you can make it work on both sides. I’ve seen many deals fail because the topics in 1-5 were not covered and perhaps both parties were ill-prepared. Don’t get caught out, do your homework and you will succeed in negotiating your dream home! We wish you all the luck in the world and know that when you find ‘the one’ you will have the winning formula to negotiate with success!
