Property negotiation is a skill in and of itself. It’s a useful and often under-appreciated part of your property buying toolkit that can save you money straight off the bat. However, property negotiation is not something you’ll be doing on a day-to-day basis, so we’ve collected together everything you’ll need to know about the bidding and negotiation process.
One of the most important aspects of negotiation is starting on the right foot. Professionalism, punctuality and knowledge are all traits that will help you get the property of your dreams. Be sure to put aside specific time to calculate your negotiation prices, draft letters and generally deal with the process of negotiation. It’s not easy, but done right the following can help you get the best deal:
Probably the number one mistake made by buyers is not having other options when they put in a bid or start negotiating. Naturally, it helps if you have other properties that you can fall back on without compromising on anything. Sometimes this may not be possible, but always remember that if a deal is not going your way – or is becoming detrimental to the appeal of a property – you can walk away.
Making concrete goals, and sticking to them, will help you take a much more ordered approach to property negotiation, especially if you are bidding on more than one property at a time. Make sure these goals are tailored to the property you are bidding on as well, rather than simply aiming for an arbitrary percentage off the asking price.
Negotiation is the art of creating a win-win situation. One of the most common reasons a negotiation fails is because it becomes more like damage limitation for one party, creating negative emotions and distrust. When you’re negotiating on the price of a property, try to ensure you’re making up for it in other ways. Things like non-returnable deposits can add a fantastic amount of peace-of-mind value to sellers, especially if they’ve had a bad experience with buyers pulling out before.
Negotiations shouldn’t be led by your emotions. Ideally, they’re based on cold, hard facts. The human desire for great value for money is a strong one, but remember that you are dealing with humans on the other side of the bidding table. Strong emotional attachments to a property can also lead you to offer much more than you might otherwise, for fear of losing the property. If you have money to burn, that’s fine, but for most buyers leading with your head rather than your heart will yield much better results.
Creating a relationship with the seller is a hugely valuable thing to do. This is most easily done face-to-face. Of course some sellers are completely against this, and often estate agents aren’t too keen on buyer and seller thrashing things out. However, putting a human face on a bid is a great way to make it stand out from the crowd. Remember, though, that if you’re going into face-to-face negotiations with a seller, be sure to have your limits well laid out in advance. In essence, you want to make sure you stick to the game plan, rather than getting carried away with the moment and bidding higher than you can realistically afford.
Logic can be the most powerful tool in your arsenal. If there are issues with the property that aren’t highlighted, such as problematic uPVC windows, or high-energy consumption, these can be used to calculate a more realistic bid. This not only legitimises your bid amount, but also ensures that you’re going into a property with enough money to resolve all the issues to your satisfaction.
Remember that you may have a number of advantages over other buyers. Highlighting your status as a no-chain buyer, for example, may make you more likely to be accepted. Similarly, cash buys or on-returnable deposits can add an extra sparkle to your bid. Be sure that all your advantages are highlighted in your offer letter.
Doing research on properties in the area is essential, and you can be sure other bidders are doing it. Your estate agent will likely know how much it sold for last time, as well as exactly how much similar properties in the area have gone for. If the asking price is significantly higher, you should ask yourself why. Does this property have something special, or is it just a case of an overzealous seller?
The right survey can highlight a number of structural and/or costly issues with a property. Using this to negotiate a lower price can often be a good way to make a survey work for you, as opposed to being merely a structural check.
If you find yourself embroiled in a bidding war with other buyers, the above advice is doubly valid. It’s easy for the price to skyrocket once two committed bidders enter competition. There are two main types of bid in this case:
Open bid: this is where you have more transparency, and can see what the other buyer has bid. Using your judgement here, along with your research on the average local selling price will help you make the best decision here. The key thing to remember is not to stretch yourself. These kinds of bids often go on longer than sealed bids.
Sealed bid: here you are asked to bid without prior knowledge of your competitor’s bid. Making the right bid means – again – not stretching yourself, and working around a more logical way of thinking.
As a final note, gazumping is still alive and well in the UK. While not as prevalent as it has been in the past, knowing how to best avoid it can save you lots of time and heartache later down the line.Getting ahead in the negotiation game is all about preparation and understanding the process from the seller’s point of view. Hopefully, with our handy tips, you’ll be able to save yourself both time and money.