The Negotiation Rule I Use To Get A Better House Sale Price
Negotiation is hands down one of THE MOST important parts of a property transaction, yet it’s often the stage in the process where buyers trip themselves up. I’ve seen novice negotiators lose deals, pay too much and even rub the parties the wrong way when they didn’t even have the intention to… all because they knew shit about negotiation!
Blunt, I know, but I need to get your attention!!
If you’re in the real estate game right now and you’re in the process of buying a property, (or you’re about to be) you need to get in the know when it comes to property negotiation.
These skills could SAVE you a lot of money, and even win you your dream home!
I’ll be honest… strategic property negotiation skills have taken me a lifetime (well, what seems to be a lifetime anyway) to master and it’s simply because I’ve been engaged in property deals since I was 21. That’s 16 years of negotiations!!
I’ve also made it my mission to formally study negotiation and read as many books as I can on the topic. I’ve read TRUMP, Warren Buffett and all those big hitters in property, and I’ve applied my learning to my experiences and come up with my own little cocktail of what works and what doesn’t.
In my soon to be released First Home Buyers E-Kit, I have devoted a whole section to Property Negotiation and how to apply these skills when you go to buy a house.
Wendy’s 6 Steps To Negotiation Success goes into the finer detail about how to best negotiate a property purchase to your favour if you’re a buyer.
Here’s a snippet to warm you up.
Let’s take a look at Step 4…
STEP 4 - the Give and Take Rule.
I often apply this rule to any situation where the parties are negotiating the terms of the deal.
The idea is that whenever you are GIVING something of PERCEIVED VALUE to the other party (or in your case, the Seller), you should always ASK for something of VALUE TO YOU in return.
Let’s use example to explain this Step in action.
Say the seller values what we in the real estate world refer to as a “clean contract” (a contract with minimal conditions attached to it - such as a cash offer).
You could try to make your conditions (such as finance and building and pest) as minimal as possible.
For example, instead of offering 14 days finance and 14 days building and pest, you could call your financier and ask if they can offer you a quicker finance turnaround of say 7 days rather than 14.
If they cannot do this, perhaps your building and pest inspector can do the inspection in 5 days rather than 14?
Heck, if you’re in a position to offer a cash contract, and you KNOW this is going to be a big draw-card for the seller, then DO IT… and ask for a massive discount on the purchase price in return.
I just know that not everyone is blessed to be in this position, especially first home buyers.
Either way, if you can minimise the days associated with the conditions, and give the seller “as clean a contract as you possibly can”, maybe in exchange, you can ask the seller to agree to a lower price.
Here’s a working example for you.
You’re buying a property where you’re confident the seller will agree to a sale price of $500,000, but alongside this, the selling agent has told you that the seller prefers a 7 day finance clause as opposed to a 14 day finance clause.
Apparently this seller has been burnt in a previous property transaction by a buyer who kept extending the finance clause, only to terminate the Contract under finance on the third extension.
There are two other offers on the table to purchase this property, but you learn that both of them are from first home buyers who can only offer a 14 day finance clause.
You suspect each of these offers are either at, or hovering around the $500,000 mark.
Feeling confident you can give the sellers what THEY WANT, you talk to your mortgage broker who gives you the green light to go ahead and put a 7 day finance clause on the Contract.
In your negotiations with the selling agent, you explain that you CAN offer a 7 day finance clause, but you would really PREFER to stick to a 14 day time frame.
You will make an offer of $496,000 with a 7 day finance clause, to work in with the sellers.
Now, if the sellers really do value a shorter finance period, it is likely they will accept your offer above the others because you are GIVING THEM WHAT THEY WANT.
Now, this is a very loose example of how we apply the Give and Take Rule, but you get my point in how it works.
The concept is this… whenever we offer something of VALUE or PERCEIVED VALUE to the other side, we ask for something of value TO US in return.