10 tips to get the advantage in a negotiation
Price negotiation is an art and a skill. To get the best deal, you must know the place’s culture, customs, and traditions… but also know yourself and control your emotions.
Hello, I’m Oscar Vaello, a lawyer at Vaello Legal, and today I’m going to give you 10 tips for better negotiations when buying a property, so you can get the best deal.
Tip number 1. 10% maximum.
Culture has a lot to do with it. In some places, the margin that you have to bargain with is barely 1 or 2%, like in the North of Europe, while in more southern countries, this margin can be anything up to 30%.
In Spain, like anywhere else, this margin depends on multiple factors, like how long the asset has been on the market, how big the market is in that area, how much the seller needs to sell, and how interested the buyer is to buy. But in general, we can say that in Barcelona city and its surroundings, you can make an offer of a maximum of 10% under the offered price, and after negotiating, the price will be agreed to around 5% below the asking price.
So for example, there’s a flat in a suburb of Barcelona for 200.000€, you can make offer 180K and finally get it for 190K.
If you make an offer below that 10%, it’s likely the agency won’t even forward your offer to the seller. In other words, they won’t take your offer seriously.
Tip number 2. Ask the agency.
Do you know what is the best way to know the minimum price you can offer? Ask the agency.
I know this might sound weird to you. You may think that since the real client of the agency is the seller, they will try to get the maximum price for him, but it’s not like that.
Yes, they charge a commission to the seller based on the selling price, so the more expensive they sell, the bigger their commission will be, but that’s not exactly their main motivation.
The number one aim of an agency is to sell and to sell as fast as possible. The price doesn’t matter as much to them. A little more commission doesn’t pay off having the property on sale for another month.
What makes them want to sell fast, is that most of the time, there is more than one agency selling the same property, and the first one to sell will get the commission. There’s no second prize. The rest of the agencies will lose everything they have invested. So there’s a lot of competition between agencies to be the first to sell the house and get the commission.
This is why they will tell you the truth, not because they’re honest, but because they want you to get the deal as fast as possible.
Therefore, from the price they give you, just offer 5% less, so that you keep that margin to bargain with.
For instance, if you see a property that you like and the asking price is 200.000€, the agency tells you that maybe the seller might accept 190K, so then make an offer of 185K.
Tip number 3. Don’t let the agency push you.
The agency will tell you that there’s somebody else very interested in that property, and if you don’t take it fast, you can lose it. They always say that, whether it’s true or not, so be strong and don’t let the agency push you.
Tip number 4. Don’t be too aggressive.
We are used to watching movies where the good negotiator is aggressive and cocky. It may work in Hollywood, but it’s not the same in real life. Here it works much better to be humble and nice. Don’t pick out faults with the property, don’t have an opinion of the person, don’t laugh at the other’s arguments, and don’t stroke the ego of the counterpart. It’s much easier to get on with the other party when they like you than if they think that you are a fucking asshole.
Tip number 5. Make it emotional.
Don’t behave like a robot, don’t give the impression that you only care about the price. We’re all humans, and usually, humans make decisions based on emotions rather than reasoning. It’s not all about money, so tell them why you want to buy that property. Tell them that you’ve always wanted to live in Barcelona, that you love this city, tell them why you like the neighbourhood so much, that you want to start a new life in this city, and that you have felt so at home here since your first visit. Tell them that you feel good vibes and that you will invite the agent and the sellers for dinner on that lovely terrace, that you want your children and grandchildren to grow up there, smile and bring them a bottle of wine made in the region where you are from. Give them a break from their boring lives. Make them wish deeply to sell you the property, make the agency be fucking motivated and work in your favour.
Tip number 6. Give reasons.
When making an offer under the selling price, it is better to give some reasons for that and start appreciating the good points, then you can bring up a couple of negative points, so that the discount you ask for is justified.
For example, let’s say that there’s a flat of 200.000€, and you want to offer 190K. The correct approach is to say: I see the price is fair, the area is central and it has a sunny balcony with good views, but on the other hand, we’ll have to spend more money than expected for renovation because we’ll have to put in a new bathroom and kitchen. Also the building has to have some work done soon which will mean more money to spend, this is why we respectfully ask for a small discount.
Tip number 7. Offer something in exchange.
While negotiating, no one wants to feel like they’re losing, we all want to feel that the deal is fair, and it must be a win-win for all. This is why when you ask for a discount on the price, you should offer something in exchange, even if it’s a small thing. This way you are making it easier for the counterpart to accept your proposal, without feeling that they are giving in.
For example, you ask for a discount on the price, but in exchange, you offer to pay a deposit within 48 hours.
Or you ask for a discount and if they don’t agree, then you feel entitled to ask for something in exchange, like that they leave the washing machine and the fridge in the flat.
Tip number 8. Don’t be cheap.
It’s not that rare to see negotiations that get stuck on money or small things, and sometimes even certain negotiations are aborted having already agreed with 99% of the terms.
When buying a property, you need to play the long game. So don’t fight for peanuts, be generous, don’t get stuck on negotiations for small things, keep your ego in check and continue.
Tip number 9. Be fast, but not too fast.
We all know that when we see a good deal we should jump on it, if we think too much we could lose the opportunity. But at the same time, there’s a minimum of due diligence that we must do, and there’s always some room for negotiation, so don’t be too anxious and don’t sign anything before your lawyer has checked it out first.
Tip number 10. Don’t show too much interest.
Imagine that you’ve been looking for a property for a long time, you’ve already seen dozens of properties, and you didn’t like anything. You are tired and start to feel hopeless, when suddenly you see a property that looks gorgeous, you visit it personally and bingo! You fall in love at the first sight, it’s perfect for you.
If you show your enthusiasm, it will damage your negotiating position, and the agent and the seller will use it against you. Try to keep your emotions low and use the same trick that all agencies use and say that you’re interested in another very similar property.
My name is Oscar Vaello, and if you have any questions, drop me a comment or send me an email.
See you in the next video!