Know the market
There are 3 types of Markets
The type of market you are selling in will have a significant impact on how you will negotiate as a vendor.
Negotiating with buyers
Our experienced agents don’t focus on what the Vendor (Seller) wants or will accept as an offer on their property. Ultimately a buyer does not compete with the seller for their bottom line. It is the maximum other buyers will pay that has the greatest impact on negotiations. For example: If the Vendor will accept $500,000, other buyers have already offered $505,000 and $510,000. The actual bottom line of the vendor in this instance is irrelevant.
Buyers do not need to know a Vendor's bottom line. They just need to know the maximum other buyer's are prepared to pay. Buyers don’t compete with us as agents or the Vendors. It is with all other buyers who are competing for the same property.
Know the main negotiating rule
Most unsuccessful negotiations occur when buyers follow false ideals such as:
"No-one ever accepts the first offer"
"We were simply playing the negotiation game"
"Doesn't everybody 'meet in the middle'"
The main negotiation rule for us to communicate to buyers is "There are no rules."
Upon discovering that the property has been sold to another party, prospective purchasers are understandably upset and angry. This is due in part to the fact that the buyers were following rules of negotiation that the seller was simply either unaware of or not willing to negotiate by!
Know the difference between an offer and a contract
When a buyer inspects a property & wants to make it theirs, they will most likely want to make an offer which is constituted by :
1. Signing a Contract Note (offer) highlighting the terms and conditions of the offer (i.e. price; settlement day; conditions such as subject to finance/ building inspection etc)
2. Preliminary deposit is paid. Quite often this is the 10% amount of the purchase price however it can be 5% or even 1% of the property's value. These funds are held in Trust pending the outcome of the negotiations.
3. Section 32 Vendor's Statement is also signed to acknowledge receiving a disclosure from the Vendors about any relevant items effecting the land, buildings, title, services etc.
Once these three things have occurred, you have made, as a buyer, an OFFER to purchase the Vendor's property.
This offer does not become a legally binding CONTRACT until the Vendor signs (acceptance) the offer and all conditions to the Contract and Section 32 have been fulfilled!
REMEMBER IT IS THE VENDOR WHO MAKES THE FINAL DECISION
Depending on the state of the market and the desirability of the property, buyers may be making an offer on a property at the same time as other buyers. It is important to understand that a Vendor may decide to accept another offer without giving other interested buyers a chance to increase their original offer.
Accordingly, where the market is strong, multiple offer situations require buyers to make their biggest/best offer that they are prepared to, to secure or miss the property! Once again, their real competition is not us as Agents or the Vendors as Sellers, but rather with the other Buyers competing for the same property.
Subject to proper legal and financial advice, an unconditional offer to purchase, accompanied by a strong deposit cheque, is the most persuasive form of an offer. Remember there are no set rules in how a Seller will negotiate.
By making an offer based on your preferred terms and conditions, the worst thing that can happen is that the Seller ACCEPTS THE OFFER!!
Money is not everything
Whilst rare, there are occasions where the Seller accepts a lower competing offer in terms of dollars on exchange for a better settlement/conditions contract.
It is vital to ensure that buyers understand that they are offering not only the money but also the right conditions that are attractive to a seller. This could include a settlement or possession date in line with the vendor's next move.