We have talked about the first two tips of successful property negotiations: being well prepared and knowing the art of making offers. Let’s continue with the other three tips to negotiate for a good bargain.
Tip #3: Think win-win
1. Return of favor
The key to winning a negotiation is to temporarily put aside what you want, and think about what the other party wants first.
When you are negotiating, in order to gain something, you have to give up something in return. For example, you might be able to get a better price if you promise an early handover of the place to the buyer or let the seller have his money earlier.
2. Leave something behind
In any negotiation, refrain from taking the utmost advantage of your opponent, even if you have higher bargaining power in the negotiation. Always leave something on the table for the other party. That something you left behind can help to sweeten the deal, prevent anything unpleasant from happening, and ensure a smooth transaction with no hiccups.
Journalist Henry R Luce said, “Any business arrangement that is not profitable to the other person will in the end prove unprofitable for you. The bargain that yields mutual satisfaction is the only one that is apt to be repeated.”
Tip #4: Keep your cool
1. Don’t get emotional
Buying a property is a big thing for anyone. That is why it can be emotional at times.
Leave your emotions at home. Never negotiate when you feel exhausted or cross. You can be impulsive in your words and regret later what you have said.
Don’t take things personally, be it a ridiculously low offer, or a harsh term suggested by the buyer or seller.
Whether you have an upper hand or not, don’t offend or humiliate your opponent. Don’t lose your temper or release your frustrations on other people. This is a business matter. Stay calm, rational and professional at all times.
2. Leave the competition alone
When you go for a flat viewing, don’t get too excited about a deal. If the property agent or owner implies that there is another offer from an interested buyer and rushes you to make a decision or pay more than your offer, it doesn’t matter whether the competing offer is real or not, tell them that you are out.
Never get yourself into a bidding war. You will end up paying more than what it is worth and regret for overpaying sooner or later.
There is a high chance that ‘the interested buyer’ will back off. If it doesn’t happen, just let it be. There are still many good deals in the market.
Tip #5: Be prepared to walk away
Don’t feel bad about abandoning a deal. All successful property investors have walked away from more deals than what they have picked up.
Remember the following rules in a negotiation:
1. Only negotiate with buyers or sellers who are in their sound mind and know what they are doing.
2. Don’t waste time on sellers or buyers who have no motivation to buy or sell. Remind yourself what American motivational speaker and author Zig Ziglar said, “Every sale has five basic obstacles: no need, no money, no hurry, no desire, no trust.”
3. Never push anyone or let anyone press you to agree to something that either party is not comfortable with. The unwilling party will soon find a way to get out of the agreement.
4. Say ‘no’ to any deal that requires you to add an unusual or illegal condition that only benefits the other party. If you are not sure about the motive behind it, make sure you ask for clarification.
5. If you sense anything sneaky or your opponent is untrustworthy, don’t hesitate to call it quits.
I once received an offer from a buyer for one of my properties.
But he had one small request: To inflate the selling price by a certain amount for the benefit of his financial position.
If you wonder how it works, below is a hypothetical example.
Let’s say the actual selling price is $900,000 and the inflated price put in the contract is $1 million. After completing the sale, the seller pays back the difference of $100,000 to the buyer.
Although the buyer pays $3,000 more in stamp duty and additional $20,000 in downpayment, in reality he gets back $77,000 ($100,000 – $20,000 – $3,000) in cash. Furthermore, based on a higher selling price, the bank has given him a bigger mortgage with additional $80,000.
I immediately declined the offer because I don’t feel comfortable with this kind of deal. I can only accept offers where I don’t have to compromise on my integrity.
In this industry, there are many people who try to make use of loopholes for their own benefit. It is not worth it to take the risk at whatever price. Get out of the deal and don’t look back.
Author Garrett Sutton reminded us what matters most in negotiations: “He who cares least wins. If your intuition tells you it isn’t right, get up and walk away without regret or remorse.”