It is a higher wish of every individual to own a property one day. As you actualize this valid dream, it is very important to know how to negotiate. I would like to share my experience that I have gained for over 15 years in Business in Kenya, Africa
Have a Shortlist of Properties
It is very vital to have a shortlist of preferred properties. Identify the location, neighborhood, accessibility, amenities, security, Zoning, lease period. Once you are comfortable, Zero in on your options and start to move. It is advisable to select four to five properties and start detailed analysis on them. Get to know who is dealing with the property, who is the broker, agent or the owner. Do not be shy to gather such critical information
Speak to the Agent
Many properties are handled by the agent and you may take time to access the real owner. It is a common practice to deal with the agent. It is advisable to talk to the agent directly. Avoid email at this point. Remember as you talk, you will be able to get a lot of information that you cannot tell by writing an email.
Visit the property with the Agent and ask questions:
- Look at the property and ask, why are they asking for this price? ( The agent may reveal to you more information- it could be that the owner is relocating, developers, or the property is on auction etc )
- How long has the property been in the Market? This will help you negotiate, if the owner has been trying to sell for over 2 years, definitely they will be willing to drop the price for any serious buyer. If the property just hit the market, then chances of price coming down are minimal. Be wise and know how to identify the weak areas and negotiate squarely and without apologies. It’s your money!
- What are the market prices for such property in the area? The agent will give you all the information of that area, Remember you have a shortlist of more properties in the area. He will tell you all what happens in that area. You can prompt him to tell you more about a certain zone, a certain developers, etc. This is great way of gathering the information as you affirm your final investment decision.
- How much would you pay for this property if you were the buyer? Why? This will open up more discussions with the agent. It will also give you more insights on the additional value of the property and you learn much more on the property as you make the final decision.
- What is your bottom rock price for the property? At this moment, you are now familiar with the agent. The agent might surprise you by disclosing the owner and even disclosing the very best price that the owner can accept. I once did this and I saved one million for a property that I was to purchase. Think through before your drop your much awaited offer.
Draw an offer letter
Once you are comfortable with the property. Issue the offer letter and indicate the deposit you are willing to pay, the time period for transaction will take or when you want to finalize the transaction. Indicate your preferred Lawyer to represent you. The offer letter should have the date, addressee, must be signed, and should be time bound.
When you draw an offer, do not speak to the agent again for about 48 hours. Wait for him to come back to you either on acceptance or with a counter offer. Remember this is a game, if you talk to him quickly, it shows that you desperately need that property. This will make you loose on the bargaining game immediately. Be patient! Remember to negotiate on the deposit payable, the terms of agreement, property access rights, closing costs charges and who is to pay what. Let it be very clear.
Ensure that you know which lawyer is transferring & registering the property. Ensure that if the owners/Vendors lawyer is doing it, enquire on the charges and if they are negotiable. It is vital to get the charge sheet to avoid surprises at the end of deal. Be keen!
Sign the sale agreement with deposit payment on execution
It is important to read the agreement before signing. Look at termination clauses, penalties, warranties among other key issues in the sale agreement. Look at the names of the vendor and compare if the same names are the same in the title deed or lease. Pay the owner & not Agent. Be wise!