Many buyers are uncomfortable with the process of negotiation. The seller usually has an estate agent helping them through the process, while buyers often negotiate for themselves unless they have appointed someone to represent them. A few basic negotiating principles can make the process easier and help you avoid paying more than you intended.
Here are six tips for buyers.
1. Show Interest, But Don't Reveal Your Limit
It is fine to show that you are interested in the property and would seriously consider buying it. But be careful about revealing how attached you have become. Before making an offer, decide what you believe the property is worth and the maximum you are prepared to pay.
Look at comparable properties, the condition of the home and how long it has been advertised. A realistically priced apartment that has just come onto the market is a very different negotiation from an overpriced property that has been sitting unsold for several months.
Once you have decided on your maximum, keep it to yourself.
2. Make Yourself a Credible Buyer
Negotiation works better when the seller believes you are serious and capable of completing the purchase. If you need a mortgage, have your financing organised as far as possible before negotiating. If you are a cash buyer or can complete the transaction quickly, make that clear because it may be valuable to the seller.
Make your offer in writing and be clear about the price and proposed terms.
Avoid trying to justify a lower offer by listing everything you dislike about the property. Apart from potentially offending the seller, it raises an obvious question: if you think the property is so bad, why are you trying to buy it?
If renovation or repair costs affect what you can pay, explain them factually instead.
3. Don't Leave an Offer Open Indefinitely
A written offer can include a reasonable deadline for the seller to respond.
The purpose is not to put unnecessary pressure on the seller. It simply gives them time to consider the offer without leaving you in an open-ended situation while you may also be considering other properties.
At City-Lets, we usually request a HUF 1 million reservation fee with an accepted offer to demonstrate the buyer's commitment and seriousness.
Buyers should understand exactly what they are signing and under what circumstances any money paid is refundable or becomes part of the purchase arrangements. Your lawyer should advise you before you sign documents or transfer money.
4. Find Out What Matters to the Seller
Price is important, but it may not be the only thing influencing the seller's decision.
Find out why they are selling and what they need from the transaction.
A seller who has already bought another property may value a quick transaction. Another seller may need more time before handing over possession.
If you understand the seller's circumstances, you may be able to structure an offer that works for both sides.
For example, flexibility over the possession date might be valuable to the seller and cost you very little. In return, the seller may be more willing to compromise on price or another term that matters to you.
5. Leave Yourself Room to Negotiate
Your first offer does not necessarily need to be your final offer.
If you believe a property advertised at HUF 80 million is worth around HUF 76 million, you might begin below HUF 76 million and leave yourself some room to move.
But the opening offer still needs to be credible. An unrealistically low offer can simply cause the seller to stop taking the negotiation seriously.
Use evidence to support your position. Comparable properties, time on the market, condition and realistic renovation costs are much stronger arguments than simply saying the asking price is too high.
Avoid telling the seller that an offer is your absolute maximum unless you genuinely mean it. If you later increase it, your previous statements become much less convincing.
Know your walk-away price before negotiations begin. If the seller will not accept a figure that makes sense for you, be prepared to walk away.
6. Price Isn't the Only Thing You Can Negotiate
If you and the seller cannot agree on price, look at the other terms of the transaction.
Furniture or appliances might be included. The possession date could be moved forward or backwards. Payment arrangements may also have value to one side or the other. You may therefore decide to pay slightly more if you receive something else that matters to you. Equally, a seller may accept a slightly lower price in return for terms that make their own move easier.
Whatever you agree should ultimately be properly documented in the sale and purchase arrangements by the parties' lawyers. A successful property negotiation does not require one side to defeat the other. The objective is to reach a price and set of terms that the seller is prepared to accept and that still make sense for you as the buyer.
And sometimes the best negotiation decision is knowing when to walk away.