Negotiation Tactic - Giving up something so you can negotiate for a lower price

[Keen]

Negotiation is certainly my weak area when it comes to buying IP's.

I have read that if you say you need a 90 day settlement (though really you don't) and there is a stall on negotiating a lower price you then um and arh and go back to them with okay if you can go to $x then I can get settlement to be 30 days.

But and here my question - other than selling your own house - when would you be looking at a 90 day settlement - and what excuse would you use to now be able to settle earlier.

For my next purchase I will have pre-approval and be able to settle as soon as the bank can fund the purchase - How can I really use this to good advantage.

Regards
Keen

 

[tubs]

Keen

Hi. I have used this tactic successfully before. We had got a house down in price from $299k to $290k but wanted to go further. When the agent asked about settlement, I said we wanted a long settlement, at least 60 days but preferrably 90. We knew the house was vacant and had been on the market for some time and the vendor had gone interstate so it must have been costing them a fortune.

We used the excuse that my wife was having a baby (which she was) and was due very soon (which she was) so we wanted her to have the baby and then we would settle and fix the house up. Actually, we wanted to get it all done before having the baby. So we said that if they came down to $285k we would settle in 30 days, and they agreed. Now, you can make up any excuse that you want. You can say that your house is on the market and you cant afford to pay for two houses at the one time. Alternatively, you can just tell them that you are happy to sacrifice your 90 day settlement if they go to $x.

I also listed every single thing (big or small) that needed doing to the house to justify an initial price drop as well. You might find this handy.

PS If negotiation is not your strong point, buy this book:
http://shop.topgunba.com/product.asp?pid=605&cid=0

 

[Keen]

Thanks tubs. I'll check it out.

Regards

Keen

 

[NigelW]

Negotiation is certainly my weak area when it comes to buying IP's.

But and here my question - other than selling your own house - when would you be looking at a 90 day settlement - and what excuse would you use to now be able to settle earlier.

Regards
Keen

When the market is rising rapidly?

I always say - banks are really slow...and I'm selling some other assets

 

[Aceyducey]

Remember when negotiating you want to concede things that are of little value to you but of a great deal of value to the other party while gaining things of greater value to you.

I believe that long settlements are always advantageous to the buyer because it's a longer period of time before you outlay money. However we often try to get access prior to settlement in order to get renovations underway and hopefully completed before the property settles. This way you maximise your gain.

I'll happily agree to a slightly higher price or larger deposit if there's a bigger advantage in the longer settlement.

Cheers,

Aceyducey

 

[NigelW]

Remember when negotiating you want to concede things that are of little value to you but of a great deal of value to the other party while gaining things of greater value to you.

I believe that long settlements are always advantageous to the buyer because it's a longer period of time before you outlay money. However we often try to get access prior to settlement in order to get renovations underway and hopefully completed before the property settles. This way you maximise your gain.

I'll happily agree to a slightly higher price or larger deposit if there's a bigger advantage in the longer settlement.

Cheers,

Aceyducey

Absolutely, a little money for a lot of time can be valuable. Get control of the asset asap and pay down the track.

N.

 

[hrhpablo]

Aceyducey is of course right. The deal should be something they need that you don't mind giving up.

We were the lowest bidder on my PPOR, but got it for a bargain because we were prepared to let the vendor live in the property for 6 months and rent back to us while they built their house. We also accepted a longer settlement period (3 months) which suited them.

As a result we connected with them to the extent that they still drop by if they are in the area, well over a year later.

 

[Keen]

A couple of weeks ago I contacted a REA from one of the two main agencies where I am looking to buy, stupidly I let slip that I was an investor and that a short period of time for settlement was not an issue. I guess I should use a REA from the "other" agency as I've shown some of my cards?

Regards

Keen

 

[sue78]

It's worth it to give it a try but ultimately it depends if the sellers are desperate for money or can wait for a longer settlement. It's extremely attractive to the sellers!! Wish our buyers were like that!

A property of ours is under contract but one of the conditions is that it will go unconditional once the buyers get a contract on their property. The market is slow so it's taking forever for them to sell and they keep on requesting for extensions. We have been told by our agent that the buyers have actually been approved a bridging loan but obviously they don't want to use it.

I've been thinking about giving them a discount if they use their bridging loan and settle within 30 days. We're also desperate for settlement coz we have other projects we need finance for.

My husband and agent don't think we should offer them a discount but looks like our other deals will fall through if we don't go unconditional on this contract.