Hi PC Community, Curious to get some insight into negotiation. I understand that the motivation of seller, demand, geography etc. plays a part in why a seller has listed a property, but is there a rule members abide to for a property listing? Eg- $300k for a 3x1x1 listing that has been up for 3 weeks in Brisbane which is around market value. Would you offer 10% less, 20% less etc as a rule? Or would you attempt to find out the sellers motivations etc. before putting up an offer? Any tips or comments from personal experience would be highly appreciated. Thanks
I wouldn't call myself an expert as I have only bought 5 properties so far. I always try to see how keen the seller is and what is my competition like to help come out with my starting offer. If the seller has already bought elsewhere, he will want to sell his current PPOR by certain time. Similarly, if there are many ppl attending open homes and asking for contracts, then chances are lower that a low ball offer will be entertained. I haven't bought for last few years but I think i start my offers around 10-15% from where i think fair value is. Just my 2 cents.
PWT nailed it. There is no rule of thumb, as with all sales the key is the story behind the person. If they're motivated to sell due to family break up, moving OS/interstate, death in the family or they've already bought their "dream home" then they're probably motivated to sell and you may be on to a winner. You can low ball them with a better chance that they will enter negotiations with you. You also need to factor in the demand of the market. In Perth right now I have a friend who is consistently low balling 35% below asking price. Thus far he's had no traction but it only takes one deal of that caliber to put him in the money. Contrast this with Sydney, Melbourne or Brisbane right now where I doubt anyone would even entertain throwing that sort of offer around. This is general advice only.
OK my 2 cents. Negotiation is waaay underrated by many investors and what can be achieved by improving your skills. Long story short, if you want to be the best negotiator you can be then its going to take some effort to learn and practise different skills/techniques/approaches, and many people will probably have to come out of their comfort zone. Even if 1 technique works on only 1 property you ever buy, it could save you a lot of money. All depends how much effort you want to put into your property business. With regards to buying, yes it depends on market conditions, vendor motivations, agent motivations and your own motivations as well. But that doesn't mean you can't learn how to be a better negotiator to try to get the best deal possible for you. There is absolutely no doubt in my mind that I have saved a 6 figure number from negotiations over the years. Negotiation also extends to securing competitive quotes from tradies and to many other aspects of the whole property game. Just my opinion. Secrets of Power Negotiating - inside secrets from master negotiator, by Roger Dawson Negotiating Secrets, by David Brown A property investor's guide to negotiating, by John Potter The negotiation book, By Stave Gates Trump Style negotiation, by George Ross
What @Leo2413 said. You make your money on the way in, in real estate. By buying well you can ensure immediate equity helping you to have buffers earlier. I see it from both sides as an RE agent and the amount of poor negotiators is astounding. Your best investment would be on $150 worth of books and a week off work to read them. I don't know if there would be a better ROI out there.
