This is a common question, particularly when a private sale negotiation relates to an off-market property (where a vendor is selling without taking the property to the open market, but rather, a select buyer or handful of buyers).
Every buyer likes to know that they have paid a fair price for a property (or better yet, a sharp price), and in the face of a long and drawn-out negotiation, this can give the impression that a hard bargain was finally struck.
However, a long isn’t necessarily the measure of a fair price. I’ve had plenty of short-range negotiations over the years too, and ensuring a negotiation is fair relies on a many elements, not just time
Understanding the vital elements begins with establishing some facts. Not every agent or vendor supplies every fact, but the important facts boil down to four main items:
- Is it real motivation (do they genuinely want to sell, as opposed to “I’ll sell if I can break a ridiculous record and make a huge profit”)
- Can you establish when they’d like to sell, when they’d like to settle and when they’d like to vacate? The latter two may be different and this could give you an opportunity to frame a win-win offer
- Are they being reasonable and basing their price expectation on reliable information (such as comparable sales, a certified valuer’s independent report, etc)
- Do you have competition and if so, how much? And how do they wish to deal with competing buyers?
Once this information is at hand it becomes easier to make a decision about how to commence negotiations, and whether time is of the essence, or a gentle and patient approach is required.
It is often that we receive an agent phone call advising us of a suitable off-market to a client’s brief, and if our inspection appointment can be facilitated quickly enough, it may be in our client’s best interests for the negotiation to be approached very swiftly. When other buyer’s advocates, local under-bidders or a wider array of competing buyers are being introduced to the property also, it can often be advantageous to present the vendor a fair and reasonable offer quickly, and with a time stamp. The need to conduct through comparable sales and due diligence immediately is never starker than in a situation like this where price is fair, the property is suitable and the risk of competition is high.
We pride ourselves on being surrounded by a responsive team of professionals for situations like this.
We have building inspectors on hand who can respond within hours, solicitors who can review over night and out of hours, and property managers who provide written appraisals for us around the clock.
Not every negotiation needs to be conducted at lightning pace though.
When competition is low or negligible we need to consider the second point carefully. This point is all about when.
We recently had an opportunity to inspect a prospective off-market for dear clients of ours who sadly missed out at auction in a fabulous street in Elwood. I knew when I walked through the property that they’d gravitate to it and love it. It matched all of their criteria and the aesthetics of the home had a lot in common with the smaller house they were upsizing from. Not only that, but we’d been working together for long enough to be confident that this house would excite them.
I knew the feeling they could expect because it happened to me five years ago.
Like our home that we sourced off-market in 2013, this vendor’s home had seen her raise her children and had been the family home for many, many years. For a vendor in this position, choosing to move home is more than just logistics; it’s a new chapter…. and this can be very daunting.
Vendors who feel this way can not be rushed or pressured. Any attempt to do so is almost guaranteed to be counter-productive, and I knew this well from personal experience. I prepped our clients to buckle in for a long journey and to try to be patient.
And patient they were.
We inspected the house in early December. We carefully analysed the likely market value, compared notes with the listing agents, tentatively talked about terms, timing and flexibility, but all the while, didn’t dare to apply pressure to the vendor.
Week by week we felt that the likelihood of a sale was more imminent, but it still had all of the hallmarks of a nervous vendor.
Finally, two months, twelve days, many many phone calls and some tears later, we had a signed contract. I remember that phone call to our purchasers. She was out at the movies with a friend and he was feeding and bathing young children. After over two months of constant contact and updates, I couldn’t catch them to tell them the good news. Finally at 9.30pm I caught them both and their shrieks just about deafened me and I’m certain they could hardly believe it.
Now that deposits are paid, valuations are in, and conditions are all finalised, I sit here typing, wearing a beautiful new scarf they gave me and I reflect on the assignment and just how patient they were. Even over Christmas break and January holidays, they remained calm and gave the vendor the space she needed to make a huge decision.
It’s assignments like this that make our job so rewarding.