Save thousands on your next property purchase with this nifty negotiation strategy
By Scott Aggett, founder of contract negotiation agency Hello Haus.
Buying a home can be an emotional and stressful experience if you’re going it alone. But if you have enough knowledge on the home’s history and its vendors, you will be able to lead the buying conversation and potentially save thousands on your property purchase.
As an experienced property negotiator with more than two decades working in the property industry, I’ve developed a winning strategy that secures a lower buying price and better purchase conditions for my clients regardless of what the property type is, and where it’s listed.
So how do we do it?
To consistently secure property at lower than the buyer’s target price, there are four main questions I ask a real estate agent to determine the best negotiated price. You can adopt this strategy also to give yourself the upper hand in a negotiation.
1. What is the motivation behind the sale?
If you know the seller wants a quick sale (perhaps because they have already bought another home or because they want to move on swiftly from a separation), this will give you added negotiating power. If you discover they are not in a rush to sell, you can structure your offer to accommodate a longer settlement period.
2. Will they accept a cooling-off period?
While every state differs on the parameters around cooling off periods, often you can negotiate these terms.
We frequently assist our clients in negotiating a cooling off period, allowing more time to research the property and providing more breathing room to ensure their finance will be approved. The vendors’ willingness to accept a cooling off cause can also demonstrate their motivation behind selling quickly versus holding on longer or how much buyer competition you may have.
3. What was the highest offer rejected so far and when?
If you know what offers the seller previously refused, then you will glean an idea of where to begin the negotiation. This is the point where the rubber hits the road, and it’s time to play the long-game. Be firm during the negotiating process and ask the right questions to see which buttons are pushed. From here, we aim for the lowest end price and best terms that tick all the boxes for the buyer.
4. What will buy the home?
Asking the agent directly often gets you a direct response with a real number they know their seller will accept. Don’t be shy asking this question, however, still take it with a pinch of salt, they are sales people at the end of the day - it’s a starting point to help guide you further.
What to do before and during the negotiating process
As expert negotiators, we have honed our unique purchasing formula which has been proven time and time again to secure properties at low prices. Our clients typically save thousands of dollars, while we’ve fast-tracked the buying process and removed purchasing stress using the following model:
1. Do your research
If you have done your due diligence then the real estate agent will also take you as a serious buyer.
2. Communicate clearly
Don’t be afraid to show your interest! It’s also a good idea to tell the agent you are considering other properties, as showing you have interests elsewhere can help give you more negotiating power later. Remember, It’s one thing to show your interest, however, avoid telling the agent, at this stage, what you think the value is and play your cards close to your chest.
3. Be prepared to listen
Negotiating is a two-way process. The only way you will get the outcome you want is by taking the time to listen. Listen to the pros, the cons, and for the areas you can leverage. The goal for every negotiation is to ensure all sides felt they had a win, that’s challenging to achieve, however, it can be crucial to ensure the deal flows well and the agent doesn’t introduce external buyer competition into the mix.
4. Don't lose your cool
You want to remain in control throughout the negotiating process and not let your emotion take over. A rough rule of thumb here is to start the negotiation 5-10% below where you expect to finish. Anything less can be often viewed as an insult or could show you are not well educated in the current market values, which can lead to the agent / seller not taking you seriously or failing to engage with you further.
5. Move with speed
Put a realistic deadline on your offer, reminding the agent you are considering other properties. Open ended offers end up dragging on and run the risk of being used to “shop” your offer around to other potential buyers to try and trump.
Go with the Game Plan
The key to successful negotiation is having key information so that you don’t just throw numbers at a wall and hope they stick.
At Hello Haus, we start with asking the above questions and then build a robust negotiating strategy from there. Typically, we help our clients save an average of nearly $23,500 based on the final purchase figure coming in well below the target purchase price.
Those savings go a long way. Whether you want to save, renovate, invest, or spend it elsewhere, the reality is, you can do more for yourself and your family when it’s not tied up in the cost of your property.
So negotiate as though your future depends on it.
Oh wait…. it does.