Q & A Table of Contents
His Proposed Price For Land Is High
From: Dan, Huddersfield, United Kingdom
Question: I am in the process of negotiating the purchase of a small
piece of land to extend a building plot. The land is currently owned by
the local authorities and they have agreed to the sale of the land
subject to negotiation.
I have recently spoken to their man who unlike me is a professional
negotiator. He was very pleasant and clear and quoted a price which he
made sound as if it was half normal market value. My research shows
this is about right if it were a plot in its own right (it's not; it's
too small).
How can I understand this professional's position better? I feel he has
made a just about (but not quite) OK deal sound very reasonable but I do
need to bring his proposed price down a bit. I feel it would be worth a
go if could understand how he might be working.
Response: It sounds as if the person representing the local authorities
is someone who regularly negotiates the sale of land. Most likely he is
quite familiar with local property values, but he also has the
obligation (true of any seller) of getting the highest reasonable price
for the property when it is sold.
Do you have the capacity to get an independent appraisal of the
property’s fair price from a qualified appraiser, an estate agent, or
another professional who is familiar with local property prices and who
can assess the good and bad qualities of the property in question as
they might have an impact on the price?
One of the key lessons in sales of ‘high ticket’ assets is to understand
what choices each party faces. You need to find out whether there are
other buyers in the market for the piece of land — and, if possible, how
much they have offered. From the way you describe it, the existence of
other interested buyers sounds unlikely. If that is the case, the
seller may have no alternative to you — except no sale at all.
Once you have figured out how much the property is worth to you — based
on third-party appraisals, an analysis of how much the purchase of the
property will add to the value of your ultimate holdings, and a
cool-headed job of figuring out how much you can really afford — then
you can determine how much you want to pay — and how much you are
willing to pay.
If the seller understands that you are serious, if he is a sophisticated
negotiator he won’t take offense if you offer a lower price than he has
proposed. A seller who gets all emotional over a lower counter-offer is
not a skilled negotiator. So if the seller seems emotional, try to
figure out whether it is an expression of real feelings or just a game
to unsettle you.
A good faith counter-offer may not be accepted as is, but it can bring
the price of the property to a more attractive range. If your proposed
purchase price is reflective of what’s good for you and fair for the
seller, the worst that can happen is that the seller rejects your price
and you may have to meet his initial proposal. However, it is far more
likely that the offering price is an optimistic approach rather than a
hard and fast figure — and a reasonable, realistic counter-offer may
bring you far closer to your objective.
Good luck,
Steve
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