How to negotiate a better price of real estate
This article describes the tactics in negotiating the price of real estate, both from the position of the buyer who wants the lowest possible price and from the position of the seller who wants the exact opposite, that is the highest possible price. The price is therefore the most common subject of negotiations between the parties and also the reason why the seller and the buyer don´t finally reach an agreement.
When it makes sense to negotiate
There are cases, and not few, when negotiating the price isn´t suitable. Everything has its value. The seller was able to realistically value their offer at the current market value and then they shouldn´t discount it because it´s only a question of the foreseeable future when a buyer appears who will accept the price offered. All you have to do is to take your time. Likewise, the person interested shouldn´t try to make an offer in such a case because the probability of a discount is minimal and, on the contrary, lowering the offer may create a bad image in the eyes of the seller and the opportunity to buy could be lost. I would add that it isn´t so important whether we buy the property at the lowest possible price because real estate prices have been rising for a long time and it´s therefore a good investment. It is much more important whether the property meets personal needs. I should mention that the condition for a safe purchase is that we have finances to buy the property, either our own resources or a mortgage which we´ll be able to repay under all circumstances. If this isn´t the case, buying a property is rather risky. To decide whether it makes sense to negotiate, it´s therefore necessary to know the real market prices in the given location. We´ll be able to do this after some time of observing the offers on advertising portals but what I´d recommend more is using online sources of sales prices such as www.cenovamapa.org, www.cenovamapa.cz or www.cemap.cz which contain data from purchase contracts recorded in the cadastre, it´s therefore a completely relevant source of information for comparison.
How to create an environment for price negotiations
Starting with the very first contact, it is necessary to begin working on great atmosphere and a good rapport. Until we have a warm relationship with the other party, it´s not possible to successfully conduct any complex negotiations. So be pleasant, smile and be attentive. Before you start to show the property as a seller or before you start viewing the property as a buyer, it´s necessary you´ve created as good relation as possible and you will keep on with it consistently during all the communication that follows.
To reach an agreement, it is necessary to know the other party
The next step in increasing the probability of an agreement is to get as much information as possible about the other party. This information will help you understand what they need. When you know the needs of the other party, you´ll be able to help. Let’s have a look at an example: If you are a buyer and you know that the seller needs to sell their apartment because they need money to complete the construction of their house and that after the sale they´ll have to rent a place for 6 months to wait for when the construction is finished, your offer might include taking over the property in 6 months after the sale so that the seller can move straight into the new house. If you are a seller and you know that the buyer wants to buy an apartment in this location because there´s a school where they want their children to go after the holidays, the school is highly sought-after and only accepts pupils who live in the location, you can offer to provide permanent residence even before the property is transferred and the buyer will be able to enrol their children easily. The more information you know about the other party, the more needs you can satisfy and the better price you can agree on finally.
Negotiate!
Most sellers and buyers don´t negotiate. A tour takes place and this is usually the last contact they have. If you want to sell the property, you must be able to say „All right, are you buying?“ at the end of the tour and listen to the reaction and then work on an agreement if there is any meaningful space for it. It´s when the seller can use the information about the needs of the person interested to increase the negotiated price, repeat all the benefits of the property that are important to the other party and improve the offer with some benefits for them only, such as earlier handover, longer reservation, including the furnishings in the price etc. You´ll know the other party well which means you´ll know what they´d like to hear and what will simplify their purchase.
If you want to buy a property, you must be able to say „we want to buy, but“ and then agree with the seller on the price that makes sense to you as a buyer. There are basically two tactics for reducing the price. The first one is a quote where you expect to meet in the middle. Let´s say the offered price is 2 million CZK. You want to buy for 1.8 million CZK, so you offer 1.6 million CZK and add all the possible benefits for the seller that they´ll perceive as simplification of the sale. You don’t have to succeed immediately, sometimes negotiations take weeks and the seller is gradually getting closer to an agreement with you. So keep in touch all the time. The second tactic is gradual reduction of the price which is particularly suitable when the offered price deviates quite a lot from the current market level. I describe the detailed procedure in the last third of this article.