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When you’re ready to take action and purchase your next investment property, a successful outcome depends on your negotiation skills – and by taking the time to fully understand the motivation of the seller, you can create a win-win outcome

When negotiating the purchase of a property, many would-be buyers are so focused on what they want to achieve that they forget to factor in the other important part of the equation: the seller.

“You ideally want to know: what is their reason for selling and what terms would best fit their needs?” explains Paul Wilson, buyer’s agent and founder of We Find Houses.

After all, it’s the little details that can clinch the sale.

“Recently, we negotiated on a property where the seller was willing to accept $17,000 below the highest offer because the lower offer provided more certainty of a sale in the time frame that the vendor needed.”

Here are Wilson’s other tips for successful property negotiation:

Treat people with respect
“Do you like doing business with arrogant and obnoxious people? Of course not. Regardless of what we are doing, we always prefer to do business with people who are a pleasure to deal with as opposed to working with a bully,” Wilson says.

“Many sellers are emotional about their property and want to know it’s going to a decent person. Selling agents will also represent you better if you’ve taken the time to build a rapport with them; they are people who deserve respect and have a very important role to play in representing you to the vendor, so you want them on your side. Prevent your offers from being stonewalled by treating all parties in the negotiation process with respect and consideration.”

Negotiate with purpose
Putting in a low-ball offer by only presenting a number with a dollar sign in front of it, which is significantly lower than the asking price, won’t work unless you are dealing with a highly motivated vendor.

“You need to justify your offer – this process is called conditioning,” Wilson explains. “What you are doing is conditioning the seller as to why they are not going to be able to achieve their dream price.

“You need to build a case as to why every other buyer will most likely discover this same reason. You can then condition them to the value of your offer – a bird in the hand is better than two in the bush – which increases the chance of the offer being accepted.”

Focus on your desired outcome
Prior to commencing negotiations, be clear on the maximum price you are willing to go to and the terms and conditions that are aligned to that price. You need a keen grasp of your own financial circumstances and a tight rein on your emotions, Wilson says.

“You need to do this for yourself so you don’t get distracted when negotiations commence, as it means you have a target to focus on. In life, and in the art of successful negotiations, you are unlikely to hit a target if you don’t have one to focus on. Always be calm, considered and practical – this is definitely a time to let cooler heads prevail.”

Detour around roadblocks
“I was recently negotiating for one of my clients to buy a commercial property where the vendor wanted to remain in the property as a tenant following the sale,” Wilson explains.

“The selling agent was a real roadblock in the process and the quality of the proposed new lease he had drafted up with the vendor was going to cause every buyer to walk away from negotiations, because the terms of the lease were not commercially viable for any future owner.”

To work around this, Wilson encouraged the selling agent to bring the seller and the potential buyer together on site.

“By collaborating this way, we could get an understanding of the needs of the seller and what terms would satisfy his needs as a future tenant, while at the same time meeting the needs of the future owner,” he says.

“After hitting that roadblock initially, I was able to approach the process in a different way to achieve a successful outcome for all parties. Sometimes you just need to know when to zig and when to zag, and communication is always key.”

Written offers are serious offers
You can spend a lot of time submitting verbal offers, but there is more certainty in presenting a signed written offer with all the evidence detailed as a supplementary document justifying your offer.

“This prevents the sales agent from miscommunicating your instructions, and it also means he is only one signature away from securing you a contract on your terms,” Wilson says.

“A written offer also forces a seller to make a decision one way or another. A verbal offer does not carry the same weight and is not treated with the same amount of consideration.”

This article first appeared in MPA's sister publication Your Investment Property