A Beginner’s Guide to Real Estate Negotiations in Kenya
Real estate can be a tricky game, especially for beginners. From understanding the terminology to knowing how to negotiate, there are a lot of factors to consider when you’re looking to buy property. If you’re new to real estate, don’t worry; we’ve got you covered. This guide will discuss the basics of real estate negotiations, how to negotiate effectively in the Kenyan market, and what you need to know to make the best deal.
What is Real Estate Negotiation?
Real estate negotiation is finding the best deal possible for a property. Negotiation is a skill that is essential for any type of real estate transaction, whether it’s a lease, purchase, or sale. The goal of real estate negotiation is to reach an agreement that benefits both parties. Still, it’s important to remember that the buyer and seller have different priorities.
The Basics of Real Estate Negotiation
Before jumping into negotiations, it’s essential to understand some basic concepts. Here are a few terms you need to know:
1. Asking price: The asking price is the price the seller wants for their property. It is usually listed on the real estate agency’s website.
2. Offer price: The offer price is the price the buyer is willing to pay for the property.
3. Walkaway price: The walkaway price is the highest price the buyer is willing to pay for the property. Once the walkaway price is reached, the buyer will walk away from the deal.
4. Counteroffer: A counteroffer is when the seller responds to the buyer’s offer with a different price.
5. Closing costs: Closing costs are the fees associated with the transaction, like transfer taxes, legal fees, and commissions. The buyer usually pays these costs.
How to Negotiate in the Kenyan Real Estate Market
If you’re a beginner in the real estate industry, don’t let the fear of negotiations stop you from moving toward purchasing your dream property. In this article, we’ll take you through everything you need about real estate negotiations in Kenya.
1. Know Your Budget
Before beginning any negotiation, it’s essential to know your financial limits. You should have a well-calculated budget that includes expenses such as down payment, closing costs, repairs, and renovation. When you know how much you can afford to spend, you can identify the properties within your range. It’s also vital to remember that the asking price isn’t necessarily the final price. It’s essential to have a little wiggle room if you want to negotiate effectively.
2. Get Your Facts Straight
You should thoroughly research the property you’re interested in buying or selling before going to the negotiating table. Essential details you should gather include the current market prices of similar properties in the area, how long the property has been on the market, and any potential repairs or renovations the property needs. Having all this information at your fingertips can help you make informed decisions during the negotiation process.
3. Start With a Reasonable Offer
One of the most crucial aspects of negotiations is knowing how to make a reasonable offer. When making an initial offer, it’s crucial to be reasonable and not too low or too high. An unfair offer could put the other party off and result in them not taking your proposal seriously. Start by making a fair offer based on the property’s current market value.
For instance, suppose the seller had initially listed the property for KSH 5 million. In that case, you can start by offering KSH 4.5 million or KSH 4.7 million and then negotiate from there. Remember that this isn’t a hard and fast rule, and it may vary depending on the state of the market or the seller’s motivation.
4. Negotiate With An Open Mind
Negotiations are an art that requires an open mind and flexibility. When both parties are fixed on their offers, reaching an agreement that is satisfactory to both can be challenging. Finding common ground between the parties is one way to keep negotiations flowing.
At times, what seems like a stalemate can be solved by discovering the other party’s underlying interests and coming up with solutions to meet both parties’ needs. Try to frame your negotiation in an open-ended manner that encourages discussion rather than a demand.
For example, instead of saying, “I want the property at KSH 4.7 million, “try saying, “The property is appealing. Let’s discuss how we can create a mutually acceptable price.” This approach sets a positive tone for your negotiation meetings and makes it easier to reach an agreement.
5. Hire a Professional
If you’re intimidated by the negotiation process, consider hiring a professional to help you. A real estate agent can be a valuable asset during the negotiation process. They understand the local market, have experience negotiating, and better understand the property’s value. Besides, a real estate agent can provide an unbiased approach, which can help avoid emotional tendencies that can affect negotiations.
A real estate attorney or broker is another professional you can consider hiring when negotiating. They can provide legal and business advice, handle closing costs, and ensure all documents are in order. Hiring a professional may come with additional expenses, but it may also save you time and money by helping you get the best possible deal.
6. Be Flexible on the Closing Timeline
Closing a real estate transaction can be a complicated and time-consuming process. Often things go differently than planned, and unforeseen occurrences can delay the process. A flexible and reasonable timeline can help you avoid conflicts that may arise during the negotiation process.
Consider the seller’s needs and circumstances when deciding on a closing timeline. For example, if the seller is still looking for a new property, it may be best to give them more time to find a new home. A quick closing may be appropriate if the seller has already found another house to move to.
7. Understand Contingencies
In real estate negotiations, contingencies must be fulfilled for the sale. These can include financing, appraisal, inspection, or repairs. It’s crucial to understand all the contingencies arranged and ensure they are met to the satisfaction of both the buyer and the seller.
Real estate negotiations in Kenya can be daunting, especially for beginners. However, negotiations can be smooth and fruitful with the correct information and strategies. It is vital to research the market, understand the needs of all parties involved, and maintain open communication and flexibility throughout the negotiation process. Additionally, seeking the guidance of a professional real estate agent or lawyer can be extremely helpful in ensuring a successful transaction. Remember that negotiation is a skill that can be learned and improved with practice, so don’t be afraid to negotiate for the best deal.