Unless you’re attending a property auction, where the sale price is decided by the market on the day, it is common practice to negotiate a final dollar amount somewhere between the dream price of the vendor, and the desires of the prospective home buyer. Involving more bluff, hubris as well as smoke and mirrors than your regular poker game, this argy-bargy can either end in an entourage of popping corks… or tears. So, here’s some advice to keep the hankies at bay.
Let’s say, for example, as a buyer you have fallen in love with your dream home, and getting your name on its title at a great price will be even dreamier. You need to make an offer to get the ball rolling, but do you go in low and risk offending the agent/vendor? Would you be offended if you were the seller? And if there’s other offers, you don’t want to crash to the bottom of the pecking pile with the vendor stating: “Well, I don’t want to give my home away!”
Just what is the appropriate starting point?
Table your emotions
Perhaps before launching a price point, a good strategy may be to look at any opportunities that are evident. For instance, not only do some property’s enjoy a fantastic presentation, their furnishings can also capture the buyers’ eye. Should this be your case, this can be a good thing if handled carefully. Rather than ask the agent if the vendor would include such things as the ritzy pool cleaner, barbeque furniture or even the main sofa, a handy tip is to make a compliment about these ‘extras’. Through the agent, compliment the vendor on such fine taste, and politely ask if there is anyway the vendor would consider leaving such and such there? In the process, throw in as many superlatives as you can and flatter like crazy.
Not only will your ‘love’ stand you out from other interested parties, any experienced agent will also tell you that some vendors really want their home to go to someone that will love it just as much as they have. And this shared love can sometimes win over price.
Yes, you run the risk of the vendor thinking you will now pay the earth, as you are bringing passion to the price. However, emotions run high with vendors that have been in properties for a substantial amount of time. They need to get as much as possible, but they’ll also want to have a good feeling about moving on from that part of their life.
Kicking the property’s tyres
Right. You have a winning offer and you are conducting building and pest inspections. If there are issues, does this provide the opportunity to get the property cheaper? Be careful here, if there is/are minor issues with paintwork or a drippy tap and you start arguing over pennies, you may start to upset everyone. However, if the reports identify major structural issues you can request they be rectified by the vendor, and this also gives you the opportunity to back out of the deal if you have inserted ‘subject to inspections, etc…’ in your offer.
Money doesn’t grow on houses, let alone trees
When you are in the thick of upping your offer while the vendor lowers theirs, be quick about it. If you insist on making incremental counter offers, you’re just giving competitive purchasers time to come along and possibly outbid you. For example, if you’re willing to go up $12,000, don’t make four additional offers of $3,000 each. Each party should also work towards a 48 hour reply, or shorter, otherwise you’ll get nowhere tactically or psychologically with everyone getting annoyed.
Talk big — think little
If you’re thinking you’ll dig your heels in and bellow, “This is our one and only offer, unless it’s accepted by the end of the day I’m moving!” Don’t. Every agent that has taken offers from buyers has to deal with this old tactic… and it is a dud! For starters, no one likes this John Wayne move. It’s arrogant, and no vendor likes ultimatums. Worse still, if you’re in a busy market and this ‘offer’ is rejected, the agent will move on to other interested parties and negotiate with them — after all, you told the agent it was your last offer. Agents need to work with buyers that are interested in buying… which clearly now you’ve informed them you’re not.
Treat ‘em mean, keep ‘em keen. Really?
What about the old ‘playing hard to get’ scenario. Where, you really like the property, but you’re afraid to show it as the agent will assume you’ll now pay more for it. Yes, this is a totally understandable position. However, if you show you are too detached and the bidding (offers) war heats up, you run the risk of not being contacted by the agent as she/he thought you weren’t that interested.
So, if you now know what not to do… what can you do?
Aside from offering dollars, go beyond what other buyers may be doing and offer convenience:
- If you have the flexibility, ask if the vendor would like a longer or shorter settlement time
- If the vendor has already moved out or will do so quicker than settlement, would they like to rent it to you (pre settlement) and make some extra money?
- If there is a substantial garden and you are into gardening, mention how you will look after it and love it like your own (work this line hard, and it soon will be)
- If you’re up to it, offer to have the vendors visit every now and again to see how their old home is going (this is a biggie for retiring folk)
- Or, if it suits, enquire if the vendor wants to store some of their furniture in the garage for a few weeks after settlement, thereby mitigating their moving-out pressure.
- Plus, buddy-up to the agent. Get to know them, share the small talk, promptly return their calls and become their NBF. That way they’ll have empathy for you and your offer when you go in to bat.
The more ‘outside the box’ thinking you can bring to the vendor’s table, the more chances you have of pleasing the homeowner, and hopefully securing the property of your dreams.