Smart Negotiating Tips from a Buyer’s Agent who Knows…
The good news is you don’t have to be a talented negotiator to get a great deal on your next investment property. You just need to learn a few tricks from the pros. So how do buyer’s agents negotiate on a deal?
Understanding Vendors
It starts with having a deep understanding of what the vendor actually wants. Vendors are driven by different motives. Some are driven by price but they may have different requirements or desires. Establishing a good relationship with the sales agent will help establish the vendor’s needs. It will also help establish how the vendor wants to sell his/her property, by private sale, auction or Off-Market.
Having Solid Market Knowledge
Having solid market knowledge is important. You need to know the area that you’re looking to buy in intimately. You should identify at least five recent comparable sales. This eliminates some inconsistencies such as an unusually high selling price because a purchaser became too emotional.
Study comparable sales
Do your homework to show sales agents you’re serious. That way you’re more likely to extract information from them. If you approach agents with comparable sales on hand and an understanding of demand in the area for that type of property, you will be in a position to talk with them about which recent sales are reliable, comparable sales. Agents will generally chat more openly about their honest opinion when the buyer has educated themselves.
Cultivate goodwill with the agent
While sales agents do work for the vendor, don’t underestimate the power of being genuinely nice towards them. Treating the sales agent politely might get you important information about the vendor’s situation and their expectations. The sales agent may be willing to tell you what the vendor’s value in terms of the timing of the transaction, their style of communication, desired terms and any extra things you can do to enable a smoother transition for them. Price should be the last item you discuss.
Establish the agent’s rules before negotiating
To help strengthen your position, you also need to understand how the agent will handle offers and counter offers. Find out if they will call the vendor immediately, sign up the offer or facilitate a counter-offer. Will they call other buyers before selling it? And if so, how will they deal with competing buyers? Try to establish if the negotiation will be fairly handled so that you don’t show your cards and get slapped in the face with rejection, or worse still, gazumped or played off against other buyers.
Identify some potential weaknesses
With any potential purchase always have at least two negotiation points up your sleeve. These points should be issues with the property or the location (e.g. needs re-wiring or new roof, busy road, opposite a noisy school). You can use these to show the sales agent that while you’re interested in the property, you know that these issues with the property should make the price discountable as a result.
Understand the vendor’s position
Try to find out what the vendor’s motivation is for selling. Are they time-restricted and have to sell or not? Sometimes offering a shorter settlement period can get you a few thousand dollars off the deal. Alternatively the Vendor may want a really long settlement. Paying a deposit on the day could also close a deal. That’s why you need to extract as much information as you can from the sales agent to know how to present the best offer.
Make sure your offer is clear
Make a clear offer and then just leave it. If you follow up too soon, ask where the offer is at and what the next steps are, indicate to the agent that you may have more money up your sleeve. Don’t say the offer is your best or last unless it really is. Agents can’t be held accountable for selling at a higher price to a competing buyer if you have told them it’s your last offer.
Tell the agent about your Plan B
By this stage you know your requirements, are actively looking to buy and should have a Plan B property you are prepared to pursue if this purchase isn’t successful. If you’ve built up a good relationship with the sales agent he/she will know that you aren’t entirely emotional and are motivated to buy so they will feel impelled to keep things moving for you. An agent doesn’t want to lose their leading buyer. Nothing feels worse than telling a vendor that the buyer who made a reasonable offer is now out of the market.
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