Negotiation Skills tips for House Buyers

The Irish Property Bubble (2006) Sell, Buy or Rent?
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What has struck me in my limited experience in buying houses - most buyers are exactly like me - very little experience at negotiations, very emotionally involved in the purchase etc. We go in and expect to able to do deals with skilled negotiators (i.e. EAs). It’s like sending a child to fight an adult. I know some EAs are better than others but in the majority of cases they can run rings around us in terms of yanking your chains, pushing your buttons etc to get a few more quid out of you. What about putting together some sort of tipsheet/document for house buyers with some basic negotiating tips (we’ll have plenty of time to learn them while waiting for the bottom :smiley: ). In spite of it being a Buyer’s market there is still a lot more to doing a deal than ‘Here’s my really low offer, take or leave you’re a feckin’ eejit if you don’t’. Buyers are constantly asking for real negotiation advice on the likes of here and AAM and to be honest they don’t get much practical usuable tips.
I’m still house hunting myself, the last deal fell through due to sellers pulling out - but I was surprised to find that the negotiations I went through with estate agent matched exactly a scenario I had read on a US negotiations tips website.

Here’s the sort of tips I mean:

Be willing to negotiate in the first place
Some people are too shy to talk about money. Others think it’s rude or demeaning. And in many cases they’re right. However, when it comes to doing a deal - and we all have to sometimes - being unwilling to engage in “money-talk” can be a very expensive business.

There are a lot of experienced negotiators out there. If you’re buying a house or a car, or taking a new job, you can be sure you’ll have to deal with such a person. If they can see you’re timid about the whole business, many will take advantage of that fact.

Don’t get emotionally involved
One big mistake many amateur negotiators make is to become too emotionally attached to winning. They shout, threaten and demand to get their way. This is all counter-productive.

Most deals are only possible if both people feel they’re getting something out of it. If the person across the table feels attacked, or doesn’t like you, they probably won’t back down. Many people hate bullies, and will be more willing to walk away from a transaction if it involves one.

Keep calm, patient and friendly, even if the other person starts losing their cool. Make sure you leave any pride or ego at the door. You’re much more likely to do well that way.

Let them believe the final decision doesn’t rest with you
Once a negotiation starts, most people want to get it over with as quickly as possible. Don’t let your impatience beat you. One great way of doing this is to let them believe the person they’re negotiating with isn’t actually you, but some other “authority figure”. Eg. Your husband or The Mrs, whoever.

Say something like “Well, I’ll have to talk it over with my spouse / partner /accountant before I can come back to you”.
This is also a great strategy for preventing people rushing you.

Also never run the house down with negative comments or pointing out the bad points in an effort to back up your low offer, you will only annoy the EA. The EA cannot use that sort of info to get the seller to drop the price. Agree it’s a great property with great potential but that the money is the issue not the house.

We could also present some expected scenarios and how to deal with them. Eg.

Offer less than you expect to pay. Have a final figure in your head which is your true walkaway figure.
Stage 1: Outrage by EA at first offer.
Expect the estate agent to be horrified at your first offer. They will tell you the seller won’t take it. State calmly that’s your offer and to let you know in due course.
Soon the estate agent may come back to you and tell you the offer is most definitely refused. Don’t do anything. Give it a couple of weeks.
Or the estate agent may come back with a few quid knocked off the asking price but not much. Then you know they are prepared to negotiate…
And so forth…

Does this sound like a good idea?

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If you’re not embarassed by your offer, then you’ve offered too much!

Sounds trite, but the point is that people need to get over their embarassment/inhibition about bargaining. You don’t need to even consider the sellers price expectation, they’re not the ones paying the price, the buyer is! If a massive gap exists between the two, then simply shake hands with the EA and thank him for his time. If the market deteriorates, they’re more likely to want to bring you back into the bidding if they didn’t think you were a smug git the first time round.

3

Go on Daft and look at the map view:
[*Dublin * (Property for Sale in Ireland | Daft.ie) as an example.
Zoom in.
Now that one in a lifetime opportunity - not so once in a lifetime is it?

**Disassociate from the deal **and see the market for what it is.
That’s what any good EA does.
Meet them on a level playing field.

Now if we could do the same for actual sales prices then you could go in to battle well armed.
For the moment (and for the foreseeable future) assume 50% below asking price as your starting point.
Anything else is a bonus to the EA.

4

This is basic negotiation skill. You NEVER start out with your desired outcome. You need to give your counterparty some room to manoevre.

If you want to pay 300, start at 270 etc. Same goes for salary negotiations, ask for 10% more than you would be happy to settle for and then let them beat you down to what you actually want.

