Property Negotiating Tips – Part 1

One of the most important skills an investor requires is the ability to negotiate. The reality is that everyone can benefit from being able to negotiate, even if you aren’t an investor. Negotiation gives you the ability to create win-win situations and allows you to be able to effectively communicate with other people. Now of course this is important in business and property investing.

Think for a moment – what is your definition of negotiating?

The dictionary defines negotiating as “trying to reach an agreement or compromise by discussion with others”

I would go further as to say that negotiating is “demonstrating to another party how you can help them by getting them to do what you want”.

A negotiation doesn’t necessarily require a compromise

In a successful negotiation you might get exactly what you want, and the other party might agree to all your terms. But equally, a successful strategy in negotiation is to give up terms that aren’t important to you but are important to the other party while keeping the terms that are of high value to you.

Asking the right questions

So how do we know what is important to the other party?

Negotiation starts from the minute we meet the other party – and there is a lot of work that needs to be done before we make any offers, or counter-offers or “get down to business”.

The most important aspect of negotiating is to ask enough questions (and do enough research) to determine the other party’s needs, values, and currencies. The traditional negotiating may be over in a couple of words, if the first part is done right.

We need to gather as much information as possible, and assemble an accurate picture of the situation, to give us the best idea of the right offer when we it comes time to make our offer.

Examples of questions in property investing, that will help us assemble this picture are:

Why is the vendor selling?
How long has the property been on the market?
What is the vendor going to do after the property has been sold? (eg what do they need the money for)
How much did the vendor buy the property for?
(You get the idea).

If you are asking questions and not getting the right answers, then ask different questions, or ask in a different way. You will find answers not just from asking the vendor or real estate agent, but also through researching the area, gathering property-specific information (such as what price it sold for, and when), doing a thorough property inspection and keeping your eyes open, talking to neighbours etc etc .

Through asking these questions we can start to figure out whether price or a fast settlement are more important, or perhaps the “vendor just wants the property sold”. We can then structure our offer accordingly.

Sound good? Ready to negotiate your first deal? Not quite. There’s a few more steps involved, but we are getting there. See Negotiating – part two (coming soon) for a few more details and the last (and equally important) half of the process.

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