Negotiation at the Pointy End

The Age. Weekly Review, James Buyer Advocates Young Homebuyer is an 8 part series designed to take young homebuyers through the entire homebuying process from the inside.

This week is the second last. The Pointy End. The Money Part. The .

Are you a good Negotiator?

Why not take the Harvey Norman test?

Before you take on the $800,000 negotiation to buy your home and impress the Missus, let’s see how you perform with an $80 kettle at Harvey Norman.

Walk into the electrical section find an $80 kettle and walk over to the counter and offer $65.

Oh Mal don’t be ridiculous I haven’t the time, its unAustralian, those salespeople at Harvey Norman still have to earn a living.

Mmmmm

Ok try this one. Walk into your boss and ask for a raise. The raise you need to get for the bigger deposit on your home.

Wow that’s a bit more skin in the game than the Harvey Norman test, but its still only a fraction of the $ connected with your home negotiation.

Oh Mal don’t be ridiculous he wouldn’t give me a raise, I can’t afford to lose my job.

Mmmmm

Ok now make an offer on your $million home.

Sure no problem. Anybody can do that. I’m a good negotiator.

Mmmmm

Are you are good Negotiator?

At times I’m not sure I am. In fact I’m a bit like you with the “walk into my boss” test. In our office I’m regarded as the weakest when it comes to negotiating our fee. I actually try and avoid fee talk and I prefer others to our fee.

Yet somehow I’m engaged to act on behalf of a variety of people, including hard-nosed business negotiators, lawyers, stay at home Mums and doctors to buy some of the most expensive and grandest homes in Melbourne and I have been doing this for many years.

Why is that? I’ll tell you after the Top 5 Mistakes I see every week in Melbourne Homebuying Negotiation

  1. Buyers go into a negotiation underprepared – lack of due diligence.
  2. Have little or no idea on long term for them.
  3. Talk too much, listen too little and tell too much. Lack of any understanding as to how the industry works.
  4. Think its all about money – it’s more the plan, the process and the decision.
  5. Feel they know the theories on how to deal, but can’t execute in real life and then panic.

For me a Melbourne Homebuying negotiation is a sincere attempt to reach an agreement in a manner that allows all parties to move forward with outcomes acceptable to all, not just one side.

I negotiate on behalf of others reasonably well in part because I have experience, I know what’s coming and I’m not attached to the result. I honestly don’t mind if you buy the home or not and I don’t stress over what price we offer or what you end up paying. What I care about is that I have taken you through a professional process that allows you to achieve the emotional and financial outcomes you really want to achieve.

I obviously do it reasonably well as last year we bought over a hundred homes with an 84% success rate* but I should say the homes we bought represented less than 1% of the homes we initially assessed.

So how can you negotiate reasonably well?

  1. Understand what it is you want – the PPP and FFF plan (weeks 2 and 3)
  2. Do your Due Diligence (week 4)
  3. Make a Negotiation and Offer plan that includes timing, your targets, opening offer, response to response and then run it past a few trusted people
  4. Get Started – often the hardest part. Lead rather than be led.
  5. Be prepared to give and receive the Wet Fish Slap. You know the commercial for Fisherman’s Friend when the girl walks up and gives the guy a hit had over the head with a huge wet fish. Now that’s my kind of negotiator. To be good at deals you have to accept there will be uncomfortable moments – you have to give them and you have to receive them. Recognize the Wet Fish Slap, consider it, don’t react, only respond and stay on track.
  6. Remember why you are doing this. Don’t get distracted with ego’s. I don’t care who’s the nicest, who’s right and who deserves. I care about what my client really wants within common decency parameters.
  7. Keep Going. Its not over till you’ve bought it or somebody else has.

So how would I negotiate a better deal for our two

Young Apartment Buyer who bought in 2000, an apartment in Docklands at 15 Caravel Lane for for $507,500 and resold it for $576,000 in 2014.

Young Buyer who spent similar money in 2000 on a family home in Celia Street $493,000 and sold again in 2014 for $1,500,000.

If with some brilliant negotiation I could have got the Docklands apartment for $400,000 would it have been a good negotiation?

This is how I would best negotiate Caravel Lane – I wouldn’t.

This is how I’d best negotiate Celia St – I’d make sure I go it.

I might end up paying an extra $10,000 or $20,000 more, but I’d get it because it fitted the buyer’s PPP now and FFF longer term plan. It was a good home for the buyer’s desired financial and emotional outcomes.

And you know what, they’d still be close to $1 million ahead.

 

 

More in The Age, Weekly Review, James Buyer Advocates Young Homebuyer series

Article One: Good Home and Bad Homes – Simply your decision. Glen Iris gain a $million – Southbank lose a $million CLICK HERE

Article Two: Clarity Plan – PPP’s – get the best out of now  CLICK HERE

Article Three: Futureproof your plan FFF’s and put a $million into your pocket – CLICK HERE

Article Four: Due Diligence. Boring but very profitable. Great hourly rate work – CLICK HERE

Article Five: Value Concepts that can work for you – CLICK HERE

Article Six: Practical Valuing – CLICK HERE

Article Seven: Negotiation at the Pointy EndCLICK HERE

Article Eight: Walking the WalkCLICK HERE

* 84% success rate was measured between Jan and Jun 2014 as clients who had bought, who we had bid for in this period.


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