Negotiating is ingrained in the Indian culture. Everyone expects to bargain and is not surprised or insulted when this happens. However, when acquiring property in prime central London, it is likely that the seller is not used to your style of negotiation. Here are some basic guidelines that will improve your chances of a successful negotiation.
Establish your ‘walk away terms’: What is the maximum you will pay? What timescales will be acceptable both for exchange and completion? What items will you want included in the sale for that price? What are the payment terms? If you do not have a target for your negotiation, you are almost certain to fail.
Gather all relevant information: Why are they selling? How long has the property been on the market? How many viewings have there been? How many offers have they had? How strong is the market? What time pressure are they under? What will motivate them to sell other than price (which is often not the overriding factor)? How does the property compare to other similar properties on the market/that have sold recently? What nationality are the owners? How old are they? What is their profession/business? How might this affect their negotiation style?
Always play the reluctant buyer: The negotiation starts as soon as you speak to an estate agent. Therefore, you should never be overly enthusiastic. If you really like a property, show interest, but also point out potential negatives by saying, for example, “It’s nice but I don’t like the way the bedrooms are configured. I also think the price is too high. I would probably consider it at the right price. What do they realistically want for it?” Remember, the estate agent really just wants the deal so he may tell you the actual figure as far as he knows. Consequently, you may be able to achieve even less than the figure he gives you. Simply remain neutral and point out some of the issues that ‘concern’ you even if you really like the property.
Ask for more than you can get: You can do this by putting in a low offer. However, this must be a figure that you can vaguely justify. If not, the seller and agent will assume that you are a time-waster. However, you should also ask for extra items to be included, for example, the Ferrari, the furniture and the artwork. Even if you do not want these, you can use them as bargaining chips later.
Raise your offer by ever decreasing increments: Each offer should be carefully planned. If the asking price is £4 million and your target price is £3.5 million and your initial offer is £3 million, you may want to increase your bids to £3.2 million, £3.3 million, £3.375 million, etc. You can also improve your offer by offering better timescales or dropping the Ferrari rather than increasing your offer price.
Avoid ultimatums: You must consider the egos and personalities involved. Generally, an ultimatum will be construed as confrontational. Instead of saying “this is my final offer—take it or leave it”, a much subtler way would be to say: “Unfortunately, this is the maximum I can offer you for the house. You just need to decide whether it works for you or not.” The message is clear: We can’t offer any more. The fact that it is apologetic is the key. This gives the other side the illusion that they have won by extracting your very last penny.
‘Lose’ the negotiation: You are far more likely to succeed if you let the other side think they have won even when you have achieved the terms you want. This is also important as the agreement is not legally binding until contracts are exchanged, so they will be less likely to renege than if they thought you had got the better of them.
Jeremy McGivern is the head of Mercury Homesearch