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Property Negotiation

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Transcript

Thank you for tuning in to another episode of The Board. Today is all about negotiating with property or property negotiation. Why this is so important is I was actually sent a couple of Inbox messages about, “Arjun, how do we negotiate property better? I have purchased it once, I haven’t had a lot of practice. I’m looking at investing now and the first time was so difficult.” I had another message from people as well just going, “Arjun, look, I feel uncomfortable dealing with real estate agents. I’m not sure really how to approach it. What are your thoughts?” I just want to say thank you to everyone, firstly, who sent some of these messages. I got countless amounts and I’m just really, really appreciative of that, and this is what led me to the video today with property negotiation.

In the four headings here, there are four key headings to look at when it comes to negotiating property. On countless occasions, we are saving our customers at InvestorKit from $20,000 and upwards. In some cases, we had properties where we were saving $25,000, $30,000, $40,000 and in some where we’ve saved even as low as $15,000. There are a few important factors to understand negotiating and why these factors work is what I’ll go through with you today. The biggest question, “Who Wins?” We all want to go into a negotiating battle feeling like we’ve won, but in terms of negotiating like property, it’s different. Not everyone needs to go in coming like a soldier thinking, “I need to absolutely destroy this person in front of me, I need to absolutely win this.”

Sadly, it doesn’t work like that most of the times when we’re doing property negotiating. The art is making sure both sides win, and so you have to really understand the motives of the seller, the motives of the agent, the property, the reasons for selling and take advantage of that opportunity to make wins happen in both worlds. If you’re planning in your world to just go, “Well, it’s all about me winning.” Chances are you’re probably going to miss out on the deal. You may have had some occasions where you may have had a successful story to share to go, “No, no, I absolutely low-balled, went for what I wanted, trusted it, and it just came through.”

Great, but from someone who’s had this experience multiple times, not only for myself but professionally for customers, I must tell you winning in both worlds, for you and the seller, is a must. When it comes to winning, what are some examples? I’ve noticed in some situations, there was a sale of a property where I noticed on the title there was a bank that did a loan. The particular lender was Pepper Finance, and alongside that they actually support a niche of customers where the lending interest rates are slightly higher but they’re helping out this particular group of customers that others don’t get. Now, assuming that interest rates are higher and this person may have some holding costs issues. You can almost go, “All right, maybe a speed of cinnamon might be something that they might value because of the high interest rates on something.” If they want to get rid of it, they probably want to get rid of it sooner.

Now, other things are the sister states and so many other emotions that happen in property, and I’m sorry as a buyer, you really need to go in emotionless. Now in this transaction and example of both sides winning this, it was us in InvestorKit realizing there’s an opportunity for our customer to gain significant negotiation advantage. But instead of just hammering at it, we realized that a fast sale would benefit the seller. Instead of the standard 42 days settlement, in some stages we’d come down to 25 and in some stages 30. Now the benefit of that is it’d allow the seller it to go, “Okay,” Mama sales agent going to the vendor, “Hey, we’ve got this offer a little bit lower than what we’d like but they’ve got a faster settlement and I think that could really help us here.” There are many things but the idea is trying to find places or moments where both parties can win.

Second part, research. To get to your part of the winning, to get to your understanding of I can bring this price down by a certain level. Agents are offered many low-ball prices all the time, but the problem is not many of these offers come in with a research attached to it. Now research is varying, you can come in from pick things you picked up on the piston building report, you can come in from comparable sales. But the three main headings you want to look at research are interior, exterior, land size. When you look at interior, exterior, land size, and you’re comparing the property prices, they’re a great way for you start for you to present. Actually, I think that we should only pay X amount, maybe 30,000 lower because of these four properties and this price range with this interior similar, better or worse, this exterior, this land size.

Then on top of that are the extras meaning how much they’re renting for, features, and a few other things that come in terms of market direction. But on a high level, agents don’t always want to hear every little bit of things like that, that they don’t have time to sometimes look at all of that. They might come down to those three main areas, can you present properties that are higher in terms of man size, larger, or better interiors, better experience, that selflessness? That’s that three main key categories that they’re looking for when it comes to that back and forth on research and negotiation. If you’re not coming with this prepared, there’s a high chance that your offer may not even be looked at, or if it is looked at, it’s pretty easily put to the side because there is not, A, actual backing behind what you’re trying to propose.

The next thing is low-balling. It’s very difficult for someone to know, as a sales agent, if you’re taking things seriously or not. The next part actually from low-balling managers very well with managing expectations that go really together. Agents in Australia and from the South Pacific have a very difficult job compared to some other countries. In other countries, take example for the USA, they have a lot of situations where you have a buyer and a seller’s agent that each take a little bit of their own parts and they’re just dealing with each other. This trend is picking up in Australia in terms of the buyer’s agent market, for example, us here at InvestorKit dealing with the sales agents. But majority of the times in Australia, sales agents are dealing with not only do they have indoor and managing their expectations as their customer, but they have a very difficult job of managing a huge pipeline of buyers that want to look at it, don’t want to look at it, are serious and not serious.

Because they have this job of managing expectations, they don’t want to waste their time with people who are not going to take it seriously. If you are low-balling, if it’s worked for you, that’s awesome to hear but in most cases it’s not going to work. Even if you were appeared to pay slightly more when you wanted to go with a strategy of starting low and then coming high, they might not even get to your offer or take you seriously on that part and they might start dealing with others. I’ve seen situations where someone’s price they’re willing to pay was 20,000 to $30,000, more than what actually the property went for. They communicated this with the sales agent, they went through the back and forth on this offer and perhaps too many back and forth. But a buyer’s agent was able to come in and close the deal.

We’ve had some situations in our cases and this is the reason why sales agents love to work with us. We come in with qualified customers who are prepared to buy, we come in contacted them post doing a lot of research, so they know that when we’re contacting them as a sales agent, we’ve done a lot of the hard yards and the work already to know this is an ideal investment. When you consider all these things, they’re more likely to resonate, deal with and take us more seriously from a buyer’s agent perspective. Which is sometimes where we can actually walk away with the deal because we’ve come in firm with research, with the right proposal and ready to do a deal. Where some customers might actually be willing to pay more but they just haven’t been able to secure it because of this uncertainty on low-balling.

These are the four things when it comes of the art of negotiating property or property negotiation. Who wins? Let’s get both winning. The research, come in prepared, don’t waste people’s time with low-balling and obviously understand the managing expectations. Being firm on certain things with the real estate agent and closing the deal, “I’m going to help you get your next property, most importantly, at a good price.” That’s it from us here at InvestorKit, the experts in wealth creation helping you take action.