Few people are experts in negotiating a low purchase price on a property.
A good selling agent, on the other hand, knows how to get the best price for their client.
So it’s somewhat ironic that buyers often forget who the agent is really working for.
BIGGEST MISTAKES
Sydney buyers agent Bianca Field, from Bought Agency, says one of the most common mistakes buyers make is forgetting that the agent works for the seller.
“Sales agents are very charming and I think it’s very easy to get comfortable with them and give up all of your information, such as budget, your max limit, how long you’ve got to buy and the motivation behind your purchase,” Field says.
Melbourne buyers agent Mario Borg says he has heard horror stories when it comes to the negotiating blunders of buyers.
He says it’s a common mistake for buyers to give away their budget too early and show emotional attachment.
Other big mishaps include believing everything the agent says and “negotiating against themselves”.
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“Remember, real estate agents work for vendors and will be tenacious – and at times ruthless – in their quest to secure their vendor the highest price,” he says.
COSTLY CONSEQUENCES
As a buyer, if you show your cards too soon, it’s not just one agent at one property who can potentially pick apart your weak points, says Field.
“A lot of the information they give out to an agent goes on a database,” she says.
All the agents working across that network will then have access to the buyer’s budget, purchasing time frame and reason for moving – which puts the buyer at a disadvantage with that agency from the get go.
“They’ve lost an element of control when it comes to negotiation,” she says.
Having the selling agent know your budget can be quite a disadvantage, she adds.
“Because the agent knows that the buyer can spend that much, they will be naturally showing them properties that are exactly what they can spend,” she says.
“And any properties that might be a little bit less than what they can spend, they might now guide that property at a higher price point to that buyer.
“Pair that in with, ‘We’ve got six weeks to find a property because our kids are starting school,’ and the sales agent also knows what the motivation is.”
When buyers get caught up in the excitement of the purchase, they tend to “underestimate the agent’s strategy and experience,” which weakens their bargaining power from very beginning, says Borg.
“They either overpay, miss out altogether, or end up with terms that don’t actually suit them,” he says.
LOWBALLING
Over-negotiating or “lowballing” is another major mistake buyers make when negotiating, Field says. “It doesn’t need to be an aggressive process. On the other end is someone who is selling who is really nervous. Sometimes I think when you throw really low offers at agents they think you’re not an actual buyer,” she says.
“And when you’re too pushy and the agent has to pass on information to the vendor, that can make for a deal that’s too difficult.”
NEGOTIATING TIPS
When negotiating with selling agents, director of Bought Agency Bianca Field suggests the following tips:
● Offer comparables: Provide the agent with two or three sold properties and tell them you’d like to see similar ones, explaining why.
● Safeguard your price: Instead of giving a budget, be vague about your price parameters. For example, you could say, ‘there may be capacity to spend slightly more but there’s no guarantee, however we’d still like to have access to those properties in case we can access more funds’.
● Protect your motivation: The same goes for the reason behind your move. You could say something like, ‘if the right property came up tomorrow we’d be happy to buy it, however we’re not in a rush’.
● Move quickly: A conveyancer with a same-day turnaround and a broker who is familiar with the market you’re buying into are extremely helpful to have on your side
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Originally published as Biggest mistakes buyers make when negotiating on property
