Negotiation – Tools to make it advantageous for you2016
Be aware that in France, 88% of properties are sold for less than the price originally requested by the seller. Based on these statistics, it would be a shame not to start a negotiation! A discount of at least 6% is in most cases possible. There are, however, no predefined rules and any potential discount depends greatly on the initial price assessment made by the seller. It can happen that some sellers set a fixed price and refuse to reduce it. Nevertheless, this scenario is quite rare. If you present strong arguments, you will usually force the seller to revise his price down. However, do not be completely taken in by the actual discount percentage. This indicator is in fact unreliable. What would you prefer?
- Getting a 1% discount on a property initially marketed below the current market price
- Negotiating 15% off the price of a property initially offered 30% over the market price
Choosing the first option makes sense! For us, the aim is to allow you to buy at the fair market price. If possible, we obviously try to purchase below it. This mainly depends on the context (situation of the seller, urgency to sell, initial marketing date of the property).
To save money at this stage, it is better to know how to drive a negotiation. You need to present strong arguments to make the seller cave in and turn the negotiation in your favour. Do you know how to put in place a strategic negotiation plan to buy at the best possible price? Ours enables a large majority of foreign buyers collaborating with us to obtain a significant price reduction. Of course, we are not magicians! A property in a good condition, priced below the market price and new on the market is not easily negotiable. On the other hand, you can get a reduction on an overpriced property that has been marketed for years!
In this article, we are going to talk about the action levers we use. They enable us to successfully negotiate on behalf of foreigners working with us as French property finders. A word for people who have chosen to undertake the legal acquisition of their property on their own. This article will really help you to buy at a better price. Feel free to use our action levers! 100% guaranteed results!
Action levers used during the negotiation
You must put in place a strategic negotiation plan to buy at a lower price. You also need to understand that if the property is correctly priced and new on the market, it would be at risk to negotiate the price. Indeed, you could lose the property you are interested in. You will rarely be the only interested party on such a good deal. It is essential to negotiate cleverly, by fully preparing the negotiation. You will need to present solid arguments that the seller cannot turn down. This is where our action levers come in.
Analysis of properties on offer in the same segmentThe first action we undertake for you, possibly the most important one. This action is always the starting point of the negotiation plan. We consolidate and analyse the properties on the market similar to the property you are interested in. By similar, we mean of the same type (type of property, area and features) and similar surface.
The market defines the fair price of a product. This saying is not only valid for real estate. Indeed, it is in fact valid for most sectors of activity. This is the best way to get an idea of the value of the property. It allows us to obtain a basis to undertake a negotiation. Thanks to this action, we get an idea of the value of the property on the market at the time.
Date when the property went on the marketAs previously mentioned, a property on the market for many months or even years will be easily negotiable. As time passes, a seller becomes more and more impatient and ready to make concessions. Do not hesitate to offer an amount much lower than expected by the seller if the property has been for sale for more than 6 months. Be more restrained for a property newly for sale. Indeed, the seller could potentially not take you seriously and may no longer want to negotiate with you.
Offers to purchase historyThird key point of interest, the history of the offers to buy previously sent to the seller by potential buyers. This point will allow you to know the seller’s capacity to negotiate. A seller who has received multiple offers close to the asking price (less than 5% below the asking price) and turned them all down is clearly not opened to negotiations. It may be dangerous to start negotiating too hard. But the situation two months ago may be different from the situation now. Be aware that time always eventually beats the seller!
Highlighting the defects of the propertyLet’s be honest about something: it is unlikely that the property you will buy in France is defect-free. And this is precisely what will allow you to purchase it at a better price! Paradoxically, while you really want to acquire this property in France, you are going to put together a list of its faults to negotiate its cost down. Listing the defects of the property and presenting them to the seller has a clear goal. Indeed, you will place the seller in an awkward position. Importantly, make sure you also include the property faults which are not really bothering you. This may include the lack of a garage even though you do not have a car. It may also include the distance from public transport even though you do not plan to use them.
A seller holds his property in high esteem because he has probably lived in it for many years. He will certainly have forgotten all the defects in the property. We have to force him to look at his property from an outsider’s point of view. By acting this way, we will force him to rethink. The seller will convince himself that ultimately his property may not be worth the amount he is asking for. He may lower the price, which may bring on an agreement on the sale.
