Negotiating goes beyond the price

We negotiate about how the negotiation will go. Often.

This blog was prompted by a conversation I had with a prospect yesterday. He, (like many do) asked me about my negotiation ability. I decided it would be a good illustration if I could share my past three negotiations which span the last five days.

For each negotiation, all centred around the fact that I had to negotiate with the listing agent about how my offer would be treated.

We negotiated about the negotiation, and this is something that few buyers understand, because they aren’t familiar with the various processes that take place behind the scenes.

The first negotiation was for a beautiful property that had an auction date set some two weeks from now. We knew it could be a crowd pleaser and the agent and vendor were receptive to early offers. We had a client budget that was not entirely likely to beat any competition; in fact their maximum budget was ten thousand dollars shy of the vendor’s pre-determined reserve. I had to manage a negotiation with the agent that gave us the opportunity to ‘get the property on the market’ with the budget we had. In other words, the vendor’s reserve had to decrease by $10,000 in order for our offer to be considered an acceptable start to the pre-auction bidding.

This was an ‘all in or all out’ situation for our clients, as they knew that any competition would eliminate them from the race. The negotiation involved a time limit; the agent gave other buyers a whole business day to challenge our offer.

Time limits can sometimes be very effective, particularly if other pundits are awaiting finance with an auction date in mind, (as opposed to being purchase-ready in the event of a pre-auction sale). Often a 24 hour period is insufficient for others, but an experienced buyer will know that an auction date can often be bought forward suddenly, and with short notice.

But we don’t always pounce at the option to secure a property prior to auction; in fact the second negotiation highlights this.

We were assisting a family with a home purchase and the auction was an online midweek event. Two weeks prior, we were privy to the price that we could have secured the property for if we chose to pounce earlier. It seemed a reasonable price, and was broadly at the level that I’d assessed the value at. Our clients were quite nervous at the thought of someone else securing their dream and they asked me to try to secure it prior. Conversations with the agent confirmed their pre-auction process. Upon receiving an offer, they’d give all interested parties until the close of business the following day; meaning buyers would have well over 24 hours to formulate their position.

That’s a long time.

I recommended to our clients that we go to auction, knowing that a shorter time frame, the pressure of auction nerves and the chance of intimidation over a face to face zoom arrangement could deter buyers from stretching their price limits.

We secured the property for a good price.

The third negotiation was the really interesting one. The campaign was a private sale with a quoted range and it became abundantly clear that the vendor’s price expectation was rigid at the top end of the quote. My appraisal sat at the middle of the quote, so I had some work to do. The agent had to manage a determined vendor, while I was not prepared to budge past the appraised limit.

My task was to find a way to get the agent to agree with me about the value, as opposed to the price. We discussed comparable properties and battled it out to eventually agree that he, too appraised the property where I had. I negotiated with him around how the offer would be presented and treated.

There was to be no ‘rejection’ of the offer. I would only proceed if he would agree to have the vendor countersign the offer and deal exclusively with us. Over the course of two days, we finally secured the property at my appraised price.

There are many steps in the background that agents and offices implement as agency policy when it comes to dealing with offers. They all vary, some have their quirks, and sometimes their own protocol is over-tuned.

Asking questions, understanding the rules, challenging respectfully and renegotiating is common practise.

Negotiating the negotiation is a huge part of what we do.