Let me explain how to conduct a purchase negotiation about an often “overpriced property”.
First, let's be clear! "Overpriced" is a highly subjective concept. Because all buyers think that asking prices are too high, right? So, what does “overpriced” really mean? Is the price “too high” simply because you don’t like it? Perhaps. Does knowing that a comparable property next door sold just 6 months ago for 20% less money; does knowing this automatically make the property you are looking at overpriced? Maybe. Or perhaps someone you trust—whether it’s a good friend, your daughter who likes to think she is a real estate agent, or even your gardener—, if someone you trust insists the property is too expensive, does this make it overpriced? I am not so sure…
Because never forget that “personal” opinions are just that: personal and opinions. No matter how well-intentioned, especially when they come from non-experts, they don’t establish objective value! You need to walk on solid ground here.
In truth, to make your point efficiently that a property is overpriced, you need to base your claim on solid analysis and demonstrable facts. You have to consult reliable sources such as notarial records, recent sales data, or price per square meter. To start with, consider the condition of the property. It is very important, for obvious reasons. Has the house been recently renovated? Has it been updated 15 years ago? Or is it in its “original,” perhaps dated, condition? Or worse, is it in a state of disrepair, and you will have to spend months and a lot of money to renovate it? Location is equally critical. Is there a busy, noisy road nearby? Are the neighbors troublesome? Is there future construction planned next door? Thorough research into the local environment is key.
Once you have all the facts, you’ll need to adjust the price per square meter accordingly. OK, I know some people say that price per square meter is not an adequate tool, and that when you buy a house you don’t just buy “square meters.” That’s true but only up to a point. I am very sure that the price per square meter is a solid benchmarking tool. So, for instance, if a home is listed at 3,720 euros per square meter, but significant renovations are required for the bathroom, kitchen, pool, and exterior, you might reduce that figure by 25%. And if there is a main road too close for comfort, then reduce it again by a further 3%!
Only then are you ready to make an offer! It’s important to do your homework, so don’t rush! Once you have an informed and reasonable and “arguable” assessment of the property’s value, the next step is to engage with the seller. Your approach will depend heavily on their circumstances. Why are they selling? Who is selling? Is the seller an elderly widow? Is it a couple living far away in a northern European country like Germany, or couple in the process of divorcing? Or perhaps the sellers are multiple heirs to an estate!
Also, you need to try and get the answers to important questions of timing, like: What is the sellers’ timeline? How long has the property been on the market? Is the sale urgent? Are there some taxes due after the finalization of an estate? It’s also helpful to understand why the property hasn’t sold yet: is it because it has been on the market for just a few weeks, or is it because the listing agents aren’t pushing hard enough?
Talking about listing agents, it is quite possible that you may not find them as useful as you would hope. Of course it’s not systematic but, well, don’t be surprised if that happens. Always keep in mind that they work for the seller, not for you. It is very rare that they will hide some information from you; right, I know that’s illegal, but it does happen. Or (more likely) they will stall because they simply don’t have the answers to your questions but they don’t want to admit it! Either way, or anyway, you HAVE to do your utmost to get the info you need!
Then, with both your analysis and a clear understanding of the seller's situation, you have your “pitch” and you are ready to make an offer. Because it is a pitch; that’s all it is really!! Anyway, deciding how to present that offer—whether in writing, in person, or through an intermediary like the listing agent—will depend on the seller’s context. In all likelihood, it will go through the listing agent. After making your offer, you’ll need to be prepared for the seller’s response, whether that means making a counteroffer or holding firm – or even moving away from that particular property, because sometimes, it is for the best.
Negotiations can vary greatly in duration. While the groundwork may take days or even weeks, the actual negotiation might wrap up in a single meeting or stretch out over a longer period, especially if multiple parties are involved in the decision-making process. Be patient: time is usually on your side!
Now, here is a crucial nugget of information about the negotiation process, a little secret: As a general rule, sellers tend to settle somewhere in the middle of the initial offer range. Keeping that in mind, your opening offer should be low enough to allow room for negotiation, but not so low that the seller is shocked and falls off their chair, or feel insulted and refuses to talk any further!! For example, if the asking price is 340,000 euros and you offer 230,000 euros, the negotiation may conclude around 285,000 euros. That’s because 285,000 euros is the midpoint between the asking price and your initial offer.
So to sum it all up, I want to emphasize that all the preparation should aim to navigate this psychological reality of negotiation, because you want to take the sellers smoothly where you want them. That’s the name of the game!
Finally, given the complexity of the process, it might be wise to engage a professional who knows how to do all the “detective” work, and who understands the nuances of real estate transactions. In my experience, that’s solid advice for all buyers, whatever their nationality – because most French buyers aren’t any more experts at real estate than you are! Of course that’s especially important if language or cultural differences are at play. Because when it’s all in French and you’re not a native or fluent speaker, it’s highly likely that some important nuances will be lost in translation. For example, if you’re American and the sellers are French, I guarantee you that your ways of addressing the “money issues” are different, and that those differences – both cultural and linguistic – could significantly impact the negotiation and its outcome!
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To learn more about the French real estate context, visit www.frenchproperty.coach or call Pierre Guillery on +33 6 8434 8992
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