One of the many reasons people ask me to help them find their homes and investments in London is to handle the negotiations.
Even though they are successful entrepreneurs, financiers, private equity and fund managers or partners at major law firms, who all handle complex negotiations, they know that property negotiations are somewhat different.
So, I devise strategies and execute them, but I always ensure that my clients are comfortable with each step in the negotiation.
Am I always successful?
Well, I certainly don’t manage to reach an agreement in every situation – sometimes we do have to walk away, but my success rate is better than most and I achieve prices that my clients often don’t think possible.
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“In preparation for the offer Jeremy did all of the homework, showed us the comps and devised a negotiation strategy. His initial offer was much lower than I would have made despite the fact I handle negotiations as a regular part of my job. Indeed, the strategy he devised meant that I acquired the property at a favourable price and for less than the maximum price we had targeted, once again showing that he had my best interests at heart”. Mr M Stoleson – Belgravia
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Unfortunately, most buyers and sellers treat property negotiations as a glorified haggle. The sole focus is price. This is a massive mistake which will cause you to either overpay or miss out on opportunities where you could have acquired an exceptional property at a good price, if you had taken a more sophisticated approach.
I often hear people (not my clients) complain about the negotiation process. They tell me they put forward an offer, the seller doesn’t accept it and also refuses to counter-offer. In the buyers’ eyes the seller is intransigent and difficult.
The buyer then tells me he wouldn’t make another offer because he (and yes it is always a he) doesn’t want to bid against himself. He insists on a counter-offer before doing anything.
But this rather misses the point. You are not bidding at an auction. You are negotiating a property transaction with a seller in an open market. So, let’s look at it in another way: when a company offers on another company and their offer is refused, do they simply give up and refuse to make another offer until they receive a counter-offer? No. Indeed, they will have factored in the likelihood that they will have to make several offers.
Indeed, if my first offer is accepted by the sellers, I am normally concerned because it means that we probably could have acquired it for less (of course there are exceptions to this rule but they are very few and far between and, in these rare instances, we are purposefully engineering our initial offer to be accepted).
Because the reality is that your first offer should really be about gathering information in addition to all the information you have already uncovered. You may not always like the answer, but you will have more data with which to work.
Your initial offer will also probably be designed to influence the seller and realign their expectations. However, this needs to be done in a non-confrontational and subtle way – not just taking into account the seller, but also the estate agent whose role in putting forward the offer also needs to be considered.
In short, please don’t be concerned about bidding against yourself. Instead, focus on your goal which is to acquire the property at a price that works for you. So, in the first instance you need to establish what your “walk away” price is and then create a negotiation strategy around this. Then you make your first offer.
Of course, this is just the tip of the negotiation iceberg. So, you have a few choices:
- Continue haggling like the average buyer which will achieve poor or average results and countless missed opportunities
- Spend time improving your property negotiation skills. Go on courses, read books and practice
- Ask an expert to help you…
… and yes, that is an incredibly unsubtle bit of self-promotion! But it stuns me how many people seek professional advice on share portfolios worth £500k but don’t seek advice on multi-million pound property purchases. And then they get annoyed because they miss out on the best property your money can buy and fail to negotiate the lowest price possible. Go figure!
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“We were keen to progress the negotiations quickly. However, Jeremy devised a negotiation strategy which he felt would give us the highest probability of achieving the lowest price possible. This involved moving more slowly than we would have liked but they managed to secure a significant reduction of £500,000 from the asking price which in hindsight we would not have achieved” Mr & Mrs Murphy – Notting Hill
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So, if you are serious about acquiring a property in London and would like to know more about the most successful negotiation techniques for the current market, simply email me at [email protected] or call 02034578855 (+442034578855 from outside the UK).
