Part I: Mastering the Art of Negotiation
Buying a property can be a complex art that is essentially founded on expert negotiation and the relationships that facilitate it. With the average person buying property less than a handful of times in his or her life, it stands to reason that those relationships with sales agents and other key property personnel will have to be forged during the process of buying. Those relationships are not only the key to accessing unique opportunities pre and off market, but they also signify one of the first and most important steps in negotiating great deals.
Top Buyers’ agents will have fostered those contacts over their years in the business, and though they may be on opposite sides of the negotiation, both parties understand the value in building a positive rapport in order to secure the best deal for the buyer and vendor alike. Without rapport there will be no trust and without trust there will be no exchange of information. Gathering information is a crucial and fundamental aspect of negotiation. But whilst knowledge is power, without application it is useless.
Building a successful rapport with the sales agents and vendors relies on you as the buyer being somewhat open with regards the information you’re willing to share. Remember, negotiation begins the minute you walk through the front door of an open house or pick up the phone to the agent. As soon as you start giving information you are negotiating. What you want to avoid are the trio of common mistakes people make at this point in the process: it’s true that you don’t want to go in overly enthusiastic and give away too much; however, playing it cool is a dangerous game as well.
You want to give away just enough information that you create a valuable connection with the sales agent; it’s all about striking the right balance. Consider the laws of reciprocity, if you’re not willing to give away any information, why should they? However, sharing facts about your budget or preapproval amount is just going to play into the hands of the agent who is looking to extract the highest possible price for their client.
Trusting the sales agent is the third most common mistake people make; it is the agent’s job to be overly friendly, subsequently luring potential buyers into a false sense of security whereby they believe the agent has their best interests at heart instead of recognising the sales façade. There is a legal distinction between a sales and buyer’s agent, and the former is legally obliged to get the highest price possible for the vendor. The sales agent is not there to represent your best interests; that you have to do for yourself or have a buyers’ agent or representative there to support and protect you.
That being said, you don’t need to view the sales agent as the devil either, they’re not. You need to understand how to work with them to achieve the best possible outcome. Recognising negotiation styles is another key factor in negotiating like a pro. From the compliant negotiator who is more concerned with being liked and is therefore liable to sacrificing their own needs in the process, to the ego driven competitive negotiator whose sole mission is to win and watch you lose as they aggressively fist pump the air; you have likely encountered both.
However, the most successful is the collaborative negotiator. They’re the ones who remove emotion and look at both sides of the equation, working towards a mutually beneficial agreement. Identifying both your own and the agent’s style is step one in opening up the lines of communication. Ask lots of open questions because they have the information that could strengthen your negotiation strategy; from the vendor’s motivations for selling, to their back up plan to your offer or BATNA (best alternative to a negotiated agreement), the more trust you build with the agent (or vendor) in the first place, the more likely you’ll discover the information you need to close the deal.
In part two of mastering the art of negotiation, we talk strategy and how to create an offer that can’t be refused.