The following is an email I sent to my subscribers in November 2022. Nevertheless, it is instructive to see what was being said in the press at the time & the overreaction to it. The advice on negotiation is still absolutely correct:
Negotiation Tactics |
I received an email from someone two weeks ago.
He proudly announced that he was going to come to London and offer 50% below the asking price on lots of properties.
His thinking was that he would receive 18 or 19 rejections, but someone would say yes.
I expect that he had been reading headlines such as this one on Bloomberg:
UK Home Sellers Slash Asking Prices After Mortgage Rates Jump
So, what would you regard as prices being slashed – 10%, 15% or maybe 20%+.
Well, this is what they say happened in October:
“Asking prices for homes dropped 1.1% … after a 0.9% rise over the previous month, Rightmove said. The decline – despite the “weight of financial uncertainty” – was in line with the average fall recorded in November during the pre-pandemic years of 2015-2019”.
Would you regard an asking price reduction from £3m to £2,967,000 as prices being slashed? No, nor would I. And even the most bearish predictions are nowhere near 50% price falls. So, if you were selling a property how would you react to an offer of 50% below the asking price?
Now, I’m not against low offers, but blindly making them can annoy estate agents and limit your access to the best opportunities, inadvertently handicapping you. So, you need to have a much better strategy to take advantage of the bad news flow.
Mastering the Art of Negotiation in Uncertain Real Estate Markets
If you have read any of my recent articles, you will know that I am actually quite bullish about prices in prime central London over the next few years, so I love it when everyone is pessimistic because it makes it a lot easier to negotiate. Unfortunately, for most buyers, the great irony is they wait until things seem less uncertain and prices have started to rise again.
So, the vital things you must do when negotiating in times like this is:
- Make sure you have accurate information on the owners
- Ensure that you have a very clear understanding of what is happening in your target market
- Collate all the misinformation that appears in the media as “conventional wisdom” to leverage it in the negotiation
- Be the most attractive buyer possible
- Think of how you can make the agent look good despite making an offer that may be considered very low (this will help get them on your side which is vital in the negotiation)
- Work out your walk away price first and then the initial offer you will make in relation to that
- During the negotiation be very aware of how you “stagger” your offers for maximum effect
Strategies for Winning Negotiations Beyond the Numbers
I apologise in advance, because what I am about to say is a point that I repeat ad nauseam about negotiations: I have had several offers accepted for clients that they didn’t think possible because the psychological factors are often more important than “the numbers/logic”.
Likewise, by framing the negotiation correctly and focussing on point 4 above, I have also had offers accepted which were not the highest put forward. Admittedly, this is partly due to my reputation, but you can also do an awful lot to put yourself in pole position.
This is what negotiation is about. We have a process that gives our clients (who are some of the world’s most successful businesspeople and used to negotiating in their own fields of expertise) the highest probability of acquiring the best property their money can buy at the lowest price possible. And if you would like to know more about it, simply click here