Yet More Bad Advice: The Common Negotiation Tips People Give That Are Just Plain Wrong

Earlier this week we shared some well-meaning but poor-quality negotiating advice that we’d found on property community pages. The property community in Australia is a friendly one, and people want to help one another out. Those that have successfully bought or sold a property often feel like they have some expertise to share too.

The only problem is that it’s often very poor advice and can cost people opportunities. Today we’re sharing some more examples of common bad advice that we’ve seen recently.

1) ? ? The first to talk about price has lost

This is a very common saying, and while it can be true in very specific circumstances, most people that take this approach are doing so without the right context and subsequently get it wrong. Price is often the elephant in the room, and rather than avoid it, we generally see better value in confronting it, raising it, and addressing it directly.?

We want to know why they have priced the property at that level, why the vendor thinks their home is worth that amount, and what the comparable data is (and, if there’s a difference, what accounts for that). And then we pull the pricing apart if required.?

The only circumstance where we have seen “first to talk has lost” to be true is when we’ve asked the agent “what buys the property?” When we ask that question, it then becomes important to hold and wait for a price to be mentioned.

2) ? ? Time is on your side?

This one is flat-out wrong. Time is not your friend during negotiations. If you allow the seller time or give other buyers a window, you then face unnecessary competition against you, or a red-hot prospect might get cold feet.

There are times when we’ll be strategic. For example, we might make an offer that is well below what an owner may want based on our research, however, they will take longer in the decision-making because of this. We do that as they might need to see more of the market to adjust to our level, but this is the minority of deals we do, and it is only ever applied very strategically.

3) ? ? Don't get into competition with others?

This advice is impractical, for the simple fact that the best properties are going to be the most sought after (and indeed if there is no competition you should be very wary indeed)!

What’s important is that you get comfortable with competition, and skill yourself up on the strategies and tools at your disposal to deploy quickly to outwit and out-maneuver other buyer competition. It is important to avoid getting emotional about the process (and often competition creates emotion, which we think is where this advice stems from).

Of course, it is true that you want to minimise competition by building a pre/off-market buying strategy, as this is the smartest way to buy a property and remove the risk of competing with emotional end users. However, if you do end up competing for a property, don’t let that rattle you. Be prepared for it.

4) ? ? Stick to your strategy, there is always another property.?

It is true that you need to have tough skin and be in the search for the long haul. The number of people that are able to secure the first property they find that meets their needs are small indeed in any market.

However, this piece of “advice” is defeatist talk. If you are truly fighting for a property you want, then don’t simply give up! Don’t get emotional, but do get creative, and come up with an alternative solution to improving your chances of securing the home. It happens to us all. As we negotiate every day, time after time, we are faced with a situation whereby our initial strategy didn’t work for various reasons. That is when we recalibrate, calmly review the position then develop alternative paths to get the job done at the lowest price.

5) ? ? Odd numbers are better than whole rounded numbers?

This is only true when negotiating via EOI (expression of interest) campaigns. It’s a tactic that you deploy because most buyers tend to offer round numbers such as $500,000, $505,000, $510,000, or $520,000. Adding $1 or $101 for example may just win you a property while you are effectively offering the same amount.

However, at an auction, or through standard private treaty negotiations, this very rarely makes any difference unless any buyer you may be competing with can't pay more than you, the same would be true whatever the number looked like if it were higher than their budget allowed. The truth is that in these circumstances the number is all that matters. Not whether it is odd or even.

We could go on and find endless examples of the kind of bad advice out there that can cost you a dream property. Negotiation is such a critical step in the process that you can’t cut corners and do things by halves here. Find an expert in property negotiation to support you through the process, and not only will you get proven good advice and strategic input, but you’ll save money in the process too.