You’d imagine that buying a property would be as simple and straightforward as purchasing any other desired item. You’d see an advertisement and attend an open, ask the estate agent for the property’s price, submit a fair offer – perhaps expecting a little bit of argy-bargy along the way – before reaching a final agreement. Yes indeed, you might imagine it to be an easy process – but 18 years of real estate negotiation experience tells me otherwise.”
Buying property: the art of negotiating
What makes a strong and fair negotiation?
By this stage, you’ve probably realised that purchasing property isn’t a straightforward process. But don’t get angry. Get even.
What you must remember as a buyer is that the selling agent’s key responsibility is to represent their vendor and to act in their clients’ best interests alone.
This doesn’t make them the enemy. They simply cannot represent both the buyer and seller simultaneously.
Many moons ago – before I became an advocate – I remember being clearly told by my estate agent boss that it was my responsibility to get the highest and best price for my vendor. I went about my job, and did just that, time and again. Upon reflection, the trickiness, ugliness and downright confusion involved in traditional real estate negotiation has led me to the business I have today: I’m here to level the playing field between buyer and seller.
Most people will only purchase one or two properties in their lifetime, whereas in the last nine months Infolio has negotiated over $64 million dollars worth of property purchases.
Professional negotiation is both my job and my passion: the privilege of representing buyers in the most important transaction they will likely undertake during their lifetime. And even though real estate negotiation is something I do on a daily basis, I still occasionally come across situations that are plainly unjust for buyers.
It begs the question – what makes for a strong and fair negotiation? I’m sorry to say that there’s no hard and fast rules, but in today’s blog I offer some valuable pointers to help you in the right direction.
When a property is passed in to you at auction … Congratulations! Before you get too excited about your position as ‘last bidder standing’, think carefully about whether you should increase your offer substantially, as you will in effect be bidding against yourself. Typically, the agent will tell you that this is your one opportunity to purchase the property at the vendor’s reserve price, and should you not accept that purchase price the agent will offer the property to all other interested parties which may lead to an ‘auction after the auction’. This threatened situation will only occur if there are other motivated buyers prepared to pay more than you. If there are other interested parties milling around outside, why did they not bid? Before walking into the home to negotiate with the agent, hang back a moment to see if there actually are any other parties waiting around for a result or an opportunity to buy.
When there are multiple offers … Multiple offer situations really sorts the wheat from the chaff in terms of negotiating prowess. The most important thing you can do as a buyer is to gain a thorough understanding of the process you are about to become involved with. This will differ from agency to agency – to better familiarise yourself with the procedure, ask some of these useful questions: a) If I submit an acceptable offer and another buyer comes in with a higher offer, do I get last right of refusal? b) Will other buyers be told what my offer is? c) Does the agent get confirmation that the home is going to be sold prior to requesting my highest offer? Importantly, make sure you are not increasing your own offer without the genuine motivation of competition. This will come down the dealing with a reputable agent who is honestly telling you there is competition, and you have an opportunity to purchase providing you put your best foot forward. If this is the case, gird your loins and get the job done! Remember – a negotiation is only hard if you don’t know what a property is worth, so do your research. If someone is prepared to pay more than the property’s true value, walk away knowing there is another home waiting for you just around the corner!
Source: The Real Estate Conversating Feb 25th 2016 http://www.therealestateconversation.com.au/blog/lauren-staley/buying-property-the-art-negotiating/property/home-buyers