08 Jul Negotiation tips – don’t pay too much for your next property purchase – Shannon Davis
In today’s show Shannon Davis, from Metropole Properties in Brisbane, has some more negotiation tips and outstanding advice if you don’t want to pay too much for your next property purchase.
Kevin: You’ve heard of the saying that you’ll make money out of real estate when you buy, not necessarily when you sell. Well, it all comes down to your tactics as a buyer. How good are you at negotiation? I’m going to talk to a man who does it for a living now – buyers agent, Shannon Davis, from Metropole Properties in Brisbane.
Shannon, I’m just keen to talk to you about some of the tactics you use or some of the negotiation tips you might give someone.
Shannon: I think the first thing is have your due diligence in hand because that leads to confidence. The more prepared you are and the research that you’ve done, the more confident you’ll be in negotiating with the other side.
Kevin: You can spend too much time, though, on that area, can’t you?
Shannon: Oh, definitely. You don’t want to get to a point where it’s analysis paralysis. We definitely need to be prepared because that will lead to a better solution.
Kevin: Are there some strategic areas that you should always look into?
Shannon: Most importantly, comparable sales. I think one of the problems is people focus too much on the asking price, and they might try and shave some off. But if the price was set too high to begin with, you haven’t really saved yourself any money.
Do your own research on comparable sales and get some confidence about that because that’s where you know the value of the market.
Kevin: Is it always about getting the lowest price?
Shannon: Not necessarily. I’d rather get a wonderful property at a fair price, rather than a fair property at a wonderful price. What I mean by that is it’s the opportunity to have something that’s appreciating in your portfolio, so don’t always be a bargain hunter and miss out all the time.
Kevin: Due diligence, that’s the first one. What’s the second one?
Shannon: I think being credit-ready is a massive advantage. The amount of times that our buyers get put to the top of the pile because they’re pre-approved on finance is a huge thing.
It’s not always about money, but the conditions of the sale, the vendor motivation. Maybe they want to rent back. Maybe they want a short or a long settlement. The amount of times it comes down to not necessarily money, but more favorable conditions in the contract.
Kevin: I’ve heard that a few times, too. It’s not always about the amount of money you offer; it’s the conditions that are on the contract.
Shannon: Yes, definitely. Have an ear for that and to make it more presentable for the other side.
Kevin: So, credit ready. What’s the next one?
Shannon: Be prepared to walk away. I think if we get too emotional about a property, then that’s when you’re going to lead to mistakes. It’s no good buying a property and being so excited and so emotional about it that you’ve given the first five years capital growth to the other side.
Always, it’s disappointing, but be prepared to walk away. Often, when you do walk away, that’s when you’ll re engage the other side anyway.
Kevin: I guess it’s the old story, isn’t it, that there’s always another property?
Shannon: Exactly. I think it’s misconceived that the seller has all the power. They want a sale and they want our money, and we have to be prepared to walk away if at all possible.
Kevin: I guess, too, as part of that, you have to show that you’re not too anxious all the time and not responding so quickly, Shannon.
Shannon: There can be, again, that misconception of the seller having all the power, so we’re rushing back and we’re meeting their deadlines. Sometimes push back a little bit. The fact that they’re talking about another offer and things like that, it might be real, it may not be real, so you need to push back a little bit because we have a lot of power as the buyer.
Kevin: So don’t respond to that, but always remember that there is another property if you miss out anyway.
Shannon: Yes, definitely. There are always good opportunities in all sorts of markets. We can’t be too anxious to pounce.
Kevin: I guess the bottom line here, if we were to sum it up in one word, is take the high ground and make sure you stay there in the negotiations.
Shannon: Control what we can control – what we’re doing, not what they’re doing. If we miss out, we miss out. If we walk away, we walk away.
Kevin: Shannon Davis is from Metropole Properties in Brisbane. Shannon, thanks for your time.
Shannon: No worries, Kevin. Any time.