Let’s face it, when negotiating for the purchase of a property, the average Australian is at a huge disadvantage.
Sales Agents are now highly trained in this fine art and spend their days at conferences, role playing and putting it all into practice at every opportunity.
Some would have had the chance to negotiate on hundreds of deals and built valuable experience every years, while the average Australian would be lucky enough to go through this sales process 2-3 times in their lifetime.
Having been trained in this area myself and been in the “heat of battle” on numerous occasions, there are three key points that I find can give me an edge.
1. Knowledge is key
If you are making an offer on a property, base it on something other than emotion or what you feel it is worth.
Do your research, start with sales in the last 3 months and a radius of up to 500m from the property in question.
This may need some fine tuning (dates or distance) but is the rule of thumb valuers will use to get an accurate estimate.
If you are basing your purchase price on a number of nearby sales and if they are “superior” or “inferior”, the sales agent will soon realise you know what you are talking about.
The agent should also know these sales and in some cases, may have even overlooked others, this gives you the upper hand and puts you ahead of other buyers.
Importantly, your offer is less likely to be dismissed as it will be more accurate and well researched.
2. Create Urgency
This is one tactic agents use to drive emotion and create FOMO — Fear of Missing Out!
In cases like and Auction or Tender it can be a bit difficult to turn the tables but in every day negotiations, you should look to put that pressure back on the sellers’ via their sales agent.
One way to do this is to create a Deadline to try and stop the sellers sitting on an offer.
There is different way this can be done, according to your relationship with the agent and how serious you are;
- A clause can be written into the contract
- When forwarding the contract via email, it can be put in writing
- It can be given verbally
If I have a good relationship with the agent I would likely opt for point 2 or 3.
However, if I have not worked with the agent before and felt he may not be communicating effectively with his sellers, point 1 would the best course of action.
Most deadlines we put forward would range from 24-48 hours, depending on the circumstances, things like other interested parties, day of the week (leading into a weekend and open home) and your own personal circumstances.
Obviously the shorter the deadline, the more urgency you are creating.
I would also recommend understanding your sellers also, as an elderly couple may not respond well to a 24-hour deadline.
48 hours is generally seen as being enough time to consider and respond with an offer.
3. Understand the sellers needs
I believe this is the most under rated part of the negotiation process and something we have had a large amount of success with.
99% of buyers will only be concerned for their own personal circumstances and miss out on a lot of opportunities by simply not understanding what the sellers’ needs are.
Ask the sales agent questions like;
- Why are they selling?
- How long do they need for settlement?
- Do they need to rent back?
- Have they already purchased elsewhere?
- Is there anything we can do to make our offer more attractive?
Everyone automatically thinks that price is the only consideration for sellers and in most cases, it is.
However, we have been successful on several occasions, with a much lower offer simply because we understood the seller’s needs.
It may have been a longer settlement or a 3-month rent back period built into the contract for certainty.
I find a deal will come together when there is often the smallest win for both parties and it is not always about price.
While Sales Agents are trained to have the upper hand and to create enough pressure to squeeze the last drop out in every sales negotiation, there are things you can do to take control of the situation.
Knowledge is power as they say and being armed with facts and data will send a message to the sales agent that you know your stuff and have done your research.
Putting pressure back on the sellers rather than them taking their time and sitting on an offer will also lead to a better outcome for you.
Finally, it is never just all about the price, understanding your sellers needs and adjusting your offer accordingly will dramatically increase your chances of success.