As with any investment, buying a property is about making a profit at the end of the day – and this means that you need to buy it at the best possible price. This can be tricky whether you’re a seasoned property investor or just starting out, so here are some of the best sales and negotiation tactics to use to ensure that you make the right moves.
- Do your homework: There are plenty of factors in play when it comes to determining the value of a house and the only way to get a good idea of how much it’s worth is to take the time to do your own research. First, compare it to similar listings in the area – they won’t be exactly the same as your property, but they will give you a good range to start from. Remember to compare type to type, as homes can range significantly in value whether they are free-standing, in a complex or in an estate. You can move higher or lower in this range depending on what the property you’re interested in has to offer. Remember that these are listing prices, not the prices the property actually sells for, so be sure to balance it with sales trends and automated valuation reports that you can get online. These report the actual sales in the area.
- Don’t show your hand too early: No matter how much you want the property, don’t show your enthusiasm – instead, stay calm, cool and silent about numbers. Instead, try and draw a price out from the agent to see what the seller is willing to settle for. The less the agent and seller knows about how much you’re willing or able to pay, the better. Be patient, let the seller wait a bit and let the agent get back to you – it shows eagerness to sell and puts you in the better position for negotiation.
- Know your budget and the value of your offer: Before you settle on a property, you need to know exactly how much you are willing to spend – from what your bond amount can be to how much you are prepared to spend on improving the property. This will give you a firm line to take during negotiations, as you don’t want to overextend yourself. In addition, the real value of your offer can make negotiations more favourable. For example, a cash offer is always the best possible offer even if it is a bit lower than other offers. Offers subject to home loan approval are good especially if you have pre-approval and a cash deposit ready. Offers on condition of selling a property are usually the least attractive to sellers, even if they are offering more money.
- Put on a little pressure: Once you have everything in place and make your offer, don’t give the seller too much time to make their decision – 48 hours is plenty. Make your conditions clear – that this is your final offer and there is no room to negotiate. Also, consider the psychological effect of your offer itself, as people look on a specific number as more meaningful than others. For example, if you want to offer R499,000, rather offer R500,000 or go lower to R497,000.
With the right sales tactics, you’ll negotiate professionally and powerfully – and get the best value for your growing property portfolio.
Jason Scholtz is the CEO at Envision Investments and a leader in the property and strategic investments industry in South Africa. For more investor tips and an insider’s look into the South African market, be sure to get in touch, keep an eye on this blog or visit http://www.envisioninvestments.co.za/