Winning Property Negotiations By Assessing Buyer Activity
When negotiating on a property, sometimes the hardest part is knowing what to do with the limited information you have. Limited information can make decision making harder, while complete information makes it simple. This is why when we negotiate on behalf of our clients, we spend a lot of time building a picture of the other buyer interest before making our first offer.
When you're aware of the level and nature of competition for a property, you can tailor your approach accordingly. For instance, if there are multiple buyers showing strong interest in a property, with some having made significant offers, it indicates you have limited negotiating power in price alone. If all offers presented included the same terms, the only deciding factor from the vendor perspective will be price. In such a scenario, understanding your competition enables you to craft a more compelling offer, perhaps by being flexible on terms, providing certainty or manipulating the negotiating timeline.
Conversely, if you find yourself as one of the few interested parties, or perhaps even the sole prospective buyer, this knowledge empowers you to negotiate from a position of strength. You might negotiate for a lower price, delay your offers, or for more favourable terms, knowing that the vendor has fewer alternatives.
What Buyer Activity Should You Assess?
Imagine if you had a crystal ball that allowed you to know exactly what other buyers were thinking. I bet your first thought would be ‘What’s their budget’? Closely followed by ‘Have they made an offer yet?’, ‘What price did they offer?’ and ‘How interested are they in the property?’. If you knew those answers, you’d have a beautifully clear picture of your competition. So that’s what you should assess.
When you are assessing other buyer activity, it’s best find a measure of these 4 things:
The level of other buyer inquiry
The number of seriously interested parties
The number of other offers made
The value of the highest current offer
How To Assess Other Buyer Activity
The answer is in having powerful relationships with the Real Estate Agent selling the property, as well as knowing what questions to ask and when. As experienced Buyers Agent's, we have spent years cultivating a working relationship with each and every Real Estate Agent in our local area, giving us the edge over the average buyer in these conversations. Nevertheless, here are 3 tips you can use to build rapport quickly with the Agent, which allows you to ask the right questions:
View the Agent as an ally rather than an adversary
Remember, they’re the expert advising the vendor to accept or reject an offer, and if you get off-side with them, they could intentionally make it hard for you to buy the property. An easy way to do that is be curt with the information they provide when you ask questions.
Instead, treat them as a necessary proponent to the purchase. You don’t have to be their best friend, but you absolutely have to be respectful.
Be forthcoming with your interest in the property
This is an incredibly thin line to walk. You want to prove to the Agent that you’re genuinely interested (which will allow you to ask the hard questions) without giving them an indication of your budget or thoughts on price. Avoid answering questions involving numbers, instead provide general commentary on how the property suits your needs.
Ask the right questions
It sounds simple but can be incredibly hard. Instead of asking ‘what’s the highest offer’, consider disguising the question by asking ‘have you had any other serious interest in the property?’. This opens the conversation to give you the right to ask the pointed followup - ‘have they made any offers yet?’, and then another - ‘is the offer inside the guide price?’, and another - ‘is it above or below [insert number here]?’
So Why Is Knowing Other Buyer Activity So Important?
Comprehending the level of competition involves more than just counting the number of potential buyers or watching how many people walk through the open home. It requires having some hard conversations and ultimately building a picture on four things; other buyer interest, the number of seriously interested parties, the number of offers made and in an ideal world, the exact figure of the highest offer.
It’s important because to build a picture on how low you should start your offers, you must understand the floor price, and you guessed it, this is 100% driven by other buyer interest.
Building a picture on other buyer activity will ultimately allow you to place your first offer that’s high enough to grab the Real Estate Agent’s attention but low enough to avoid the ultimate failure of overpaying for the property.
If you’re unsure about the negotiation landscape when it comes to buying property, reach out to us and we’ll help you negotiate the best price for your dream property.