9 Tips to Negotiate A Good Deal
Negotiation is a conversation intended to strike a mutually beneficial deal. For example, the purpose of negotiation between a real estate developer and a homebuyer is to arrive at a mutually beneficial deal. A homebuyer want the best possible house within his budget and a real estate developer wants to make as high a profit as possible. Real estate developers offer discounts and other benefits to make the deal as acceptable as possible for the homebuyer.
Negotiation is an art, and every buyer should learn how to negotiate better. Through practice, everybody can learn the art of negotiation.
Follow these nine tips to get the best possible deal while negotiating with sellers.
Before negotiating, do a detailed study
Study the project in which you would like to buy a home. Look at the current price of the property and the launch price of comparable properties in the market. How does the project compare to other projects in the market? What are its strengths and weaknesses? How good is the reputation of the builder?
Be a rational negotiator
While negotiating, be rational. Negotiating with a real estate developer is very different from bargaining with a grocer. It is one of the largest investment of your life, and you should never lose sight of this fact. You should have a well-thought out strategy, especially if you are a first time homebuyer. On the other side, there is a very experienced negotiator. For both parties, there should be enough room for choosing with alternate plans.
Is the project worth negotiating?
Homebuyers should study the project really well before they even think of negotiating with the developer. You should study every aspect of the property. You should also study the prevailing market conditions, the credibility of the developer, the condition of the property, and the pros and cons of investing in the project. You should negotiate less if it is a new project, because there are many prospective buyers. You may not be able to strike a deal which is in your favour.
Negotiate more on older projects
There is more room for negotiating, if it is an older project. In the market, there are many projects, which have been remaining idle for long. This gives you strong reasons to negotiate. It also makes sense to negotiate harder if the developer is in poor financial state, and plans to liquidate his investment.
Does negotiation really get you the best deal?
Undoubtedly, negotiation has its advantages. There are external factors that influence whether you get the best possible deal or not. In a developer's market, there are fewer sellers and more buyers. So, the odds of getting heavy discounts are low. In a buyers' market, there are many properties and not many buyers. So, the possibility of getting major discounts and attractive deals from the developers is quite high. So, learn before you leap.
No developer will react well if the buyer starts negotiating by quoting an unrealistically low price. It is good to quote a price that is 15 per cent lower than the quoted selling price, because this is usually seen as acceptable. Whether you should quote a higher price, and by how much will be strongly influenced by your initial research. However, when you start out, make it very clear that you are sincerely interested in clinching the deal.
Know what to avoid
Homebuyers should never speak about the project in a derogatory tone, and should avoid bringing out up shortcomings of the project while negotiating. You should focus on the positive aspects of the project, and know how to present yourself as a serious customer.
Know when to stop
When the price nears your budget, it is time for you to stop negotiating. It does not matter if that does not match the price you would have ideally preferred. Do not forget that the developer may offer additional benefits that are not available in publicly traded apartments. This can add value to the deal. Do not stretch the negotiation process more than necessary.
Always gauge the developer's willingness to negotiate
You may ready for a healthy negotiation, but it is possible that your developer may not. With the help of your broker, get a clear picture of the financial status of the developer. Find out more about the unsold inventories with the developer. Visit the developer's website and study the listed prices. Compare the prices with prices listed in other real estate websites and see how much prices have fluctuated over time. This will help you establish beforehand whether the developer is doing a distress sale of the property.