What are some of the best ways to be a good negotiator? In today’s show we talk with Josh Masters, from BuySide.com.au, a man who negotiates all the time.
Kevin: An old saying that I love to reflect on from time to time is that you’ll make money out of real estate when you buy, not when you sell. That all comes down to being a good negotiator. Even if you are using an agent, you have to understand the negotiation tactics that are used and how you can use them to your own best advantage. A man who does this all the time, Josh Masters, is from BuySide.com.au. They are buyer’s agents, so obviously, they do negotiation; that’s part of the business.
Josh, I wonder if you’d give us some insider secrets here. What are some of the best ways to be a good negotiator?
Josh: That’s an excellent question, Kevin. I probably do have to stress that the most power you’ll have as a negotiator – especially as you’re buying – is when you’re in a buyer’s market or a softer market. It is very difficult to do it in a seller’s market.
But when you’re a buyer, and it is a softer market and there is some leniency on negotiations, there are a range of things that you can get into that a lot of people overlook but can be really valuable to the seller and also to you in terms of interest rate payments and the like.
One of the things that can be available to you is decreasing the deposit. That is quite common these days. So, taking it from 10% down to 5%. Why that’s an advantage is that it means that less of your money is locked up in someone else’s bank account, essentially, so you can still have access to it, you can spend it on whatever you need to, and when settlement time does come, then you can obviously put in the remaining fee from the bank loan itself.
Kevin: That’s a good point too. As long as you’re covering off on the agent’s commission, because mainly what the agents are concerned about is having their commissions in that trust account.
Josh: Very true. Another things I would definitely look at is settlement terms. These are key. The settlement term for us is really important as an investment, especially coming up to periods like December or June/July where we might be coming into a very soft tenant market. That means that there’s not a lot of tenants around, especially around Christmas time – a terrible time to rent out.
Usually we’ll want to push that settlement time past that period into a period where tenants are really back in the market, like late January – a key time. Rather than going for your standard six weeks, you might push it out to 12 weeks. That can be quite a good little strategy to get hold of, as well.
Kevin: I like that one in particular. That’s a good one. What else have you got?
Josh: One of the key ones that we like to use – it’s often just one that we like to throw in there but it’s really valuable to us – is early access to the apartment. What that means is that before settlement comes – let’s say you have a six-week settlement – we might ask for two weeks early access. We get our property manager in there. We allow that property manager to show people through so that when we do come to settlement, we can have a tenant in there from day one.
Kevin: That’s fantastic. I love that. Do you have to do anything special in the contract to allow you to have that early access?
Josh: It’s always good to talk to the agent and get something in writing when you’re dealing with the solicitor and trying to close the deal up. You don’t want to have to rely on he said/she said when you go back into the negotiation room. I always like to have a little bit of a clause in there, or even an e-mail, confirming from the solicitor that you can have early access prior to show clients through. Generally, if you’re amenable with the sales agent, they will let you do it.
Kevin: Of course, you’re always better off having it done properly – especially if you’re a seller – because effectively, you’re really giving possession prior to settlement.
Josh: I wouldn’t go as far as saying possession. God, I hope not.
Kevin: Well, the moment you hand the keys over and allow access is effectively what you’re really doing. Isn’t it?
Josh: That’s true. We always like to have the sales agent there, though. They will arrange it with the property manager, and again, that’s why I say it’s really good to be amenable with the sales agent, because they’re taking their time out of their day and if they don’t want to do it, they’ll just say no.
It is good, I guess from a personal perspective in the negotiation, to get on side with the agent. Don’t make an enemy out of them. There’s no point in burning bridges. You never know when you’ll need to call on a favor from them in the future.
Kevin: That’s very good advice, as we always expect from you, Josh. Josh Masters from BuySide.com.au.
Great talking to you again, mate, and we’ll catch you again real soon.
Josh: My pleasure, Kevin. Thanks for having me.