Analyse the personal situation of the sellerInformation is priceless but often difficult to obtain! Use your interpersonal skills, talk and use your charm! Use anything to get the seller to confide. You need this information at all costs to judge the negotiation margin. When undertaking this action, you will find out if the seller is in a hurry to sell or not. The seller will be in a hurry to sell if they are in one of these following situations:
- In the case of an inheritance. Indeed, the proceeds of the sale of the property must be shared between several people of the same family. There are often disagreements among family members. Therefore, they will usually hope for a very quick sale
- An owner moving away to take on a new job
- Result of a divorce
In contrast, a couple selling a holiday property in France will have more time. So, they will be more demanding on the selling price.
Some vendors will be smarter than others. Indeed, some will not easily divulge the reason for the sale while some will be more talkative! So, take the time to analyse the situation and act accordingly if you are in a position of strength. Whatever it is, adapt your offer using this criterion.
Negotiate the agency feesThese fees, worth between 5 and 10% of the property value. The ads for the property generally include these additional costs. The estate agency will receive these fees as reward in the event of the sale of a property.
Sellers and agencies sign a sales mandate stipulating the remuneration of the estate agent in case of success. On this basis, why is it up to you to pay these charges? Indeed, it is the seller who chooses the estate agency! We have always been against this system. We will consistently fight against it, particularly because you also have the Notaire fees to pay. These purchase costs will represent between 8 and 9% of the amount of the property.
Consequently, we successfully use this action lever to negotiate the price of a property. In recent years, estate agencies have been facing new threats (real estate portals online, low cost online real estate agencies, direct sales between individuals). They are no longer in a strong position. Most of them prefer to reduce their commission and “win” the business rather than stand firm and see you drop your interest in a property. Indeed, the completion of a transaction increases their rate of conversion and their reputation in an ultra-competitive marketplace. Start by asking for a total exemption from the agency fees. If not possible, ask for a fair split of the fees.
Play agencies against each other Careful! This action lever is only valid in the case of a simple sales agreement between the seller and the agency. A simple sales mandate allows the seller to engage several real estate agencies to increase the exposure of his property. On the other hand, an exclusive mandate is completely different. The seller entrusts only one agency for the sale of his property and sign a mandate with it. You need to obtain this information. If several real estate agents are marketing the property, find them all and list them. This is the way to break down the pricing on the ad:
Each agency will present a different price because their commissions will not all be the same. All you must do is play the competition between the agencies and turn the negotiation to your advantage!
Put forward your financial positionA cash purchase is always a huge advantage to turn the negotiation to your benefit. Indeed, a seller will consistently prefer to sell his property for less for a cash-paying customer rather than to wait for a buyer to reach a financial agreement with the French banks. In most cases, buyers will actually need finance. Sellers may sometimes sound distrustful. Actually, it is often due to repeated unsuccessful negotiations and particularly due to buyers who did not obtain the finance necessary to purchase.
You have to show that you are serious. Make sure to have spoken with your bank to know your borrowing capacity. Also, do not hesitate to show figures illustrating the calculations for your potential borrowing. You can also use online tools to simulate mortgage figures. The objective is simply to prove that you are a serious buyer and build confidence with the seller. Try to demonstrate a strong financial position and show good faith. You will see that the seller will not hesitate to wait until you get your funding in place to continue the efforts to finalise the transaction with you.
These are the keys to turn the negotiation to your advantage. By using these action levers, we can guarantee that you will get a significant reduction in the price of the property. Even more so if this property has initially been priced above the market price. Once again, do not just rely on the actual percentage reduction that you obtain. Indeed, this indicator is not reliable. Once you have reached an agreement with the seller, you must confirm your commitment in writing and send an offer to purchase.
What are your thought on our action levers to turn the negotiation in your favour? Can you think of other ways to force the seller to reduce his price? If you are a foreigner who has already bought a property in France – How did you negotiate? Feel free to share your experience via the comment box below. This could be useful to other foreign buyers. You can also comment and ask us any questions you have with regards to the negotiation of a property in France. We will be delighted to answer them!