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latimes.com/classified/reale … y?coll=la-

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“Getting to Yes” by Fishcher Ury and Patton forms the basis of every negotitation skills course I have ever attended

Worth reading.

My main tip for negotiating is this - people are afraid to make first offer/first move because they think it looks weak. it doesn’t. by making first offer you are taking control and set the basis for the negotiation.

finally never make it a single issue negotiation i.e. price. bring something else into it like contents or when they can close

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Yeah but only 72,000+ according to my daft search this morning 8)

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Definitely worth reading; worth noting however that the issue of making a first offer is a contentious issue among negotiation theorists (IIRC). For example, in The Art and Science of Negotiation by Harvard professor Howard Raiffa (a great read if you don’t mind the mathematics), he makes the point that usually the end price (if there is one) ends up around the midpoint of the first offer and the first counteroffer. That sounds logical of course, and is based on the fact that when you’re negotiating you want the other person to move every time you move, or else you feel you’re not getting a good deal. BUT it does mean that the person not making the first offer actually holds more power in setting the final price.

Just some food for thought.

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Would the “asking price” from the vendor not serve as an initial offer?

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Yes I would think so. Think Tyler was talking also about making offers for sites, etc.

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Yes, buyers have fallen into the trap of letting the vendor’s initial offer be the starting point. When buyers were insecure, we bid up from that and now we’re unsure how far below this to bid. Even when it is obviously a buyer’s market, the seller holds onto this “first bid” advantage unless…

Buyers start a “reverse dutch auction” (used in priceline.com and by the U.S. TARP bailout) Here’s how it works:

An individual buyer says, “I’m willing to pay up to 275,000 for a 3-4br semi in south Dublin. Who can give me the best house for my money?” Then sit back. If no suitable house exists in the 1,819 listings in S. Dublin, just wait (time is definitely on the buyers side.) Eventually you’ll find a realistic seller or one who is forced to sell.

I hate to tip my hand, but if things don’t work out with my current employment (likely enough for anyone in this day), I might attempt to replicate some of daft’s success with a whowantstosell2me.com. The optimist in me thinks this could uncork the Irish housing market within days. The pessimist in me wonders if anyone raised on this island during the boom years can ever be taught the shape of the right side of the supply/demand curve.

Incidentally, my example wasn’t entirely theoretical, find me good a 3-4br semi in better near north commuter villages (Portmarnock, Howth, Donabate, Malahide, Skerries)… and I’ll raise an eyebrow, if not 275k. The market isn’t stuck, the sellers only need to bend to the new reality.

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I am looking at houses where I live and one in particular is priced at 520k I am 17 miles from Dublin and patiently explained to the EA that for this I can now buy a 4 bed in Castleknock, Leopardstown, stillorgan, Rathfarnham, Malahide, South Circular Road, Homefarm Road, Fairview, North Strand etc… The EA told me that “we” aren’t competing with these areas.

The EA said to me that his sellers will not reduce their prices because they do not have to.
Not only do they not have to reduce their prices, they are in no great hurry to sell and therefore can “wait it out”. Those who can’t wait it out are renting out these homes and have no problems doing this as rents are rising?

I really think that sellers and EA’s are under the impression that on January 1st 2009 that it will be business as usual and that this was a “glitch”…

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Snap. Except I was going to call it buyersmarket.ie.

Care to collaborate?

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I really do believe that Jan 1 is a big psychological barrier for people; they’re just trying to get through xmas now. There is not as much stuff coming onto the market as I expected, and I think you’re right that people are trying to “wait it out”. Hopefully come January, when nothing has magically changed, sellers will get a bit more realistic.

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Yes, I think this would make a good team effort. And your name is much batter than what I came up with on the spur of the moment. But then, who’d have thought that daft would be such an appropriate name for an Irish property website?

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seeing as ireland has a mostly hostile climate, viewing a potential house you fancy on a really crappy day when it’s really wet and damp will help you rule it out if its too dark and dreary inside.

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I think also that a lot of people will take their properties off the market when they realise that this might last a little longer. Meaning I suppose that only those who need to sell will remain.

18

Good point. OTOH, if rents continue to drop, more and more people may need to sell if they can’t cover the mortgage by renting (which means pretty much everyone who bought in the last few years I would imagine?).

By the way, what happens to properties that banks seize? Are we likely to see them coming on the market, or do they get rented back to the former owner?

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Won’t the banks force them to sell at any price? Or if they seize them then won’t they have to sell them to realise some of the money back?
Either way I think that properties that remain on the market into the new year are properties that have to be sold - regardless of whose selling them.

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regarding the selltome buyersmarket idea, there must be something in the air, I was just wondering if I should put an ad up the the areas I’m interested in stating my max spend for a three bed with a decent garden. Must be a zietgeist thing