Our Messed Up Property Negotiation, Don’t Do the Same!

The negotiation on our first purchase was a disaster. We initially had gone for another flat and it had fallen through when the agent told us someone else had bought it after he already agreed verbally that the seller was selling to us. We wondered if the agent was just using us as bait to crank up the price on the other buyer. Alas, we will never know!

The whole business was quite rushed as we were not buying in our home area (big mistake!) but we had little choice. If we were to get anything, if we were to get started, it had to be there because prices in our permanent home area were and still are out of control. At the time we were temporarily living an hour away from the location where we were looking to purchase, and as we were leaving there soon, time was running out and we were about to give up.

But then another flat popped up out of nowhere in the same building as the previous flat. The owner was asking way too much (these are studio apartments in northern France) at around 53,000 Euros. Since we were making our first negotiation and were pretty clueless we actually took into account the seller asking price instead of the true value of the property. Now we know that asking price is really irrelevant, you make an offer based on what you think it is worth.

Anyway, it seemed too much but we were embarrassed to make too low of an offer in comparison to the asking price, so we offered 40,000. The seller countered with 48,000. We said we couldn’t go past 43,500 and the seller agreed. At the moment we were happy, but later we realized that we paid too much. The seller made us think we came closer to winning the negotiation but in reality he won by starting with a high asking price.

It was a quick lesson. A better flat suddenly popped up after we had already agreed on buying the first one. So we made a bit of a low offer of 38,000 and the seller accepted without negotiating. He just wanted to get rid of it and didn’t want to take the chance of losing the offer. This made it even clearer that we overpaid the first property as the flat was actually better and cost us 5,500 Euros less.

Rule of investing: always buy low and sell high. If you can’t buy low, don’t buy at all! Once you make an overpriced purchase, you can’t change the mistake.