Free Book Offer for DGA Readers: ‘The Insider’s Guide to Acquiring Luxury Property in London’
If you are planning to acquire a property, you have two goals: to find the best property your money can buy and to negotiate the lowest price possible.
Today’s article is an extract from The Insider’s Guide To Acquiring Luxury Property in London written by leading property expert, Jeremy McGivern.
If you want to read the rest of the book, you can claim a free copy in an exclusive offer for DGA readers.
How To Negotiate The Lowest Price Possible on a Luxury Property
There are only a few lucky people born in life with the natural ability to negotiate with skill and ease, who never seem to break a sweat or betray a single stray emotion, and who are able to persuade others to agree to what they want despite a perceived conflict of interest. They are rare, but they do exist.
Make no mistake, however; these skills can be taught and learned. It’s a misconception to think that only natural negotiators can ever be great negotiators. In fact, you do not even need to be a great negotiator. To have a huge advantage, you only need to be slightly better than the majority of people.
In order to gain this advantage, you simply have to learn some basic theories, strategies and tactics, which we will discuss here in greater detail.
Being able to negotiate well is a great advantage in many areas of life, whether you are acquiring a home, buying a car, or simply trying to put the children to bed.
The strategies and techniques you will learn here can be applied to any situation and, once you have learned and practised them, they will simply become second nature. The examples we use here focus on property negotiation for ease and clarity.
Remember, learning how to negotiate well is not unethical or unfair. Negotiation is a fundamental part of many business exchanges; it is simply a discussion aimed at reaching an agreement that is acceptable to both sides. Ideally, both parties should be relatively happy with the outcome.
As you will learn, successful negotiation is not about bending people to your will, bludgeoning them into submission, or attempting to create a win‐lose situation. There is always a sliding scale of success in every negotiation and, as you will learn, in the ideal scenario the opposition will always think they have “won.”
This does not mean that you should deliberately mislead them into making a bad decision, but neither does it mean that you should make unnecessary concessions to keep them happy.
It should be stressed that the skills and techniques you will learn here are not a magical fix even though you will be amazed at how simple and effective they are. The strategies you will learn will not guarantee that you agree every negotiation.
In fact, the only thing you can be sure of is that you will never successfully complete one hundred percent of your negotiations. Sometimes you will have to walk away from a property because you are unable to agree terms.
Sometimes your children will insist on coming back downstairs to tell you that you haven’t hugged them goodnight even though you already have twenty times (you may have guessed that I have two young children who are brutal negotiators themselves because they refuse to take “no” as an answer).
However, by incorporating these strategies into any negotiation the probability of reaching a favourable outcome is greatly enhanced. Over time you will save yourself hundreds of thousands if not millions in business and other transactions…
Ignore High Asking Prices & High Offers
I have often seen properties that remain on the market for months because of owners who have turned down a high price early in the marketing and have then refused further sensible offers because they cannot bring themselves to accept a lower price. This highlights a number of points:
- Most sellers do not really understand how to reach a walk away price. They are using their gut or arbitrary figures.
- An offer means nothing until the deal has been concluded. There is a huge difference between having an offer of £5 million and actually selling the house for that amount – something that many sellers forget.
- Agents often overvalue properties to win the instruction. They can sometimes be embarrassed to admit this later, especially when their client has turned down a good offer thinking the agents’ valuation was correct.
You can sometimes use such situations to your advantage. Firstly, find out when the offer was and at what level. Is that buyer still in the picture or have they bought?
What you must remember is that most people are poor negotiators. In this case, the seller may have turned down a good early offer because they were greedy, lacked motivation, were underprepared, or didn’t know the fair value of their house.
However, you know what fair value is and what your walk away price is. You can offer significantly lower than the initial offer; for example, £4 million is the asking price and an initial offer of £3.6 million has been rejected. The fair value is £3.5 million, so you can offer £2.9 million.
This has a big psychological impact. Even if they still want £3.6 million you will have moved them away from £4 million and they realise that £3.6 million may even be a stretch. Now they should consider themselves lucky to get even £3.5 million.
Buyers are often put off by overpriced properties and refuse to negotiate. They shouldn’t be. It probably means that you will be negotiating in a vacuum and, as long as you know your ceiling price, then you cannot lose. Conversely, you don’t want to try to be too clever.
If you would like to read the rest of the chapters on negotiation, you can request a complimentary copy of The Insider’s Guide To Acquiring Luxury Property in London by emailing [email protected] visiting www.mercuryhomesearch.com/behk/ or calling 02034578855 (+442034578855 from outside the UK).