Negotiating your way to profits

Top negotiating skills are something every successful renovator needs to master, because trust me, you’ll be applying those skills on a daily basis throughout your renovation project.

You’ll be wheeling and dealing with a whole range of people, many of whom you’ve never met before. They’ll be a mix of genders, race, ages, education levels, experiences and communication styles. And just to further complicate things, you’ll soon discover that everyone you’re dealing with has their own agenda.

Before you throw yourself head first into your reno project, think in advance about your ultimate end goal and how to negotiate your way to success. The following are the key parties you can expect to be playing the negotiation game with.

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NEGOTIATION WITH YOURSELF

Renovating can be tough and will require personal sacrifices in order for you to reach your end goal. It may require you to give up boozy Saturday nights or lazy Sunday mornings at home to trudge through stores looking for fixtures and fittings. Before you venture into a renovation project, negotiate your own terms in respect to how much or little you’ll be involved in your own reno project. A clear and realistic outlook on what you’re committing to – before the reno commences – will help you cope with the journey ahead of you.

NEGOTIATING WITH BANKS

Before you buy any property, get your finances in order before you start house hunting, especially in the current climate, where it’s more difficult to get a loan approved. You don’t want to start negotiating on a property only to find out that you can’t borrow the money you assumed you could.  Negotiate the right type of loan, your interest rate, your package fees, the timing of your interest payments (say fortnightly instead of monthly) and your break costs, too. Remember every dollar saved is an extra dollar earnt.

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NEGOTIATING WITH AGENTS & VENDORS

With your loan approved in principle (also known as pre-approval), you’re now in a position to go house hunting. Now the fun part of negotiating with agents and vendors begins.  It’s always useful to find out what the vendor’s motivation for selling is.  Are they committed to another property and in need of a quick injection of cash? Is the property for sale because of a marriage breakdown? Is early access a possibility so you can get in and start your renos before settlement? Just like renovating, tailoring your offer to what the vendor wants will make your offer more likely to be accepted.

Here’s a tip: When making an offer, don’t go in with your best price first, as this leaves little to no room for negotiation.  And don’t go in too low; you don’t want to insult the vendor. To show you’re a serious player, put all offers in writing. This will not only make agents sit up and take notice, you’ll also be assured that the vendor is seeing the offer.  ALL offers submitted in writing are required by law to be disclosed to the vendor.

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NEGOTIATING WITH LAWYERS

There is little room for negotiation when hiring and dealing with solicitors or licensed conveyancers. The only thing that might be negotiable are their fees. If it’s a straightforward purchase or sale, it’s often cheaper to go with a conveyancer over a legal professional specialising in property. Conveyancers generally charge a flat fee for their services.

If the deal is more complicated, or it’s a high-value transaction, you’ll likely need legal representation throughout both the purchasing and selling period. Make sure you get a fixed price cost estimate before any legal work begins.

Your solicitor might be well versed in the law, but forget that you aren’t.  This means they may refer to items and terms in your contract you don’t understand. Don’t sit back and pretend you understand. You’re paying for their time so ask all the questions you need to until you feel you have a real grasp on the situation.

NEGOTIATING WITH COUNCIL

If you’re making any structural changes to your property, you’ll be dealing with a private certifier or your local council. There’s little room for negotiation when it comes to dealing with council.  All you can really do is make the process as smooth and hassle-free for all concerned. When planning your structural renovation, find a local draftsperson or architect who is well versed in the building regulations and requirements of your local area. Make sure they have a proven track record of successful DAs or compliance certificates.

If they’re submitting the plans to council on your behalf and handling the whole process,  they need the right personality and skills in place to negotiate with council on your behalf (and reach a successful outcome in the quickest way possible).

NEGOTIATING WITH A BUILDER

This is often a stage in the renovation process that terrifies people. Dealing with a builder and negotiating (when you really don’t know much about the subject yourself) can be scary. You need to be satisfied you’re getting what you’ve paid for and won’t be stung for a load of variations throughout the construction process that turn your profitable renovation into a financial disaster. The way to ensure this happens is to be across everything from planning right through to building.  Before construction begins, spend a few hours sitting down with your builder and go through every item that’s included and not included on a room by room basis internally, and externally, too. It may take quite a few hours for your builder and you to do this, but what it will do is highlight any issues and variations early enough to change them easily (before construction begins), rather than halfway through construction when your power to negotiate is greatly diminished.  When negotiating with a builder, always opt for a fixed price contract and consider incentivising them with a cash bonus for a quicker build that doesn’t compromise quality.

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NEGOTIATING WITH TRADESPEOPLE

There’s a stack of tradies you’ll be negotiating with throughout the renovation process and you’ll quickly learn the ins and outs of how to do this effectively. In fact, I’ve written a whole blog just on this topic. Try to obtain a minimum of three quotes for each job.  This will quickly demonstrate the true price you should be paying for a job. The middle range quotes are a good guide of what the true costs of the work should be.

Where possible, avoid appointing trades on an hourly rate, giving them no incentive to finish quickly.

NEGOTIATING WITH SUPPLIERS

Negotiating with suppliers is where you’ll save yourself a tonne of cash.  If you’re brave, always ask for trade prices even if you’re not in the trade. You’ll be surprised at the discounts you’ll be offered when suppliers think you’re in the business.

And remember: to be a good negotiator, you shouldn’t be cold and ruthless in your dealings with other parties. Good negotiators are flexible and able to work with those around them to achieve a good outcome for all involved. And when all of this can be applied, you’ll be in a better position to negotiate win / win outcomes for all parties concerned that ultimately lead to increased renovation profits.

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