The Four Pillars of a Successful Property Negotiation Strategy
Negotiating a lower price on a property can be a challenging task, but with some preparation and knowledge, you can increase your chances of success.
At Chamberlain Brown, we use a 4 Pillar Approach to Negotiating the lowest price:
1. Assess Other Buyer Activity
Before taking a seat at the negotiation table, its essential that you understand your competition. If there were three other committed buyers having already made unconditional offers, the landscape is very different compared to if you're the first buyer to make a move.
When assessing other buyer activity, having a strong relationship with the selling agent will allow you to find out more detailed information than your competition. This in itself is an edge worth having.
2. Understand The Sellers Motivations
It goes without saying, understanding the seller's motivations can help you negotiate a better price.
If the seller is in a hurry to sell, they may be more willing to accept a lower offer. Likewise, if the property has been on the market for a long time, the seller may be more open to negotiating a lower price. However if you make an offer before the first open home, you're laying all your cards on the table.
Before we deliver our negotiation strategies to our clients for approval, we identify the key drivers of the vendors sale decision to ensure anything that can be leveraged, will be leveraged.
3. Understand The Agents Motivations
While not always the case, sometimes the real estate agent may have a personal incentive to help you buy the property.
It could be as simple as the fact that you're easier to deal with than the other buyer asking a million questions and playing hardball, or it could be a genuine self interest. Its very common for agents to have a contract period where they are the exclusive agent. If this period is due to expire soon, the real estate agent risks losing the sale commission if they can't sell the property. If you're in the right place at the right time, they'll work with you to get the deal done.
4. Overlay Fair Market Value
Finally, after piecing together the narrative around motivations, its now time to turn the attention to valuing the property itself.
Applying a systematic, analytical approach allows us to accurately value property within a 2-4% range (much smaller than your typical 10% range shared by real estate agents). The most efficient way of doing this is by comparing the property for sale against like-for-like properties that have sold within the last 3-6 months in a 1-2km radius.
Develop A Tailored Negotiating Strategy
Do we make an offer now or wait? Do we offer a longer settlement or early release of deposit clause? Do we organise our Building & Pest Report before or after the offer is made? What is the starting offer and what do we expect their response to be?
With the information we've received after completing the 4 pillar process, the answers to these questions come very easily.
Its only now that the fun begins...