Negotiation Tactics in a ‘Sellers’ Market – Part One

It’s an understatement to say that the residential property market is ‘hot’, as values in almost all major locations are up on this time last year. Sydney, Melbourne and Perth are leading the charge, as supply is outstripped by demand from a growing population.

In real estate terms, we are currently in a sellers market, whereby in most locations all agents need to do is list a property for sale and watch the enquiries flood in. There’s no need for follow up calls or to make any contact with interested parties, because those looking to buy, have most likely been looking for a while and learn quickly that if they don’t chase the agent they will most likely not get a call back and if they leave their call back to the agent too long, they often hear those dreaded words—”sorry the property just sold”. This is case at the moment for any well located properties in high demand areas across the bigger cities. During these ‘sellers’ markets, agents will recommend vendors to go to auction,  as they have a hidden saying in the real estate agent industry—”quote it low and watch it go”  which has certainly been the case during these times.

So as a prospective buyer, what are some of the things you can do to assist in winning the fight to secure a property?

1. Set your offer with a deadline

If you are serious about of couple of properties at the same time, it is best to put an offer that lapses on your preferred property, so as to ensure you give yourself ample time to compete in both properties.

When negotiating this condition with the real estate agent, inform him that you are interested in another or several properties (if that’s the case). If they ask which property, feel free to tell him the exact property but only if the other property is going to sell for less than what you are offering on this property.

Do not tell them if the other property is worth more because if the agent is smart they might already know what the other property is worth and if its worth more, they will try to get more money out of you for this property.

If the other property is higher in value, then its best just to tell the agent there is another property you are chasing, but only quote the suburb or area location, therefore the agent doesn’t know which property it is, but they know that you are active and if they don’t recommend your offer to the vendor and it is not accepted by your deadline, they could lose you as a buyer.

2. Put in your offer (again)

Let’s say the vendor doesn’t accept your offer – this doesn’t exclude you from making another offer, or getting someone else to make another offer on your behalf. Put your offer in writing, present it with deposit funds, and limit your conditions—A vendor will see this a serious offer and given its right there in front of them, they  just might be happy to accept the offer, given they have piece of mind knowing they have a sale ’right now’, as opposed to the unknown outcome of waiting for the auction.

More negotiation tactics in next month issue…