So often I speak with buyers and sellers and I am horrified at the stories of negotiations gone wrong. Please find following some simple tips to avoid being one of the statistics of properties which should have sold and didn’t or being the disappointed buyer who sees the property sell later for a similar price or less than they would have paid.
In many cases the negotiations break down for reasons which should not occur. For example the buyer indicated that they may pay a certain amount and this gets communicated to the owners and then when the offer comes in it is less. The owner gets upset and thinks the buyer is playing games when in reality the comment from the buyer may have been casual without a lot of thought and perhaps they have later gone back for a second inspection and they noticed issues on the second visit which made them adjust their thinking before making the offer in writing. Worst still the owner may have accepted the verbal offer only to find the buyer says no I have since thought about it and would not pay that for the property.
- Offers must always be in writing.Whether you are the buyer or the seller insist that any offer or expression of interest be in writing. This will avoid a lot of confusion and save both parties headaches in the process.
As a buyer you have a better chance of the owners taking your offer seriously if it is presented in writing and sellers will know full details of what they are making a decision on. If negotiations should continue in writing so each party always knows exactly what the other will do, not may do.
- The deposit is important. For the buyer – it will show the owner you are serious, in a strong position and in a multiple offer scenario it will also make a difference. 10% is the maximum we can receive. It is held in a trust account until Settlement.
For the seller – It will show you have a serious buyer in a strong position. Buyers do not walk away from 10% however we hear of plenty that walk away from $500 etc. If a buyer defaults on a contract they will lose the deposit. What most sellers do not consider is that the agent may be entitled to their full commission if the sale was unconditional. You do not want to see the deposit all go to the agent and you end up with nothing 10% is best, that is the maximum we can receive before it becomes an instalment contract which is not good for you either but that is another story.
- Settlement. Be flexible, this is often one of the factors which form a major consideration in negotiations. If you can give a little here in some instances the price will not be as firm.
- Multiple Offers.Best practise involves the use of a multiple offer form all buyers are requested to sign to confirm there is more than one offer and their best offers are required. To give yourself the best chance always consider your terms as well as the price. Make sure you have offered the best settlement and terms you can. This includes the deposit and number of days for conditions which may apply. When considering your price make it an uneven amount. So often we see a property sell to someone for $500 or $1000 more than the second offer. eg. offer $401,800 instead of $400,000. Instead of doing 7 days for building inspection, try to do 5 days etc. As a seller always make sure the agent goes back to all parties and advises them they are in a multiple offer situation and ask if their terms and conditions are the best they can do and make sure they present them to you in writing.
- Get it signed.A contract is not a binding contract until all parties have signed and initialled any/all changes and the buyer has been given a copy so the cooling off period starts. Push for this to be done asap so as to avoid parties changing their mind or other parties presenting better offers.
- Keep to the terms. Remember time is of the essence. If the deposit is due on the the 17th make sure the funds are in the agents account or cheque is delivered to the agent on or before this date. If this does not happen the seller has a choice as to whether or not they continue with the contract, likewise with finance clauses.
Ideally any negotiation should be a win/win scenario where both parties come out of the deal feeling better off than before. Hopefully the buyer loves the house and the seller is happy with the result and to be moving on 🙂
Hope this helps & Good Luck!