Tapping in to the power of negotiation will ensure the best purchase price for a property investor, says Simon Pressley.
Finding the perfect property and location is only part of the battle.
Three-time Australian Buyers Agent of the Year Simon Pressley told Bushy Martin on the Get Invested podcast that key to a successful negotiation is having extensive knowledge of your asset and the property market.
“The key to being a really good negotiator is to know your product. I think it’s important to not underestimate the value, as a good negotiator, of really knowing your stuff about the property market that this asset is in and then the individual property that you’re trying to negotiate,” Simon said.
“When the person on the other side of negotiation, when you share some information with them that they didn’t know, whether they admit it or not, they realise that you have some power over them. You have knowledge. And that’s a very, very powerful position to be in.
“And the person who buys property for a living, the buyer’s agent, will always know a heck of a lot more about that product than the individual DIY investor.”
Simon says having a lack of knowledge is one of the biggest mistakes a DIY property investor will make in the negotiation process, and can lead to regret in the future.
“There are some buyers who have a false sense of confidence. You think, ‘well, I’ve been thorough and I’ve done my due diligence and I know everything there is to know’. But you don’t know what you don’t know. And if you’re transacting in something as important as an expensive property, are you prepared to roll the dice there?” Simon said.
“Just ask yourself before you sign off on that deal – how would you feel if two years after you’ve signed that contract, you discover another bit of information, but it’s too late then? How would you feel then?
“The person who’s more likely to pick that information up, when you still got time to do something about it, is the person who’s transacting property for a living.”
In addition to knowledge, Simon says the ability to sum up a situation is crucial in the negotiation process.
“The person that you’re negotiating with, they more often than not need to feel like they’ve had a win as well, because two parties need to sign a contract at the end of the day. And very few parties are going to sign that contract unless they both feel happy,” Simon said.
“So, the key is not just thinking hardball is the way to do things … it’s to try to understand what’s motivating the other party. Why are they selling? What are their circumstances now in a legal sense?”
Simon also explains the other common challenge DIY investors can face in negotiation is allowing their own emotions to influence their decision-making.
“[For example], that’s the emotion of going ‘oh, I better accept this, this is the one I don’t want to miss out on’. So, they agree to the terms or they agree to the price,” he said.
“There’s no way in the world that a skilled buyer’s agent will allow that to happen unless it’s a really good outcome and the best outcome that one could get.”
Listen to the full interview here.
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