How to Use Time as a Negotiating Tool
How to Use Time as a Negotiating Tool
Buying property by private sale is hard work because you need to be a mind reader; you need to be able to understand the agent’s position (Is their authority about to run out? Will they lose their commission?) as well as the owner’s position (How determined are they to achieve a particular price? Do they need to sell by a certain date?). It is all about establishing a level playing field for yourself, about getting the negotiation process to be in your favour and not the vendor’s. Don’t be afraid to negotiate harshly; however, always avoid ultimatums. When an agent rings you or you are expected to ring an agent back, don’t return the call. Wait until they ring again. They will find it frustrating, but time is a wonderful negotiating tool, so use it to your advantage. This approach will help you to see through the games that both sides play. Time is the key component in negotiations. The longer the property is on the market, the more chance you have to get a better deal.
Case study 1
Because the owners had unrealistic expectations of their property’s market value, it had been passed in to a vendor bid at auction. Once a property has been passed in and a week has gone by, private sale negotiating skills come to the fore. Get another person other than yourself involved, so that they can independently verify any offers or interest in the property. Don’t simply listen to the estate agent.
I kept in touch with the selling agent, letting them know that if the price was reduced, my client would be interested. This effectively put pressure to complete the sale on the agent, whose authority to sell was about to expire. Not only would the agent lose the listing, but also any commission. Two days before the authority was due to run out, the agent let me know that the owner would consider a particular price. Was my client interested? My client was interested but had seen another property coming up for auction on the coming weekend. I indicated that my client would be interested at a slightly lower price.
Our client then organised one of their acquaintances to also enquire into the property during the agent’s last week of his authority period. They were promptly told that they would have to move quickly as the agent was expecting an offer from a particular party, which of course was my client. This was a clear indication that we were the only interested party that the agent had available and therefore we were able to secure the property for a much lower price on the agent’s last day of his authority to act on behalf of the vendor. With four hours to go, the agent became one of our tools in purchasing the property instead of the owner’s tool in selling.
Use time for your advantage
In private sales, what should be a simple process of ‘this is the price, let’s buy it’, is actually a minefield that can cost you a lot of money if you pay more than the property’s market value. The longer private sale negotiations go on, the more you become aware of any competing buyers, and thus you are in a stronger position to negotiate the purchase price.
Case study 2
We were asked to buy a property that was for private sale. Having made several inspections of the property over a period of two weeks, I began negotiations on behalf of my client. I indicated the client’s level of interest to the agent, but said that the offer would not be confirmed in writing unless the owner was prepared to accept the amount of the offer. (This was an offer without really making an offer.) After several days the agent said that his client was prepared to accept.
At this point I told the agent that my client’s interest had changed and was now at a lower amount. The agent later rang to say that he was now holding an offer which was in writing. I went to the agent’s office, as he thought for my client to sign the contract, but I actually wanted to see the signed contract of sale, and of course there wasn’t one; there was within two hours, though, when I showed the agent the error of his ways.
– David Morrell
REALas predicts property prices
REALas predicts property prices – Australia wide including auctions and private sales.
Between April 2016 and May 2017, the median accuracy of REALas predictions was within 5% of the final sale price. REALas predicts potential final sale prices for properties currently advertised for sale.