By,
Dean Darby
Project Director, FAM Properties
Negotiation as part and parcel of property deals Buyers invariably place initial offers below the asking price and, of course, when we act as buyers agents, it is our duty to negotiate on behalf of our investors and place offers below the asking price.
The success rate of negotiations varies depending upon the speed and direction of the market. In bull markets, we face significant challenges negotiating on behalf of buyers. In fact, closing deals at the asking price can sometimes be difficult due to higher offers from third parties.
The most defined change in this process is the change in market conditions. In a stagnant market, sellers are forced into being more agreeable to lower offers; and in a rapidly sinking market, low-ball offers are often accepted out of fear of the unknown. We’re now in a seller’s market so the power has shifted; if anything, the issue is prices not being increased even after listing as the market rises.
Most areas within UAE have equal room for negotiation It is very much a case of “a rising tide carries all boats” at the moment, and the sentiment of property owners and landlords is positive across all segments and areas of the market. However, having said that, certain projects in Abu Dhabi offer great opportunities right now with a small number of highly motivated sellers actively negotiating with buyers.
Time is the second most negotiated item Typically, the most common item open for negotiation in the current market is time to transfer. Sellers want to transfer tomorrow, and conversely, buyers often need time to arrange for funds. Buyers often want snagging or maintenance items covered as part of the conditions of sale, and both buyers and sellers often request assurances and compensation should either party back out of the deal.
There is no hard and fast rule when it comes to negotiating In more mature and slower moving markets, you often find negotiation “norms” that both the buyers and sellers are generally tolerant to.
However, in the UAE market, we place offers on behalf of buyers on a case-by-case basis. We take into account many different factors that differ greatly from one deal to the next, and it is hard to generalize on a set figure.
In some extreme cases, experienced buyers may instruct us to offer more than the asking price to avoid the seller courting other offers, and reduce time and opportunity cost overheads.
Look for key “tells” when negotiatin gLength of time on the market is the main variable here – if a seller has been actively marketing a property for three months or more, he is more likely to suffer from “seller’s fatigue” and enter into negotiations with a different mindset. With off-plan properties, knowing when the seller is due to pay the next instalment can be useful. It is for obvious reasons in the seller’s interest to close a deal before the next instalment is due.
Finances and paperwork should be in order before beginning negotiations Buyers need to have ready access to funds, and in the case of finance deals, deposit amounts plus pre-approval in place from mortgage providers make an offer much more solid and likely to be accepted. Sellers need to be able to evidence they own the property via title deeds, and have no outstanding liabilities such as unpaid service charges.
Apart from the formalities, I think both sides need to try to manage their own expectations accordingly and understand the process and mindset on the other side of the table. The ability to walk a mile in someone else’s shoes allows for a smoother buying and selling process
Value of having an experienced broker• He/she understands your needs and would be willing to go the extra mile to get you the best price – as a seller or buyer
• Knowing that beyond price, time is a major element in property deals, your broker will ensure you do not miss out on closing a profitable transaction
• A well-rounded agent would be armed with up-to-date market data, be experienced in sales and marketing, and have an established network of contacts that would go a long way in helping clinch you the best deal that satisfies your requirements
