Let’s Deal…. 17/09/12

Like most people who are up with it all, I subscribe to a lot of social media and newsletters that I tend to read throughout the week. For the most part there is always some nugget of information buried in a load of opinion, and if you are happy to mine for it the results are worthwhile. It’s the one percent-ers that make all the difference between success and the not so successful in real estate, and indeed in life.

Whilst reading through some articles this week I came across some “laws of negotiation” written by a prominent real estate selling agent. These were simply a point form guide of what this gentleman felt were the key manoeuvres to take into consideration when selling a property. The little tips and tactics designed to give the selling agent an edge over the buyer and you know what, he was pretty spot on with a lot of it.

For example there was discussion on how to receive an offer with a look of surprise on your face as if you expected more. This was to be done at all times. There was a reference to when price negotiation was best dealt with, and in this particular article it was suggested that was when the first offer landed on the table, so straight away. There were a number of other laws focussed on making sure the decision maker was in the room and being aware that walking away from a deal could be considered a negotiation tactic.

When I read these my first reaction was to think that it was a little simplistic. After all, everyone knows that when you offer a price, the agent will ALWAYS tell you they were expecting more. It was only common sense to have a discussion on a deal with the decision maker, and although cheeky, walking away with the intent on coming back was an age old tactic that had been around since Moses played full for back for Bethlehem. The reality is though, I was wrong.

I assumed, because I see the fundamentals of negotiation and deals day in day out, that a selling agent would understand the basics and employ them at all times. I was wrong. Just as I assume a buyer would, in most cases, know when they are being “negotiated”. The basics presented by this gentleman were both sound and necessary. It’s always a good thing to be reminded of what needs to be done at a minimum.

So in the spirit of good basics, let me remind all the buyer’s out there of a few things. When you make an offer on a place, it has to appear to be your strongest offer, full stop. Make it on a contract of sale and don’t discuss it further until the decision maker, the Vendor, has expressly refused it. If the offer is made correctly the refusal by the Vendor should be seen as a walk away point anyway. Remember, you as a buyer, are at a distinct disadvantage as there is an intermediary selling agent between you and the decision maker so you can’t get to deal directly with the person you need to. That’s just the way the industry has structured it unfortunately. You also have the option to hire an intermediary if you choose, but that’s up to you.

In terms of negotiating, understand that irrespective of what is published or taught to some agents, the negotiation starts way before the price is discussed, and involves way more than just how much. If I can impart one piece of knowledge it’s this, see if you can find what drives the seller or the selling agent to really want to sell this property, and lean on that little piece of information. Structure your deal around it and make it the centre of how you offer. An example would be a Vendor that has bought somewhere else and wants out. Offer them a 90 or 120 day settlement in the deal. They won’t take it, but they may be willing to trade a couple of dollars in the purchase price in order to get the settlement time back to 30 days. Once again, it’s not all about price. As always, negotiate hard, but fair. Have fun and buy well.

Garry McPherson

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