In the last post we talked about the pitfalls experienced by investors who go into the negotiation process of trying to buy their investment property or buy to let property without gathering all the necessary information.
In fairness, sometimes it’s not their fault. Actually, it is something of a quirk of the property system in England (I think the system is different in Scotland) that often we make an offer and then send in a surveyor to tell us what condition the property is in. Really, this doesn’t make a lot of sense. Surely the offer should reflect the condition?
The trouble is that once an offer has been accepted and the surveyor appointed, the vendor is often not amenable to renegotiating price. This is why, as you already know, I encourage investors to “inspect” a property rather than merely view it. No, I don’t suggest you do your own survey, or even rely on what you pick up on your “inspection”, but you can gather enough basic information about condition and the likely cost of putting a property right to save a lot of grief in negotiating and perhaps a lot of money as well. For a full explanation of what this entails I recommend my own publication “63 Common defects in Investment Property and How to Spot Them”
There are two also further pieces of information I’d suggest you try to find out and which many investors don’t bother investigating. And they are:
Number 1 – Why the vendor is selling and what they are trying to achieve
It may be that the vendor has a problem that they hoping to rid themselves of through the sale of the property. You’ll often hear talk of distressed sellers in the context of buying properties at below market value prices, the assumption being that they need to be shot of their property quickly, perhaps because they are about to be repossessed, or divorced, or they are ill, or for any number of reasons. Under such circumstances a vendor may accept a low price for a quick sale.
But it could be that they want to sell for other reasons which aren’t easily classified as a “problem”. In fact they could be positive reasons such as the vendor is getting married and wants to move in with their partner, or they want to emigrate to a Caribbean Island and lie on the beach all day. These are not the classic problems of a distressed seller but they are no less important reasons to the vendor. They may be highly motivated, and achieving their desired outcome might be more important than money.
Number 2 – Whether the vendor is flexible
And by that I don’t just mean flexible on price, but on terms generally. Most investors get hung up on price but often more than just the price is negotiable, if they were to ask.
Armed with all of this information we are able to kick-off negotiations.
I strongly believe in win-win. The best deals are agreed when neither party is trying to take unfair advantage of the other, and both sides come out feeling that they have achieved something. I understand that not everyone will agree with this, nor will everyone negotiate from this standpoint. However, I can tell you that it has worked for me.
I’ll be talking about this more in the next post.
Here’s to successful property investing.
Peter Jones B.Sc FRICS
Chartered Surveyor, Author & Property Investor