Property Negotiation |
If you are planning to acquire a property in London it is essential that you understand several negotiation techniques. If you don’t, then you will pay too much – sometimes disastrously more than you should. So, hopefully, you will find the following analysis of a London property negotiation valuable.
This is a true story. Only the names have been changed to protect the guilty.
There is no such thing as a standard London property negotiation,
But I was stunned by this particular one: I had agreed a good price for my clients – an English family – on an old artists’ studio in Kensington. It was configured as four flats but the plan was to create one stunning home with double height ceilings. The sellers were a couple of young lads who had bought the property as a development project but had gotten themselves into financial problems. They needed to sell and quickly.
We soon discovered that what they had told us about their planning permission was not accurate. This did not affect my clients’ plans but as we had negotiated based on the sellers’ alleged plans, I felt that we should try to negotiate a further price reduction.
As the agent was not being particularly brilliant in his communications, my clients and I decided to arrange a face to face meeting with the sellers to reach a new agreement. This in itself is a bit out of the ordinary. The meeting, however, was a different level of unconventional.
I formulated a strategy for the property negotiation which I went over with my clients.
By the way, this sort of preparation is vital for any London property negotiation, but especially so if there are two or more of you involved on the same side. It is vital that you both know what to say and what you are trying to achieve. It is also essential to know what not to say so that you give a consistent message.
Anyway, we had agreed to meet at the estate agent’s office in Kensington. I turned up a few minutes early to make sure everything was prepared. That was when I realised that things were going to be slightly bizarre.
The agent showed me to a door which I presumed was their meeting room, but instead turned out to be a small, dark store room with no windows. For a second I thought he was going to lock me in and then ambush my client but he simply said “Please take a seat” and ushered me to a dusty cardboard box.
“Err, seriously James”. I said, “Where are we having the meeting?”
“In here” was the dead-pan response.
“James, we are about to negotiate a multi-million pound transaction and you want to do it surrounded by mops and cleaning equipment. Is this the best…”
At that moment James’ clients were shown into the room by one of his staff. Their look went from nervousness to bewilderment to nervousness again. At least then I knew the agent wasn’t playing some cunning psychological trick on me. He was just stunningly unprepared, which was fantastic news for us.
I introduced myself to James’ clients and then said I would wait outside for my client, so that they could talk. In reality, I just wanted to warn my client of the shambolic “meeting room” and confirm that our strategy and tactics were still good.
And so the negotiation began with the sellers asking us why we were trying to “chip” the price at the last minute.
My client and I pointed out that the whole deal was relatively last minute – our offer had been accepted three days before and we were supposed to exchange in a couple of days with completion 5 days thereafter.
We also pointed out that what we had agreed terms on was somewhat different to what we were actually buying due to the discrepancy in the planning and what we had been led to believe we were buying. Therefore we were not “chipping the price” but renegotiating now that we had all the facts. We did not suggest any impropriety on their part just confusion over the facts.
It became clear quite quickly that both of the sellers were desperate to transact (remember they were two friends who had partnered to do a development project). However, they had clearly not prepared because they kept contradicting and correcting each other.
Meanwhile the estate agent “representing” them was doing an excellent impression of a statue and did not say a word throughout the property negotiation. If I was being unkind I would say that he was just hoping for a deal to be reached so that he could receive his commission. But then, he may have simply been overcome by the fumes from the cleaning chemicals not to mention the heat generated by five people squashed into such a small room.
Anyway the sellers started getting slightly annoyed with each other and I was getting worried that the negotiation might blow up because they couldn’t see eye to eye with each other, let alone getting annoyed with our request for a reduction. The last thing we wanted was for the property to be repossessed and to miss out on a great opportunity.
I was trying to think of a way to subtly diffuse the situation when fortune smiled upon me; I would like to say that I was struck by a moment of negotiating inspiration but in fact a mop fell on my head.
Being a complete coward I jumped off my seat box as I thought I was being attacked by a giant spider that had leaped out from the darker recesses of the store-room. I then knocked over another box that was failing miserably to double as a boardroom table.
This was not the most elegant way to diffuse the situation but it was highly effective. Everyone was so startled and then amused to see me wrestling with the rogue mop that the heat was taken out of the sellers’ dispute with one another.
Having replaced the mop and with equilibrium restored to the universe we were able to get the sellers to focus on the key issue. So I simply asked them “What reduction do you think is fair?”
In tandem one said “£50,000” and the other said “£75,000”.
“Great”, I said, “so what you are saying is that £75,000 is what you deem a fair solution”. I quickly turned to my client who was trying desperately not to laugh and said “Hmmm, would £75k be an acceptable reduction for you? Obviously we could press for more but in the interests of moving this deal along swiftly will you accept this?”
As we had prepped properly, I knew that he would have been happy with any reduction but I also wanted to give him the opportunity to say if he wanted to ask for more. As it happened, he took the view that we already had a very good price and didn’t want them to start arguing amongst themselves again so he accepted. We all shook hands and then there was another awkward moment as we all tried to squeeze out of the cupboard meeting room.
I think the agent then mumbled something but no-one was listening. My client and I got into a taxi and burst into hysterics. Deeply unprofessional but then it is not every day that I make £75,000 for a client by having a mop land on my head. Now that I think about it, I should try it more often.
On a more serious note there are some key property negotiation lessons in this story:
- Always prepare before any meeting or telephone negotiation.
- Always set a minimum target – in this instance we would actually have walked away at the price we had initially agreed because it was a good deal. Indeed, the reduction of £75,000 may have been small in relation to the size of the transaction, but the negotiation took about 30 minutes plus 90 minutes preparation. So, I saved my clients £75,000 with two hours of work.
- Always look to avoid heated situations. If one arises try to diffuse it – taking a five minute break is often a good idea. Never underestimate the power of emotions over logic.
- Always try to get the other side to offer a price. They may offer you a more favourable price than you might expect.
- Try to make the other side feel that they have won. In this instance by saying that we could press for more but suggesting that we agree at their price meant that they saved some face
Conclusion
Now as absurd as this London property negotiation was, it was really only the setting that was strange. The fact that the sellers managed to effectively negotiate themselves down is not uncommon (please be aware that many buyers manage to negotiate themselves up, so don’t fall into this trap either).
We were also fortunate that this agent was useless in the negotiation. You will come up against more skilled negotiators – both in terms of the estate agents and sellers – so you need to be sure that you have a clear negotiation strategy and utilise several negotiation techniques. If you don’t, you will find that you are the one losing the negotiation and paying too much.
The good news is that property negotiation is a skill that you can learn. Yes, some people will naturally be better at it than others, but you can give yourself a huge advantage simply by studying some basic techniques.
Contact Mercury Homesearch
If you would like to discover more about how you can negotiate the lowest price possible when buying a property in London, simply click here, email dee@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK).
