Negotiation is an art which you need to master upon because it helps in investing in the right deal without wasting money. When it comes to property dealing, negotiation is an important part which shouldn't be left out. Some people are born negotiators and know how to get the deal under perfect price, without fetching out much. A real negotiation is a crisp and logical dialogue between buyers and seller, which would profit both once the deal is struck. If you are confusing yourself between bargaining and negotiating, then you need to get things right. Property negotiation is not a bargaining which you want to save few bucks. It involves large investment and strategy which accounts for negotiation.
If you are planning to buy a new property and looking forward to having some negotiation session with the seller, then below are some points to consider for negotiating property deals:
1. Do Homework before Embarking
Before your venture into the course of negotiation with the seller for a property deal, do some homework about the property, real estate trend, price and other details. Look at the Pros and Cons of the property before Investing. Property investment is the big step you are taking, so you need to be perfect in all areas and then head for the negotiation purpose. If the project is new, the builder will make things look comfortable and strike a deal which will be beneficial for both. However, you shouldn't expect a major price reduction.
2. Understand the Market Dynamics
This is an important point to remember when it comes to negotiation. It is to find out whether it’s a buyer's market or seller's market. In buyer’s market, Sellers are more & buyers are less whereas in a seller’s market, buyers are more & sellers are less. For instance, if you are investing in a property in Mumbai, then it is a seller market, whereas Pune, Hyderabad and Bangalore are buyer's market. In a seller’s market, the probability of negotiating property deals is negligible whereas in a buyer’s market you can get good rates from the sellers. So you need to negotiate according to the market condition and get the investment done rightly.
3. Opening the Buying Price
No developers will entertain the buyer if the starting negotiation prices are unrealistically low compared to the original market price. In an average, 5-10% lower price is accepted in buying price. The beginning of negotiation part should clearly convey that you are genuinely interested in buying the price and closing the deal quickly. Position yourself as a serious buyer and discuss by showcasing as you have all the information. Proper evaluation of the property and the real market condition is important.
4. Studying the Seller's Mind
If there is no urgency from sellers end to close the deal then forget about any negotiation. Before entering into the negotiation part, you need to first study the mind of the seller to get the right deal. Get clear ideas of the dealers selling method and the property. Also, enquire about the unsold inventories with the builder. This will give an idea of whether the seller or developer is worth to deal with. Having a pre-knowledge about the developer or seller will help in establishing a good rapport and get the best deal.
5. Finding the Reason for Sale
During the negotiation process, find the reason for the sale of the property. Is it due to the weakening of the economy, high selling price or any other reason? Many times, property owners find hard to pay the EMI or loan at the right time. This is when they end up selling the property at a lower price. If the property has a good value for future, then buying the property is certainly a good investment you can do.
6. Payment terms
If you have some idle cash lying or you have pre-sanctioned Home Loan then you can process the payment faster. It gives you leverage to negotiate property deals as sellers prefer buyers who can process payment immediately. Assuming 2 parties approach the seller to close the deal. The 1st party promises to pay a payment of 50 Lakhs within 3 months and 2nd party promises to pay 48 Lakhs in 15 days time. In all probability, the seller will decide to go ahead with the 2nd party.
7. Ask for Extras
During the negotiation period, if you find that seller isn't in the mood to bring down the price, then do ask for extras. There are situations like the buyer has to spend extra on maintenance or repair of the property. To overcome the situation, you need to be creative in asking for favours. You can ask if the owner is ready to contribute to repairs and/or maintenance free homes for 1 year.
8. Encash the FREE services of Authorized Channel Partner (CP)
The job of the authorized Channel Partner (CP) is to get the best deal and benefit for both the parties. A Channel Partner is equipped with good negotiation skills and will negotiate as per the market condition and developer/seller status. The CP does the living by negotiation and speaks the language of seller and buyer. So let the CP do his job and you stay satisfied with the end result of the deal. Since authorized CP's provide bulk sales to developer hence the chances of getting good negotiation is more possible than approaching a developer directly. The best part is all services provided by the CP in primary sales (New Sale) is FREE of cost for the buyers. However, you also need to be prepared to pay brokerage for the success of the deal in case of secondary sales (Resale).
9. Always find the Flaws
No property is perfect, finding a flaw is the best way of negotiating with the seller. Once you have decided the property, then you are also agreeing to limitations that will certainly help in bringing the rate down. The connectivity, amenities, specifications and space are some of the areas where you can find flaws, just to bring down the price of the property.
Once you have decided these factors, you can go ahead and start the negotiation part to seal the deal. You may have a certain price in your mind, but it is up to you whether you are willing to pay the said price. Upgrade your negotiation skills and go ahead confidently to get the best deal.