The Golden Rule When Buying Real Estate
You'll notice that the one thing a real estate sales agent will never, ever allow you (the buyer) to do - is have access to their vendor.
That's because vendor has all the information that is going to benefit you in negotiation.
The vendor can tell you their "wish price", the least they would be prepared to accept, their reasons for selling, and so forth.
The more information a buyer knows about the vendor’s circumstances and expectations, the easier it is to manipulate the deal to their own advantage.
Instead the agent will be evasive about their vendor’s preferences – with comments such as “we’ve not yet set a reserve” or, "buyer interest is at $xxx,xxx..."
Neither answer is much assistance to buyers when assessing what the reserve may be.
Yet, in reality, the agent knows the vendor’s ‘wish price’ from the onset.
This is why the most important key to successful negotiation is to place a buffer between you (the decision maker) and the real estate agent.
It's very hard for the decision maker to be evasive when questioned about price expectation. Yet agents do this every day of the week.
In the many articles and seminars we have witnessed on negotiation tactics, rarely – if ever - is this one golden rule mentioned.
Why the buffer?
As a buyer, if you show any emotional or physical reaction to a question or statement from the sales agent, you give away valuable information the agent will use to their benefit when brokering a deal.
It can be as subtle as a glance to your partner, a raise of the eyebrows or the tone of your voice.
This is one reason as buyer advocates, we gain a significant advantage when vendors attempt to sell their own property.
Negotiating directly with a vendor enables us to unearth far more information than a well-seasoned sales agent would ever permit.
When we negotiate on behalf of buyers however, the sales agent is granted no such advantage.
For example if a property is quoted at "more than" $800,000, the question we may want to know is what amount of money will buy the property "today?"
We want to get an indication of vendor expectation. A vital number to understand in the negotiation process.
If the agent grows attentive when we ask if the vendor will accept a certain amount – say, for example $850,000 or $860,000 - it gives us a better assessment of the vendor’s likely reserve. And it does so without compromising or disclosing our client’s position.
If, for example, the agent asks if we can put $850,000/$860,000 in writing - we simply say we don't know, we have to refer back to our client.
We are not the decision maker. But in the process, we've gained some information that will assist our client when assessing their options and budget.
Any information we provide the agent can be manipulated to our advantage when brokering deal on our client's behalf.
All the questions we ask are designed to unearth information you would never be able to access alone - at least not without disclosing vital information regarding your own circumstances. Information that would benefit the vendor.
There are numerous ways to negotiate.
It is about more than price alone.
Negotiating settlement dates, conditions on the contract, the deposit amount and so forth, are all useful tools to employ.
However getting someone to negotiate on your behalf is the most powerful.
As the saying goes – “a man who is his own lawyer has a fool as a client.”
Don’t be that fool.
Please contact us for more information.