The Nigerian real estate market is very dynamic with constant changes and evolving trends and has experienced significant growth in recent times with the availability of various financing structures. It is fast becoming the frontier of investment in Africa leading to an improvement in housing supply and increase in effective demand and transactions hence the importance of negotiations. Having interest in real estate is great but being able to elevate the interest to actual sales can be done through negotiations. The “art of negotiation” is not just a simple isolated exchange, but rather a continuing effort. Negotiations can make or break real estate deals so being a skilled negotiator is very important to buyers, sellers and especially real estate consultants.
Negotiating is an art, one that requires both experience and knowledge. All real estate transactions are unique as both buyer and seller want the best outcomes that favour them or at very least represents a fair balance of interests as nobody wants to feel cheated or slighted. Success in real estate, whether it is buying or selling a house, comes down to negotiations and getting the best deal possible. The strategy for negotiating the purchase of a home is always based on facts – the current price in the real estate market, the seller’s requirements, amenities in the property, and its comparative value to similar properties in the location. In getting the best negotiations, you have to develop a strong bargaining position which can be gotten from having in-depth knowledge of the property. A strong bargaining position can also be derived from the ability to answer the following;
1. Do you understand the market?
At various times we’re in a “buyers” market, a “sellers” market, or a balanced market where housing supply and demand are roughly equal. In a buyers’ market, supply outstrips demand so the buyer has more control of the negotiations. The reverse is the case in a “sellers market” where demand outstrips supply and sellers get the price that is being offered or even more. However, in a balanced market, this is where the real negotiations take place as there is an equal supply of homes and buyers. Counteroffers are rampant on this phase and transaction closure takes longer than the other markets as both sides feel no urgency and personal priorities reign
2. Do you know what to leverage on?
Leverage means everything when it comes to negotiations and both the home seller and home buyer should be aware of where they stand before stepping in to the bargaining process. For example, if the home buyer knows that the home owner is desperate to sell for whatever reason, the home buyer has a lot of leeway in the negotiation process. On the other hand, if the home buyer is one of many vying for the home, the home seller then gains the upper hand.
3. Is there available finance?
The available finance for the real estate purchase is very important as a pre-qualified buyer with known financial capacity increases the chances of the transaction taking place and represents less risk to owners than a buyer with unknown financial capacity. Also, the lower the current interest rates at a particular period of time, the larger the pool of potential buyers. More buyers equal more potential demand, and more closed transactions.
4. What is the Comparative Value of similar properties?
This plays a lot in the transaction as cost of similar properties can be used for negotiation purposes and this could be to the benefit of the developer and buyer. Similar properties could cost significantly less than the property for sale, but with the addition of value enhancers like recreational facilities, amenities could be used during negotiation to get the premium prices demanded by the seller and vice versa.
5. Do you have the right expertise and knowledge?
Employing the services of an experienced real estate professional (for both the buyer and seller) ensures that each side is sufficiently represented and gets the best deal possible from the transaction. The best real estate agents have tremendous expertise when it comes to market value in particular areas and are very knowledgeable. Experienced brokers see opportunities where laymen might not and can extract the absolute best value from any transaction.
During negotiations, never take an adversarial or even aggressive posture in your interactions with real estate agents, buyers or sellers. Doing the opposite actually works better bearing in mind the main reason you are having the negotiations which is to solve your real estate needs as a buyer or seller. All information released during negotiations must be delivered at the right time, place, and manner and designed to improve your position in the transaction.