Adopting this flawed negotiation strategy could lose you the perfect property.
There’s no two ways about it: negotiations can become contentious and complex transactions relatively easily, because there are two major factors at play.
Firstly, there’s the emotional aspect.
Often, sellers are emotionally attached to their homes and that can lead to all sorts of difficult experiences and tricky situations, if they feel their property is not being ‘respected’.
I’ve seen vendors walk away from profitable deals because they didn’t like the real estate agent or buyer who was set to take over their home.
By the same token, I’ve seen savvy buyers secure great-value deals, because they’ve been able to offer that one intangible quality the seller truly desired: a kind disposition and a promise not to knock down the vendor’s precious former home and turn it into a block of flats.
So, emotion is one side of the coin. The other side is money.
When you’re negotiating a property deal, you’re dealing with six and seven figure values.
Even the smallest, simplest flaw in your negotiation strategy can be costly, which is why it’s so important to put your best foot forward from the outset.
There is one proven way to do this, and yet I often see excited buyers and pushy buyers agents operate in the opposite manner.
They adopt a flawed negotiation strategy that, in my view, very rarely works to their advantage.
This no-go strategy, which I recommend smart property investors avoid at all costs, is aggressive negotiating, without respecting the vendor or the process.
When you attempt to intimidate, bully or push the vendor into reducing their expectations or making a decision, the transaction rarely finishes up in your favour.
Assertive or aggressive.
Now, I must clarify that there’s a very big difference between being assertive and being aggressive.
An example of being assertive is placing an offer on a property with a reasonable deadline – say by the end of the week, at 5pm. This is strategy that many in the industry use to prompt a vendor into action.
An example of being aggressive, however, would be making on offer on a property at 2pm, with deadline of 5pm that same day, while also commenting on the property’s many flaws.
Giving a sales agent and their client just three hours to analyse the offer, review their selling strategy and inform other interested parties of this development is pushy and rude, while negative talk about the property’s least desirable features certainly doesn’t form the boundaries of a positive working relationship.
You can also quickly ruin a deal by upsetting or offending the vendor, which is why insultingly low offers can derail your negotiations at the outset.
Even if your tactic is to go in really low and then negotiate up, the vendor could be so outraged at your initial offer than they blacklist you from the property.
As I said, I’ve seen it happen – when those emotions come out to play, logic and reason walk out the door!
At the end of the day real estate agents are just people – and they much prefer dealing with good-natured buyers than they do haggling with aggressive investors who make their life difficult.
Remember the golden rule:
Tactics that involve trying to pressure an agent rarely work to your advantage.
This is particularly true in a seller’s market as we’re currently experiencing in parts of Australia.
It it’s been my experience that being polite yet assertive will get you much further towards a successful outcome, both in property and in every day life.