After enduring a miserable few years, there are very real signs that the property market is turning. Activity in the house building market is always a helpful barometer and more and more developers are dusting down their land banks and getting out the diggers. This is a good sign, things are picking up.
So what should buyers and sellers, landlords and tenants have in mind when looking to do deals? Without doubt the key point is ‘be realistic’- although things are undoubtedly better, the days of the property boom are long behind us and the prospect of a repeat in the near future is unlikely.
When approaching a negotiation have in mind what you really need rather than concentrating on what you would like. Human nature is such that we all want to ‘have our cake and eat it’ but negotiation is about give and take and a great deal of wasted time and heart ache can be avoided by adopting a sensible attitude. You can’t win on every point so choose the points which are really important and deal with those. You should also be ready to show that you are a genuine interested party and not a ‘time waster’ – get your references ready or proof of funds – if you are in a bidding war this may put you to the top of the queue.
Top tips to consider:
1. If you want to sell, be realistic about your price. A drop in price now may save months of waiting and may be offset by the savings made in mortgage repayments.
2. Make sure the buyer is genuine – don’t be afraid to ask for proof of funds.
1. Get your mortgage agreed in principle as soon as possible – this shows that you are a genuine buyer and saves any embarrassment or delays down the line.
2. Don’t be afraid to ‘haggle’! There may be other reasons why the seller has the property on the market which dictate the need to sell quickly.
3. Get a survey done – this will give you peace of mind and may result in a further reduction in the price to reflect necessary work.
1. Be realistic – there is a lot of empty property out there. Tenants expect incentives but this doesn’t have to be an initial rent free period.
- Reduced rent for a period
- A rent free in the second year
- Doing some fit out work for the tenant.
2. Check the covenant strength of your tenant- don’t be left high and dry by a ‘shell’ company which has no assets.
1. It’s a good time to negotiate a decent deal. It is not uncommon to see lengthy rent free periods, capital payments being made by the landlords and low rents.
2. Negotiate a flexible lease – in difficult times, flexibility is important. Ideally a rolling break clause should be included
3. Don’t get stitched up with an on going obligation. Make sure you have the property surveyed if you are taking on responsibility for the whole building.
- Get the deal done!
- Don’t waste time arguing over points which aren’t really important
- Remember, every day lost negotiating a deal will result in a loss to each of the parties.
- Without the property, you can’t trade and make profit!!
For any further advice in relation to a commercial property purchase, sale, or advice in relation to lease, please don’t hesiaite to contact one of our commercial property solicitors.
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