Nine novice negotiation mistakes
Focus too much on the dollar
Sure, you want the best deal, but a focus on the all-mighty dollar means you miss other aspects of the deal such as closing date or repairs.
That isn’t to say the dollar doesn’t matter, say investment pros: the bottom line is still there. But you can compromise on price in exchange for other concessions. For example, Oro Properties principal Cindy Wennerstrom will sometimes make two offers: one “as is” and one agreeing to higher price in exchange for painting the property or undertaking other renovations.
Don’t look at both sides
“You don’t want to be that person who tries to scrape every last penny off the table for yourself,” says investor Marcel Greaux, co-founder of the Toronto Real Estate Club. “The investment community is small and your reputation could precede you.”
You do want to get the best deal, but pushing too far could hurt future deals. It’s the golden rule of business, Greaux says: leave something on the table for the next investor.
Stereotype the seller
“Get the inside scoop on the sellers,” Wennerstrom says. “Why are they selling? Did they already buy something? Is it a new build? When is the closing date for the new place? Do they have a strong sentimental attachment to the home?”
Wennerstrom styles her negotiations based on what she knows – appealing to a seller’s emotions, or their business side depending on their situation.
Reveal your hand
So you know all about the sellers, from their kids names to their new address – but you can lose your advantage if they know as much about you. Want to pay cash? That says you’re a “person of means,” warns negotiating expert James Camp, and could make the seller stick to their guns.
Miss details in the process
Basics first: submit a cover letter with your offer that makes it clear in writing. It’s hard to differentiate yourself if you’re just a voice on the phone, Greaux says.
And, hey, don’t forget to bone up on market values and seasonal trends.
Let emotion get in the way
“Take your personal emotion out of the deal,” says Wennerstrom. “Think business … If you want the seller to work with you, show flexibility and consider their wants before yours. You will be more likely to get what you really want this way.”
Get obsessed with “winning”
If you get the property, but at a rate you can’t afford or with conditions that don’t help you, that’s not really a win. Have other properties that you’re interested in so it’s not a must-buy situation.
“The best leveraged position to be in is being able to walk away from the property,” says Toronto Realtor Adam Brind. “If you can do that, you’re in a position where you don’t need them, they need you.”
Counting your chickens before …
Don’t assume you’ll win, especially in a multi-bid situation, says Wennerstrom. You’re better off looking at properties that have been on the market a while where the owners will be willing to compromise.
Not listening to expert advice
Your real estate agent and other advisors have seen a lot of deals so if they give you an estimate on how high a purchase price can go, it’s worth listening.
“Sometimes buyers hear the advice we give them but they just don’t think it’s going to go that high,” Brind says. “It’s hard to get them to listen to you.”
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