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!
