10 Powerful Tips To Get Your Property Deal Accepted

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    property-deal

    This post is going to give you insights into what you need to negotiate a property deal like a pro by asking the right questions and securing the deal to grow your portfolio.

    We have used exactly these questions and use them even today to close our property deals and as a reference, we have been able to close about 12 deals in 14 months to be precise.

    Let’s dive right in:

    I have recently published a post on how to find below market value properties to add to your property deal database.

    This is going to be an extension or the next step…

    I.e.

    To negotiate the property deals that are in your database once you make an offer on them.

    Understanding The Market Sentiment

    You will have to understand the market sentiment. Is this a buzzing market when it comes to sales or not.

    Your offer price may not be what the landlord or the estate agent is expecting most of the time.

    However, that is exactly what makes it essential for you to do the research and find if it is a buzzing market or not for sales.

    You will have to equip yourself with facts so the facts can be put forward in a constructive feedback when the prices of houses needing modernisation are hyped up to market prices.

    Be aware:

    The same market that you understood to be buzzing on houses for sale can have a period of inactivity within no time.

    So:

    You will have to do this analysis on a regular basis and adjust your message or facts in accordance to the estate agents.

    Play The Long Game For Your Property Deal

    While the whole market is after below market value (BMV) property deals, go after those which are non BMV properties but potential deals and offer on those.

    It’s quite natural that market sentiment drives landlords and estate agents as well to hike up the house prices in a buoyant market.

    However:

    When the hype dies down and the property is not sold, reality kicks in.

    House prices will be lowered. It is at this point that an investor considers this property as BMV.

    What if:

    What if you already placed an offer on this property before, when it was not a below market value property?

    You will be the first person whom landlord has access to as the closest offer and most likely to get your offer accepted.

    Deferring the negotiation works a charm and hence why we say, the money is in the chase up of offers when it comes to property investment.

    Here is the fact:

    Below the market value property deals are not driven just by price, instead they are driven by landlords current situation at any given point.

    The current house prices are replication of this scenario and one who can play the long game is the one who wins.

    No Nonsense Approach

    Build the confidence within the estate agent by showing the seriousness of your intent to buy the property.

    Have your end of bargain ready should the agent or the landlord make a move and most importantly, communicate that readiness explicitly.

    Get below documentation to the agent as soon as you can or with the offer, should they need it.

    • Mortgage Decision In Principle
    • Proof of Funds (for deposit)
    • Proof of Identity
    • Proof of Address
    • Solicitor Details

    At the end of the day, sellers love to interact with buyers who are serious and can complete the deal quickly for them.

    The question then becomes how ready are you to buy the property and how effectively have you communicated this to the estate agent or the landlord.

    Must Read: Property Investment For Starters (How to invest in property)

    EPC Certificate Review

    There have been considerable regulatory changes within the energy compliance in the recent past and it’s easy for investors to miss looking at the certificate for the property they wish to buy.

    We have recently had an offer accepted for a property and retrospectively, when we looked at the EPC certificate, we realised it needs full electrics and hence higher refurb costs.

    This enabled us to go back to the landlord and re-negotiate the property deal given the extra refurbishment that was required to fix the energy compliance issues.

    Tenant safety and housing regulations are two areas where one cannot compromise irrespective of being a buyer or a seller.

    Property To Sell

    One question you always hear from agents is “Do you have a property to sell?”.

    Predictable response as an investor is always “No. We don’t”.

    But, here is the deal:

    Consider a case where you have a property in your portfolio that isn’t performing as well as you expected when it comes to monthly cash flow or refinance valuation.

    You probably guessed what I am about to say?

    Yes:

    Offer that property for sale with the agent you are negotiating with.

    It’s a case of win-win situation for both, if the property being negotiated hasn’t been sold for a while.

    The 3 Questions For Landlord

    The three questions that one has to know

    • Why is the vendor selling the property?
    • Why is the property on the market for a long time?
    • How close can landlord accept the offer to the offered price?

    These questions then give you an idea on how you can structure your conversation or position your offer so it stands the best chance to get accepted.

    The 3 Questions To The Agent

    Estate agents or investors position their asking prices or offer prices based on sold property prices in the area are based on half a mile radius of the property being sold.

    However:

    Fact about sold comparables is they are not always representative of the price of the house you are placing offers on.

    Sold property prices don’t take the dynamics of the market into account.

    Additionally:

    Condition of property defines the sold price, so we might end up comparing property prices which are in good condition and which needs modernisation.

    So, always ask for following information to understand estate agents view of what they considered for valuation of the property:

    • What did they think about tenanting the property as is for tenants?
    • Was there any official valuation done on the property
    • How did the agent arrive at the house price?

    Must Read: 12 Powerful Tips To Choose Your Letting Agents

    Solution For On-Chain Properties

    Estate agents love investors who can show interest in buying properties which are stuck in the chain.

    If you as an investor can find a solution for on-chain properties, consider that property as yours.

    In the recent past, we have worked on a property deal, which was on a chain and used it to negotiate as a delayed completion.

    When in the chain, landlord selling the property is effectively buying another one to move into. Should that get delayed, he needs a place to live. We agreed a sale where we can exchange, but will complete only when his other property is completed.

    However, please exhibit caution:

    Our clause was to restrict the delayed completion to 4 months or under. After 4 months, the landlord has to complete the property irrespective of the status of the chain.

    Also:

    If you are buying via a mortgage, check the validity of the mortgage before agreeing the delayed completion.

    If the mortgage expires in 3 months, then most likely you should convey this to the bank and take an assurance for that to be extended until such time.

    Know Your Property Deal Profile

    Keep a tab on your emotions when you negotiate a property deal with an agent or a landlord.

    Two mistakes every investor makes when they place offers are

    • Emotionally attach themselves to the property and give in to asking price
    • Become impatient and push themselves to grow the portfolio quicker

    The truth though is:

    Property is a long game and patience always wins big time.

    Property is a people business and an emotional game which can only be won by detachment.

    Property is a debt business and if you make mistakes while buying, you will incur financial loss with limited options to rectify the mistake.

    That only means:

    Have a deal profile that suits you beyond which you would walk away than negotiate. This will force you into a habit of staying sane and wait and watch than get carried away.

    Example:

    My deal profile for a standard buy to let in North West of England is, 20%+ ROI with at least £100 cash flow at 5% interest rate.

    Must Read: 5 Effective Property Deal Analysis Techniques To Analyse Buy To Let and HMO’s

    The Soft Appeal Post Offer

    Whilst investors tend to go with the detachment investing in property, it’s how well you can maintain the balance.

    At the end of the day, it is a business with the majority of it involving human interactions, and one has to know when to lose that detachment.

    Show your soft side to agents and landlords and build the soft appeal and build the rapport that gets you more deals without asking.

    1 COMMENT

    1. Excellent tips for property investment. I would also say from this article I get not just to ask right questions before doing investments but also be creative

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