What if I told you that saving £6,200 on a property deal could come down to a single creative negotiation tactic?
Negotiation is often described as an art form, and in property investment, it’s a skill that can make or break a deal. It’s not just about haggling over numbers; it’s about understanding the motivations of the other party, being creative, and finding ways to structure a deal where everyone walks away happy.
Let me share a recent example that perfectly illustrates this.
We came across a property where the vendor was asking for £44,000. After viewing the property and assessing its potential, we decided to put in a cheeky offer of £37,395. Was it low? Absolutely. But in negotiation, you have to start somewhere, and sometimes a bold opening offer can set the tone for the conversation.
As expected, the vendor rejected our offer. No surprises there. But here’s where the art of negotiation comes into play. Instead of walking away or immediately jumping to their asking price, we went back with a revised offer of £39,999. We thought this was a fair middle ground and expected it to be accepted.
But the vendor had a different idea. They were adamant about getting more than £40,000. At this point, it would have been easy to walk away or push harder, but we took a step back and thought creatively. How could we structure the deal to meet their needs while staying within our budget?
The solution? We agreed to pay £39,999 for the property and covered the vendor’s legal fees. This way, the vendor felt they were getting more than £40,000 in value, and we stayed within our financial parameters. It was a win-win.
The Importance of Doing Your Numbers
This deal highlights a critical lesson in property investment: the importance of doing your numbers. Before entering any negotiation, you need to know your limits, your margins, and where you have room to be flexible. In this case, we knew exactly how much we could afford to pay and where we could add value (like covering legal fees) to make the deal work.
Had we simply agreed to pay the £44,000 the vendor initially wanted, it would have cost our investor an additional £6,200. This extra cost would have come not only from the higher purchase price but also from the increased stamp duty. By sticking to our numbers and finding a creative solution, we saved our investor a significant amount while still keeping the vendor happy.
But doing your numbers isn’t just about crunching figures on a spreadsheet. It’s about understanding the full financial picture of a deal. For example:
Stamp Duty: Even small increases in the purchase price can push you into a higher stamp duty bracket, significantly impacting your overall costs.
Renovation Budgets: Knowing your numbers ensures you don’t overpay upfront, leaving enough room for refurbishment costs and unexpected expenses.
Cash Flow: Sticking to your budget protects your cash flow, which is crucial for long-term sustainability in property investment.
By doing your numbers thoroughly, you’re not just protecting your investment—you’re also giving yourself the confidence to negotiate from a position of strength.
Building Trust and Relationships
Another key takeaway from this experience is the importance of building trust and relationships. Property investment is a people business, and the way you handle negotiations can have a lasting impact on your reputation.
In this deal, by structuring a solution that worked for both parties, we not only secured the property but also strengthened our relationship with the agent. Agents remember investors who make their clients happy, and that can lead to more opportunities in the future.
Here’s why building trust matters:
Repeat Business: Happy vendors and agents are more likely to come back to you with future deals.
Referrals: A satisfied agent or vendor will recommend you to others, expanding your network and opening doors to off-market opportunities.
Reputation: In the property world, your reputation is everything. Being known as someone who gets deals done fairly and creatively can set you apart from the competition.
When you approach negotiations with a mindset of collaboration rather than confrontation, you create a reputation as someone who gets deals done. And in property investment, that reputation is priceless.
Final Thoughts
Negotiation is about more than just numbers—it’s about creativity, flexibility, and understanding the other party’s needs. By doing your homework, thinking outside the box, and focusing on win-win outcomes, you can structure deals that benefit everyone involved.
But let’s take this a step further. Negotiation isn’t just a transactional skill; it’s a strategic tool that can help you build a sustainable property investment business.
Here’s how:
Think Long-Term: Every deal is an opportunity to build relationships that can pay dividends in the future.
Be Creative: Sometimes, the best deals come from thinking differently. Whether it’s covering legal fees, offering a quicker completion date, or including furniture, there are countless ways to add value without increasing the price.
Stay Disciplined: It’s easy to get caught up in the excitement of a deal, but sticking to your numbers ensures you don’t overcommit and jeopardise your investment.
So, the next time you’re negotiating a property deal, remember: it’s not just about the price. It’s about finding creative solutions that leave both the buyer and seller smiling. And when you do that, you’re not just closing a deal—you’re building a foundation for long-term success.
Ready to Master the Art of Negotiation?
At KLAP Property Group, we specialise in helping investors navigate the complexities of property deals, from creative negotiations to strategic structuring. Whether you’re a seasoned investor or just starting out, our team is here to ensure you get the best possible outcomes—every time.
Contact KLAP Property Group today and let us help you turn every property deal into a win-win opportunity.
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