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Art of negotiation

Discussion in 'Real Estate' started by Jacque, 3rd Jun, 2006.

  1. Jacque

    Jacque Team InvestEd

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    Though I've done a lot of reading and have had lots of life practice with negotiation (having children helps hone one's skills enormously!) I did another course recently which refreshed on some interesting points that I'd like to share and would welcome further comments on. Though most of them are common sense and we've no doubt heard them before, it doesn't hurt to take a refresher course every now and again:

    1. Being a good listener can be often be the single most effective way of understanding the other party's needs and finding a solution (ie: agreeable to both parties) in the negotiation process. This doesn't just mean being quiet whilst the other person is speaking, but rather involves paraphrasing (reiterating statements or clarifying questions back to the speaker so that they understand that you are listening and comprehend what they are saying) and the usage of verbal and non verbal (body language) cues to give feedback.

    2. Having solutions/responses in mind to all possible scenarios that the other party is likely to present is vital in the process of negotiation. Being prepared with effective reasons why your particular outcome/s should be adopted involves thinking through the "What ifs" before entering into negotiations. Planning and knowledge reap rewards. In real estate, this means knowing as much about the buyer and their motivation and situation as possible.

    3. Patience holds the key to many a successful negotiation and, though this may not always pay off (particularly in transactions such as real estate where market conditions can dictate you missing out on particular properties) time on your side can indeed be a powerful ally. Even better when the other party needs to move within a set timeframe.

    4. Avoid your ego taking over in negotiations. This can be easier said than done with particular personalities :D but, basically, you need to step away from the transaction if you feel it becoming too personal. Re-assess and remember the focus of your role in the first place. Negotiation is a game after all!

    5. Know your bottom line and be prepared to walk away. Goes without saying really :)
     
  2. Bundy

    Bundy Active Member

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    Great post Jacque,

    Interested in what other forumites think are key ingredients in negotiation?

    Here's a couple of others:

    Lateral Thinking
    Open mindedness
    Being able to Compromise
    Trying to achieve a "Win Win" situation for all parties

    Excellent communication as Jacque touched on.

    Bundy
     
  3. D&K

    D&K Well-Known Member

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    Canberra
    Good topic Jacque,

    With respect to real estate:

    Lots of research on the market your dealing in so you know what a fair result would be.
    Setting your limits and being prepared to walk away (politely) to look for the next opportunity.
    Not being personnal or too critical when trying to negotiate down a price.

    Dave
     
  4. Leandro

    Leandro Well-Known Member

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    Sydney
    Hey guys and gals,

    I have to first state that i have not negotiated much in the property scene yet (will do increasingly in the future), however i do negotiate a lot in my business and i believe that the following tips can be applied regardless of the domain.

    - Present one front to the other negotiator. I.e. if you are a couple designate one person who will do all the talking and negotiating (all parties involved should listen though). This will mean that you won't get caught out if one party is directed a question or comment and they don't have the answer or provide an answer with valuable information to the other party.

    - In quick decision making moments (i.e. when the other party makes a new offer after some stalling), mention that you need to quickly run this by your business partner, wife/husband etc. This will give you time to think over the offer and see if it really suits you.

    - Never show your true emotions toward a particular offer. If you seem too pleased with an offer, why would the other party want to better the deal.

    I hope these have been helpful. :)
     
  5. Babi

    Babi Member

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    indecisive as always

    Hi all. My first home search has been a loooong one - not a little due nervousness and indecisiveness. However! I finally made an offer on a 2 bed unit last week (FHOG).

    Only to see a unit in the same block come on the market for $50K less! It's got a slightly better layout, but not v. well maintained, currently rented on a month-by-month basis; can't really understand why such a large price difference between the 2 units.

    EDIT: Right. Went to property viewing and put in an offer over 25K from asking point (close to 1/2 way between the price differences); which has been knocked back! What a skeazy selling agent, why would they go in with such a low asking price, when they've decided on something much higher?!
     
    Last edited by a moderator: 3rd Apr, 2010
  6. KateMelb

    KateMelb Active Member

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    Because they're liars Babi. That's what agents do, they lie through their teeth in order to get a better result for their client and a higher commission for them. Unfortunately consumer laws haven't caught up with this behaviour yet, although Victoria certainly has reforms in the pipeline.

    Never trust anything an agent tells you. Always do independent research and speak to a variety of people. If you want to make an offer on a place, make the offer you want and ignore the agent when they inevitably say "You'll need to raise your offer and be quick, we have another offer that's higher". I've heard that same line so many times that agents must learn it in a script at real estate agent school! If they really had a better offer, they'd take it.

    *********************
    I DIY manage with Rentwise.
     
  7. Jacque

    Jacque Team InvestEd

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    Hi Babi

    Interesting to see this thread resurrected after 4 years- and how the market has changed in that time!

    In regards to asking prices, at the moment Sydney is a hot market with many agents doing away with prices or even guides, as they are allowing the buyers to do all the talking. What is still common, unfortunately, is a lower bait price guide to get you in the door. Though some guides may state $500K+ the reserve may well be anywhere between 5-20% more than this- it's a sales tactic which is misleading for buyers and very frustrating, especially for those who don't know the market well. There are also particular agents who do this regularly and continue to get away with it. It's my opinion that it should be made mandatory for agents to only price according to the price estimation provided in writing to the vendor on the listing agreement. This way, it would be more transparent and fairer for all involved, particularly those going to auction.