I have recently acquired a low-build house in Chelsea for one of our members. It was a complicated property negotiation involving sellers in an acrimonious divorce.
However, neither the husband nor wife wanted to sell their home for the price we were willing to pay. In fact, they wanted considerably more and had had several arguments with their estate agents about what represented fair value for the house.
What to do When Negotiating Property Prices with an unrealistic seller?
Well, every situation is different, but here are three of the techniques you can use when negotiating property prices:
1. Do not be anchored by their price during property negotiations.
Many people are far too influenced by high asking prices. They either don’t make an offer for fear of offending the seller or they make their initial offer at fair value, thereby giving no room for fair property negotiations. Alternatively, you end up overpaying.
2. Do not be blinded by price:
If the asking price is too high, it is very easy to become totally focussed on price and that is all that you discuss with the other side. In this instance, the divorce was an important part, but again that was not the key determinant, i.e. they were not forced sellers and the divorce proceedings were ongoing.
3. Test all information
I had been advised by the agents that the wife had been an analyst in the city and so was very difficult to persuade as she would argue against their advice citing lots of comparators. They had tried to persuade her to drop the asking price with no success. You can also do you own property valuation to help verify the information.
Point 3 is really important. The agents were selling the property off-market and the relationship with the sellers had effectively broken down. This enabled me to guide the agents on what they needed to say, but also meant that I was able to persuade them to allow me to speak to the seller directly.
However, rather than battering the seller with my thoughts on price, I put all the onus on her by saying:
“I am sorry but I am afraid that while we like your house, we seem to be missing something as we don’t understand the asking price. I would really like to understand your thoughts on this”.
I was prepared for a list of comparators that I already knew, which could have been used to justify (to a degree) a price near her asking price, but the response I got was astonishing.
She gave three examples that bore absolutely no comparison to her home. They were in completely different areas and were very different types of property, so were irrelevant. In other words, the analyst was anything but analytical and was, in fact, poorly informed.
I could have made a big mistake by pointing out that these were completely wrong and giving her my logic, but that would have missed the leverage point. And this was that she clearly felt no-one was listening to her and that she was just being pushed about. This is why she was clearly not listening to any other point of view.
The Key Point when negotiating Property Prices
When in the middle of property price negotiations, Emotions play a far more important role in property negotiations than logic. So, rather than banging my head against a wall trying to get her to see logic/my point of view, I simply listened to her and made her feel like she had control. We also discussed how much more control she would have over her life if she accepted our offer (there were complicated divorce proceedings which were ongoing).
Obviously, there were a number of property negotiation tips and tactics that I used (by the way these are not manipulative or unethical tricks. How you ask questions and other ways of eliciting responses from the other side are essential skills you have to learn). Click here if you are interested in learning more about property price negotiation tricks.
But, when faced with someone who appears unreasonable would it be a bad idea to find out their point of view first? Because if you are not interested in their viewpoint, how can you expect them to be interested in yours? And very often you will discover that the person is being unreasonable for a very simple and easily solvable reason!
Alternatively, you can try to batter them to death with pound per square foot comparisons. But what do you think will be a more effective strategy for effective property negotiations?
Now, obviously what I have described above is really just scratching the surface of successful property negotiations. Likewise, there is a clear process that needs to be followed if you or your clients want to acquire the best property your money can buy and achieve the lowest price/best terms possible.
Contact Mercury Homesearch
If you would like to know more about how to engage in property negotiations, I can provide you with variety of resources ranging from special reports to my book, The Insider’s Guide to Acquiring £1m-£100m Property in London.
Simply email me at jeremy@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside of the UK) to discover more.
Best regards,
Jeremy
Member’s Comments
“Mercury Homesearch devised a property negotiation strategy which they 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 if we had tried to secure the property quickly.
This proved that they had our best interests at heart because they could have secured the property quickly at a higher price and received a higher fee. Instead, they had the confidence and professionalism to give us the best advice.” Mr P Murphy (Notting Hill)
