Whenever I address a group, meet a client or speak on stage, there are two popular questions I am asked.
Blogger: Cate Bakos, director, Cate Bakos Property
The first question I'm asked is “where should I buy?” My response to this question is usually long because I give specific and tailored advice to every client; and no client’s property journey is ever the same as another.
The second question I usually get is around negotiation advice. It is such a vital part to the property buying process that I actually offer a mentoring and education service to clients who wish to become stronger negotiators.
Negotiation is a science, and becoming a strong negotiator is not a skill that can be developed without years of practice and experience. Having sixteen years of property negotiating experience, a science degree and a sales based career has equipped me to operate and negotiate across different platforms, with different people and personality styles to achieve some really exciting outcomes over the years.
Careful research and high level communications are always paramount to commencing a good negotiation. Patience, clear thinking and confidence all combine to support a great result. However, there are some fundamental principles and tips that can get a budding negotiator on the right track.
I recall the early days of my sales career; I took on a sales role with a large Australian manufacturer and despite a science background, I had an interest in working with people and going into sales. My new boss saw potential in his young recruit and gave me some advice. I had a looming holiday planned and he saw an opportunity for me.
“When you go to Bali, pay attention to the locals who are selling you watches, carvings, hats etc. They are masters at the negotiation process and it will take some effort to learn the prices, margins and tactics required to get a good deal from them. These people are selling for a living, day-in, day-out.” He was right—the Balinese (like many locals at south-east Asian holiday hotspots) were incredible. They could watch body language, pick up on cues, make quick decisions to close a deal or continue negotiating, and most importantly they could get an outstanding result without the wary tourist being any the wiser as to what kind of premium they’d paid.
Not that I’m drawing any parallels between Armani knockoff watches and Australian property, but the point is that years of practise and vast numbers of transactions in one’s own micro industry refines negotiation skills.
There are four key principles that I have adopted with all negotiations for purchases.
Firstly, I make sure I know my market. There is little point embarking on a negotiation if I don’t know what a competitive price result would be. This takes hours of research; usually involving recent comparable sales analysis, familiarisation with the current market, an understanding of the drivers in that market and an overview of the socio-demographic nature of the area.
Secondly—I like to understand the agent’s communication style and personality. This is essential to ensuring a good negotiation because it is much harder to negotiate with a stranger.
Third – is to understand the sale itself. This is probably the most difficult part for any purchaser because the agent has a job to do; and it is to secure the best possible result for their vendor. Buyers often say to me “the agent isn’t telling us anything”, or “they are keeping their cards close to their chest”. They are trained to do this, so it should be of little surprise. But with careful observation, a good flow of communication, understanding what to ask, how to ask it and when to ask it, a clever negotiator can ascertain some really important information that can enable them to commence a sharp negotiation. For example, when I ask a keen buyer “Can you tell me what terms the vendor would prefer?” the answer is often “I don’t know”, or “the agent said sixty or ninety”. A good negotiator will find out whether the vendor has bought and needs to sell, or is selling first, or wants a quick result, etc. There are important cues that most buyers miss when speaking to the agent. One of the biggest mistakes I see people make is avoiding communication with the agent altogether. How can you learn about the sale if you won’t talk to the only conduit between the buyer and the seller—the agent?
The final principle is the easiest one - understanding your top-end price. This step involves the least amount of science of all of my steps; it just requires a good Finance Planner/broker who understands your personal cashflow. Once you have determined your top end price, stick to it.
One final word—try to enjoy the adventure and all of the learnings that go with the excitement and adrenaline rush. If you need mentoring or assistance don’t be afraid to source it.