Negotiations can be tricky especially when it involves a luxury property where both the buyer and the seller have high expectations. They may be accustomed to making big deals in their business and take great pride in their negotiation skills. This can lead to long drawn out negotiations where the buyer and seller stubbornly hold on to their negotiating positions.
In addition, emotions add another element making it more difficult to get a deal done. It is best to cut out your emotions, which is often easier said than done!
The best way to remove emotions out of negotiations is to make a list of what you expect from the deal. Here are some points to consider.
1. Good price
2. Smooth closing
3. Closing date
5. Personal property in the home that can include some or all the furnishings
Hire a very experienced broker to represent you in the purchase instead going directly to the seller’s broker who is a fiduciary of the seller. The seller’s broker may have information that he or she cannot disclose. You need your own broker who can find out what the sellers’ circumstances. They could be anything from getting a divorce or needing to move because they have a growing family or relocation for a new job.
Preparation is very important! Here is what you need to do!
Property and neighborhood information
1. Price owners paid for the property.
2. Were renovations done? When were they done and the cost?
3. Length of time the property has been on the market
4. The comparable sales, actives and listings in contract
5. If the seller is motivated to sell quickly or not
1. Know your own financial situation and prepare a financial statement prior to going out shopping for properties.
Market conditions can vary by neighborhood and building to building. For example if you are hoping to buy an apartment in midtown Manhattan you may be able to negotiate a much better deal than if you are buying one in the West Village. The listing inventory in midtown is large and the supply of properties on the market in the West Village is much smaller. In addition, if you are negotiating on a co-op rather than a condominium you will probably get a better price because there is a growing gap between condominium and co-op prices. In addition, if you are buying in a white brick 1960’s building you will generally pay less than if you have your heart set on a classic prewar building.
One last thing! Here is a negotiating tip for international buyers.
International buyers may want to add a clause about potential changes in the currency exchange rate into their negotiations in order to limit their risk if the exchange rate changes. You can lock in a rate however, that could backfire and end up benefiting the seller.
If you are thinking of buying in a property in a new development please read my blog on “How To Get Concessions When Buying Into A New Luxury Development”