The Art of Negotiating

Negotiation is often riddled with clichés   Things like, “talk is cheap”, “put your money where your mouth is”, and my least favourite “take it or leave it”!  But these annoying clichés actually do sum up the seriousness of the battle ahead. In essence, if you don’t ask you don’t get. So if you don’t put forward your offer, you are not going to stand a chance.  I always say, it’s not where we start, it’s where we end up, that’s important, and so it’s imperative to put forward your offer to start the negotiations. 

Often, purchaser’s start with explaining to me that they don’t want to put an offer forward for fear of offending the seller. I explain that this is what the agent is supposed to do and I don’t mean offend the seller, but to put the offer in and get the negotiations going.  Many times, there is more room for bargaining then you might assume.  Things are changing all the time and so are individual’s circumstances.  What starts out as ‘testing the market’ could end up ‘blind panic’ because the seller has ‘found’ and all sorts of deals can be struck.  Just because you are a first time buyer or an inexperienced buyer don’t expect your opponents to be automatically harder to deal with.  

According to ancient Chinese military genius, Sun Tzu, "He who knows when he can fight and when he cannot will be victorious."  As always, arm yourself with information. Find out from your agent why they are selling, have they found, are they leaving the area, is it a divorce, is a job re-location, the more information you have the more informed your decision will be which could reflect in your offering price.  Remember, knowledge is power!

Then once the negotiations have started, how to manage yourself?  Do you sit back and wait? Incidentally, my favourite cliché; “he, who speaks first, loses”.   Try to keep your emotions at bay. Stay focused on the issues that are most important to you. Expect resistance. You need to end up with a price that will create a win-win for both you and the seller. This way, the sale will stay together.  Most importantly, keep an open mind and make no assumptions!  

The DIY Culture

In the 1970’s, Do it yourself (or DIY) spread from America to the UK and proliferated.  In part, this movement involved the renovation of affordable, rundown older homes.   Enormous out of town DIY superstores sprang up.   So fair to say the DIY explosion radically changed the housing market.  It became possible for the ordinary and untrained to improve their homes – suffice to say improve the value.

My point of my discussion; ‘Over Capitalising’ on property.  Can too much DIY sell your house or rinse away the free profit?  As we all know, a property is described as being ‘over capitalised’ if the amount of capital spent on it is greater than its value. Spending too much renovating can result in over capitalisation. 

Often, when I am in a property that has been improved, I am very impressed to see the creativity, but I start to worry when the seller needs to recoup their costs and they want it to reflect in the asking price.  Where house prices have fallen in the last few years, cost of materials and the rates of tradesmen have not.  House prices cannot really justify cosmetic improvements and even a new kitchen can be considered cosmetic by some.  Taste will always vary.  A kitchen hand carved by pixies and costs the same as a small yacht is not going to increase the value of your home significantly.

My point is; get good advice before you start.  Check with an estate agent that has construction experience and be realistic when toting up the projected cost before you offer.   It’s also a good idea to get tradesmen involved at this stage.  Always make a budget and then add some more, because, you will go over budget.  Your profit will be in the buying.   

How to find a good Norwich Estate Agent

Values

For my first topic, I want to discuss market appraisals and the on-going practice of how some agents over-value, hiking the asking price in order to gain the instruction.  This is possibly the most unfortunate part of my job.  

Sometimes, when I offer my valuation, I can be greeted with “so and so can get us more”.  At this point I want to throw my leica (measuring device, for those who are unsure) on the floor and leave the area.  But I refrain and enter into discussion. This is where I have to choose, do I agree with the inflated price so I can stand a chance of gaining the instruction or do I stand firm and hope the seller can see my reasoning and the reality?  I tend to have this internal argument at each valuation. 

The hardest thing in the world to do is tell people they may have overpaid for their property back in 2006 and the value of the house hasn’t really improved, it’s stabilised, because where it went up once it also came down.  So what I try to do is explain, how it’s all relative, because it’s reflective in their next purchase and everyone is in the same boat.  Generally, people are smart and they get this point.  But it’s still a test of my negotiation skill. 

Anyway, catch up with me in this blog where I’ll tell you about what’s been happening in the life of an estate agent.  I will be giving my thoughts and telling you of my weekly diary and the different situations I find myself in, hopefully it will bring some amusement and entertainment and possibly an interesting learning curve.  Leave your comments; I would love your feedback, good and bad! 

For a realistic free valuation call Yvonne on 01603 300406 at Hillcrest Estate Agents.  Or, find me on YouTube..