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House sale negotiations can be a minefield...
Throw away all the books you have on negotiating and start
again.
Why? House sale negotiations are stressful, emotional and
expensive. Need we say more?
Most of the books on the subject are too hard-nosed to be of
much value to the private seller. Sure, some full-time investors
might like to go for the jugular. But ask yourself. Will that
get you what you really want?
It's no coincidence that the leading trade magazine for
estate agents is called "The Negotiator". Having a third party
involved to handle house sale negotiations can really diffuse
tensions. The only problem is that the estate agent has their
own agenda and the best negotiators are by the their very nature
independent.
You are selling privately. You are on your own.
Let's first get the lie of the
land..
The dynamics of house sale negotiations..
Everyone wants to think they are getting a good deal. So you
want your buyer to believe they are getting a good deal. Or even
better, that they're lucky to clinch the sale...or even to have found your house.
So what does a good deal mean for the buyer? Unless your
buyer falls in love with your house it's likely they will want
to negotiate. This can become a bit of circus. If you remember it's a process and hardly ever sorted with one
touch, then you are approaching your house sale
negotiations in the right frame of mind.
Take a tip from professional house buyers..
When it comes to house sale negotiations experienced
negotiators know you either negotiate on the price or the terms
of the deal. Not both. Otherwise the other party is likely to
feel the deal is unfair.
What does a good deal mean for you, the seller? It means
finding a buyer who is financially able to buy your house and
can move within your timeframe. It also means not giving away
more money than you need to. Just pick your battles carefully. A buyer who attempts to negotiate on all fronts is naive or wasting your time. Find out which quickly.
A word about surveys..
It is not unusual for a survey to come back with comments
about issues that have been drawn to the attention of the
potential purchaser.
On average surveys knock between 1% and 2% off the
initial agreed selling price (the offer which was made "subject
to survey") of a property.
How should you deal with this? If possible ask to see a copy
of the relevant extracts from the survey. For the purposes of
your house sale you should be most concerned with those issues
coming under the "Action" section of the survey. Some issues
will be marked under "Urgent matters". Others "Further
investigation". For the purpose of your negotiations
ignore those items listed under "Maintenance considerations".
You should have already factored items such as a new kitchen or
boiler into your price.
Surveyors are naturally cautious...
This means that most period properties will have a relatively
long list of items under the "Further investigation" heading.
Here we are really concerned with those items listed under
"Urgent matters". For example, the roof may have question marks
over it.
You have one of three options at this point. Ignore the
results of the survey because you were aware of these issues and
factored them into your price, ask for quotes for the remedial
work required to fix the problem or immediately deduct a sum
from the asking price.
The choice is yours.
Top ten tips for your house
sale negotiations..
When selling privately you can't go far wrong if you:
1
Build empathy with your potential buyer. Ask lots of questions.
Get a sense of why they want your house and what is important to
them. Understand their concerns.
2
Decide in advance the minimum you are prepared to accept and
assess where the balance of power lies. If you want a quick
house sale the balance of power will tend to gravitate to the
buyer. However you can mitigate this to an extent by working out
what's important to your buyer. They may want to move quickly
too. Or you might be lucky - there might be a queue of people
lining up to offer you a quick sale.
3
Never be the person who mentions price first – he or she who
does loses the upper hand. Try to play it cool. This assumes you
have your pricing correct to begin with.
4
If possible try to involve other
people in the negotiations (fictitious or other wise). This
paves the way for you to play good
cop, bad cop if necessary – there are many variations...
including “I’ll need to ask my partner/wife/dog.”
5
Don’t over-react to offers. This usually means verbally but also watch your body language which can be a real giveaway. A
silence is worth a thousand words here. If an offer is on the
low side the famous builder’s sharp intake of breath works
wonders to signal your feelings.
.
6
Never automatically offer to split the difference as a way of
trying to seal the deal. Chances are you’ll give away more than
you need to...But..
7
You can offer to split the
difference if you sense it's an easy way to close the sale
and you're not giving away too much.
8
Be very clear about how you have pitched your asking price and
how you can justify it. If it's the price you actually want, can
you defend your price? Can you defend it even in the light of
any issues uncovered by the survey?
9
Don't get so hung up on "winning" - you risk losing sight of
your objective - a quick house sale. It's really not a battle.
Try not to become too emotional. Harder to do than say of course. But if you don't remain at least 50% detached you risk winding-up your buyer during the house sale negotiations.
10
You may find yourself being asked
to lower the price. You should if you think it's justified
(remember try to empathise with your buyer) and if you don't
want to lose this buyer.
But not all concessions have to
be financial. Think about trading fixtures and fittings, date of
completion and so on. It really comes back full circle - find
out what your buyer really wants.
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