Many people think negotiation is about money. But what matters most when you're haggling to bring down a property's price is research, preparation and the application of a little psychology.
The head of the buyer advocacy firm Secret Agent, Paul Osborne, says timing is everything in real estate, so offers to buy shouldn't be open-ended.
If you make an offer with the proviso that there are 24 hours to accept, this conveys a much more powerful message to an owner than an offer with no deadline, he says.
To boost your negotiating power, look for homes that have been listed for 40 days or longer and those that have passed in at auction.
Settlement dates and cash offers can be critical. How fast can you give the owners the balance of the purchase price?
A quick closing date can seal the deal. So can a delayed settlement if that suits an owner. The McRae Property buyer advocate, John Sommers, says home owners are keen to secure a sale from auction campaigns and this ''psychological driver'' is encouraging vendors to reduce prices and meet the market.
Agents routinely over-quote new listings. Because of this, Mr Sommers says the best time to make a pre-auction offer is halfway through an auction campaign, when a vendor is able to assess the level of market interest.
He says there is also an increased number of midweek sales at reduced prices occurring for properties - especially houses - passed in at auction the previous weekend.
Mr Osborne adds that some buyers are ''seduced'' by agents into making an offer before auction. ''You may just be the only buyer interested,'' he warns.
Pointing out the defects of a property is a negotiation trick that's been around since the Romans were building aqueducts.
It's perfectly fine to mention that the kitchen is small but experts say you need to inject ''objective criteria'' into negotiations to get buyers to see things your way.
Mr Osborne says unless it's a forced sale, property owners will avoid the feeling of being ripped off by a buyer. ''The low-ball, take-it-or-leave-it offer won't work when motivation levels don't require the property owner to accept,'' he says.
What works much better is an offer supported by research and comparable sales data. For example, an argument that the latest three sales in the street indicate a value of $800,000 could get your offer accepted.
Mr Osborne says this kind of ''it's not me but …'' pitch also takes you out of haggling.
Skilled negotiators find out everything possible about local market conditions. What are the prevailing prices? What alternatives exist?
By having other options, you gain leverage along with the ability to say no. And you're less likely to scuttle the negotiations by making an offer the vendor regards as insultingly low.
Mal James, of James Buyer Advocate, says $1 million-plus buyers believe if a house is not at the right price there will be another one around the corner.
He says two years ago, top-end property buyers needed only to find more money. ''You don't need that same level of skill with your bank manager now.
Your skills should be directed towards negotiation and value - there is a greater variance in terms of the end price if you're prepared to try hard and go low.''
Source theage.domain.com.au/
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