I keep reading articles about how the American consumer wants to negotiate on everything they buy and how even in large box stores consumers are getting deals just by asking. Negotiating is nothing new to most of the world and we do it in real estate all the time — but we are not used to getting a deal at the local Sears.
I remember traveling through Vietnam in the early ’90s and my traveling companion got addicted to negotiating and would spend 15 minutes negotiating on a 10 cent item – so there are some times when it makes sense and other times when it is important to hold your ground.
Last month I listed for sale and sold a fully furnished corporate housing condo.
The first question I always get is why did I sell. Three main reasons (1) I had owned the property for five years and even in today’s market could make a profit; (2) It doesn’t fit into my current investment theory; and (3) Based on the current deficit and tax policy, I believe capital gains taxes will go up significantly in the next five years and wipe out future gains.
The next question I get is, “Who bought it?’ It was a turn key sale – I sold it fully furnished with a tenant to an investment buyer who was tired of losing money in the stock market and was much happier putting her money back into real estate. The best part is that everyone involved in the deal walked away happy. My Realtor was happy (even though I am a broker I don’t do my own sales) because she got a commission, my brokerage firm was happy because they got the sale, my management company was happy because they kept the property in their inventory, I was happy because I didn’t have to worry about that property, and the investment buyer was happy because she got exactly what she wanted without furnishing the property herself — plus she had a tenant on day one!
But I promised to tell you about negotiations and I hear from a lot of CorporateHousingbyOwner.com owners that tenants just want to negotiate — after all, that is exactly what the media is telling them to do. When I listed this condo for sale I priced it correctly for the market. Next time I’ll price it a little above so I can make someone happy by negotiating a little. The potential buyer came in well under my listing price and was frustrated that I wasn’t willing to negotiate. My feeling was I was being fair to begin with and I wasn’t interested in playing games. In this case I won and the deal was closed just under asking.
Another example I am facing right now is with a vacation rental I have – again everyone wants to make a deal and there are a lot of people willing to give a deal – in this case I am not. Normally, my rental house would rent for $400 – $600 a night depending on the season, but right now everyone wants something for $200 a night – in this case I decided the wear and tear on the property wasn’t worth the reduced rate and I am content with not renting the property rather than loosing value through wear and tear. Each property and property owner has their own reasons for making a deal or not making a deal, just make sure you know your market and understand what is important to you before you start to negotiate anything.