Tip 2 - The Negotiation Process
Know the market
There are 3 types of Markets
The type of market you are operating in will have a significant impact on how you will negotiate as a buyer.
Know your Competition
Most buyers focus on what the Vendor (Seller) wants or will accept as an offer on their property. Ultimately you do not compete with the seller for their bottom line. It is the maximum other buyers will pay that has the greatest impact on your negotiations. For example: If the Vendor will accept $200,000, other buyers have already offered $205,000 and $210,000. The actual bottom line of the vendor is this instance is irrelevant.
You do not need to know the Vendor's bottom line. You do not need to know the maximum other buyer's are prepared to pay. Your competition is not us as agent's or the Vendor's. It is with all other buyers who are competing for the same property.
Know the main negotiating rule
Most unsuccessful negotiations occur when buyers follow false ideals such as:
“No-one ever accepts the first offer”
“We were simply playing the negotiation game”
“Doesn't everybody 'meet in the middle”
The main negotiation rule you need to learn as a buyer is "There are no rules."
Upon discovering that the property has been sold to another party, prospective purchasers are understandably upset and angry. This is due in part to the fact that the buyers were following rules of negotiation that the seller was simply either unaware of or not willing to negotiate by!
Know the difference between an offer and a contract
When you find the property you ultimately want to make yours, you will most likely want to make an offer which is constituted by :
1. Signing a Contract Note (offer) highlighting the terms and conditions of the offer as you prefer them to be (i.e. price/settlement or possession date/subject to finance etc)
2. Preliminary deposit is paid. Quite often this is the 10% amount of the purchase price however it can be 5% or even 1% of the property's value. These funds are held in Trust pending the outcome of the negotiations.
3. Section 32 Vendor's statement is also signed to acknowledge receiving a disclosure from the Vendor's about any relevant items effecting the land, buildings, title, services etc.
Once these three things have occurred, you have made, as a buyer, an OFFER to purchase the Vendor's property.
This offer does not become a legally binding CONTRACT until the Vendor signs (acceptance) the offer and all conditions to the Contract and Section 32 have been fulfilled!
REMEMBER IT IS THE VENDOR WHO MAKES THE FINAL DECISION
Find a Skilled Agent
We are proud that Bell Results Agents are recognised for being Industry leaders in the areas of Marketing, Negotiating, Auctioning and Training. For more than 3 decades, we have lead the local Market place and we know that Results; as great as they have been; are not EVERYTHING.
We earn the right to a client's business through being professional and improving our skills. That is why our team are trained weekly by one of the Real Estate Industries most respected coaches. The good news is these skills can be put to work for you today. Selling has changed yet most of the Real Estate Industry has not.
Your local Bell Results Agent is highly trained, highly skilled and above all, highly passionate about getting results that exceed your expectations. In fact, we GUARANTEE IT. To find out more, why not arrange an up-to-date Marketing Opinion on your home on-line.
Multiple Offers
Depending on the state of the market, and the desirability of the property, you may be making an offer on a property at the same time as other buyers. It is important to understand that a Vendor may decide to accept another offer without giving other interested buyers a chance to increase their original offer.
Accordingly, where the market is strong, multiple offer situations require you to make your biggest/best offer that you are prepared to, to secure or miss the property! Once again, your real competition is not us as Agent's or the Vendors as sellers, but rather with the other buyers competing for the same property.
Subject to proper legal and financial advice, an unconditional offer to purchase, accompanied by a strong deposit cheque, is the most persuasive form of an offer. Remember there are no set rules in how a Seller will negotiate.
Buyer Responsibility
Often it is difficult for an Agent to maintain a high level of Contact with all buyers that have expressed interest in the property. As such, to protect your interest in the property you should either act quickly by making an offer on your chosen property or keep in touch with the Agent to follow the progress of the sales campaign.
By making an offer based on your preferred terms and conditions, the worse thing that can happen is that the Seller ACCEPTS YOUR OFFER!!
Verbal Vs Written commitment
Your offer may obtain verbal acceptance from the Seller but it is not a contract until it has all of the required signatures of the Vendors.
Up until the vendor signs, any buyer can make revised offers to the seller! Ensure you receive written confirmation promptly from your Agent evidencing the Vendor's signature to see the Contract Note.
Money is not everything
Whilst rare, there are occasions where the Seller accepts a lower competing offer in terms of dollars on exchange for a better settlement/conditions contract.
It is vital to ensure that you are offering not only the money but also the right conditions that are attractive to a seller. This could include a settlement or possession date in line with the vendor's next move.
Negotiate with the end in mind
Is there any point saving $10,000 of your buying budget to improve a home that you may end up missing?
Today's Sellers Market requires you to often pay your maximum budget just to secure the property leaving any dollar improvements you wish to make for a later time.
There is an old Real Estate law that states, ("You cannot improve a home you never bought"). Focus on getting the home today! You can do the improvements tomorrow!
Next >> Tip 3 - Now that I've brought, what next?...
|
Investment Calculators
