How to master the art of negotiation

Keeping these points in mind will help you execute a smooth negotiation process with the seller.

The dictionary definition of negotiation is ‘a dialogue between two or more people or parties with the intention of reaching a beneficial outcome’. When applied to real estate, it would be ‘a dialogue between a buyer and a seller with regards to a property intended to benefit both when a deal is struck’. The buyer should be able to buy his house within his budget or at the best possible price, while the seller builder should be able to earn a decent profit on selling his product even after giving discounts and other benefits to the buyer.

Rational negotiation or senseless haggling?

There is serious negotiation and there is senseless haggling. Bargaining with a grocer for a discount of few rupees is very different from negotiating for a property. The latter involves a large investment grade asset and requires a carefully thought-out strategy which accounts for the abilities of a seasoned veteran negotiator on the other side of the table. There also needs to be sufficient acceptance room for alternate results to the discussion.

When to negotiate and when not to

Before embarking on the course of serious negotiation with a real estate seller, a buyer needs to do thorough homework. This would include a background check of the builder seller, the prevailing market conditions, the pros and cons of one’s own budget and the qualities and condition of the property one intends to buy. If it is a new project, the builder is likely to be comfortable with his prospect of striking a good deal on the units, as there are many potential buyers in the fray. In such a case, one can negotiate but not by much, and the price reduction may not completely be to one’s expectations.

The best deal

Negotiation has definite merits but a lot depends on the external factors. The most defining factor is whether it is a buyer’s or a seller’s market. In a seller’s market, there are fewer sellers and more buyers, so the chances of getting hefty discounts are minimal. In a buyers’ market, there are fewer buyers, so the probability of extracting major discounts and attractive deals from the developers active there is high.

How to negotiate

There is a science behind the art of negotiation, which can only be perfected after practicing it a few times. Let’s have a look at the basic procedure of negotiation:

Research: Do diligent research about the project. The launch price, current market price of the property along with prices of contemporary properties in the market should be looked into.

Opening Gambit: It is important to know that no developer will react favourably if one starts negotiating by quoting an unrealistically low price compared to the offered price. An average accept able figure is 15 percent lower than the quoted selling price.

What To Avoid: Never put down the property or point out its flaws while negotiating. Rather than focussing on any negative news or shortcomings of the project, focus on the positive aspects and how you can be a serious customer for the builder.

When To Stop Negotiating: Once a price which is close to one’s budget is arrived at, one should stop bargaining. Even if the final price arrived at is not the one which one has in mind, the builder may offer additional benefits not available in the public offer which can add very good value to the deal.

Before entering negotiation, study whether the builder seller is willing to bargain at all. Get a clear picture of his financial situation with the help of informed consultants and brokers. A brokers’ job is to get the best deal not only for the buyers or sellers, but for the sake of their own commissions and repeat business.

Ashwinder Raj Singh – CEO residential services, JLL India

Source: Times Property, The Times of India, Chennai