It is mildly absurd to discuss negotiation strategy and tactics in an article as brief as this. After all, there have been numerous books – both good and bad – written on the subject down the years. So, unfortunately, I can’t give you two or three failproof secrets which will work in every situation. Such “tricks” simply don’t exist and anyone who tells you otherwise is probably a con artist.
However, it has been scientifically proven that humans react to stimuli in certain ways and if you understand how to use this to your advantage then you will be far more successful in negotiations – be they in business, property or with your children! For the purposes of this article, I will focus on property:
- You will not succeed with logic – the default position for the naïve negotiator is to look at to read the rest of this article simply click here …comparable properties and bombard the seller with logical arguments as to why the property is worth what you think it is using pound per square foot comparisons and other such indicators. Unfortunately, we humans are influenced far more by our emotions than by logic. If you disagree with this then you haven’t been paying attention to the world around you.
Therefore it is imperative that you build rapport with everyone involved in the negotiation including the estate agent. This does not mean that you have to become their best friend, but it has been proven that people are more likely to do business with you and agree to your requests if they like you. The best way to create rapport is to ask lots of questions and actively listen to the answers so that you understand what they really want. The main motivator is rarely the highest price.
A useful exercise is to envisage yourself in the seller’s shoes to get an idea of what they are feeling and thinking. I know this sounds mildly odd and a bit “airy fairy” but you will be surprised by the insights it will give you.
Important note – this is not part of aiming for a win-win outcome. Such negotiating goals may work when looking at something simple like sharing an apple, but life tends to be more complicated. If you aim for win-win you will probably concede too much (conversely you don’t want to batter the other side into submission as I will explain later).
- Ideally you want them to reduce their price before you even make an offer. But you will have more success with this if you let them think that they are in control. Most negotiators start with something like: “The price is too high, all the other properties in the street have sold for £x per square foot, so I am offering £Y”. Instead, you might want to say: “Sorry I’m confused. Please could you help me. How did you reach this valuation?” The agent will often admit that their valuation was lower than the guide price or that the owner will accept considerably less than you initially thought.
The point is you are putting the onus on them to think about the price. You have reversed the responsibility while making them think they are in control.
- Beware anchors – good negotiators use anchors, which is a psychological term. By starting with a high price, sellers set or anchor expectations higher than they should be. Many buyers are often reluctant to put in offers that are considered “low” and very often creep up in the negotiations until they overpay. Be very clear on what the property is worth to you and then use an appropriately low anchor to reset expectations if the seller is playing hardball.
- If it’s a weak market, make it clear that if they don’t reach an agreement with you then they may have to wait several months if not longer for another offer and the market may well be lower. Do they want to undersell their house in 6 months’ time because they didn’t deal with you now? What is the opportunity cost for them of not transacting quickly? By the way, this isn’t just financial, so highlight the emotional cost to them which will be far more persuasive.
- If they insist on you offering first you can give them a range, e.g. “Well in this street, prices range from £4m-7m, so my range is between £4m and £5m.” However, only use this approach if you have a very clear understanding of valuations and obviously the range you give is lower than what you will be willing to pay. Just as the seller has tried to anchor you with a high asking price, you need to change that dynamic by anchoring with a low offer.
They probably won’t accept this range, but you will have planted your own anchor. So, later in the negotiation, if they feel they have got you to pay more than you wanted, then THE OTHER SIDE WILL FEEL THAT THEY HAVE WON even if the opposite is true. This is important as nothing is legally binding until you have exchanged contracts which can take time. Are the sellers more likely to follow through with the sale if they think they have been battered into accepting a poor price?
Massaging the seller’s and estate agent’s ego is far more important than you would imagine, so it is imperative that you don’t let yours get in the way. Ultimatums do work in certain situations but more often than not, you will achieve much better results by letting the sellers think they have won.
The ideas above are just a few tactics you want to use and this is really not even the tip of the iceberg. Every negotiation is different and there are dozens and dozens of strategies, tactics and techniques you will need to combine if you want to negotiate the lowest price and best terms possible.
If you would like to discover more about how to negotiate the lowest price and the best terms possible, simply email email@example.com or call 02034578855 (+442034578855 from outside the UK).
Who am I and why should you listen to me?
My name is Jeremy McGivern. I am the founder of Mercury Homesearch, the internationally renowned property search consultancy, and author of The Insider’s Guide To Acquiring Luxury Property in Prime Central London. I have been acquiring property in prime central London for clients for over 13 years.
Having physically viewed over 22,000 properties in prime central London, studied the details of over 153,400 apartments, houses and investment opportunities and spoken to 232+ estate agents every week for over a decade, my advice is in high demand and has featured everywhere from Bloomberg Television, The Financial Times and The Daily Telegraph to Forbes India and Bahrain Confidential.
Please note that the strategies and techniques revealed in the book and CD’s are not just theory. They have been tested and proven over 13 years of acquiring hundreds of millions of pounds worth of prime London
property for my clients, who include some of the world’s wealthiest families and most successful entrepreneurs and business people - it may surprise you but over 30% of our clients are British and based in London so this information is relevant whether you have bought a property in London before or not.
Acquiring a prime central London home is a minefield for the uninformed. Make sure you put knowledge on your side by reserving your free copy of The Insider’s Guide To Acquiring Luxury Property in Prime Central London and set of 6 CD’s. Simply leave your details above and I will have them sent to you immediately.
Good luck finding your ideal home in London.