STOP COMPETING AGAINST YOURSELF

A key mistake most property purchasers make including many who are experienced is “competing against yourself”. How does this occur…it is all about your emotional attachment and bias to want the deal?

This can be averted if several strategies and good common sense is followed. Many purchasers fall under the spell of wanting to deal directly with the Sales Agent – building a strong rapport with the agent and loving the property that is presented in your target area. Guess what … it is a honey trap

The agents represent the vendor. Their job is to achieve the maximum price possible for them. Some home truths in the marketplace which have recently been verified by some discussions with conveyancers suggests that many offers given to agents are not reaching the vendor. They are being conveniently not tendered as the agent does not feel they are close enough to the money.

Technically it is illegal as all offers must be put to the vendor. One agent politely replied” I must have it writing’. This is fair. When I submit my formalised offers, they are addressed to the Vendor and delivered care of the Agent. We take the Agents word at face value that these offers have been relayed. I have on two recent occasions had major doubt as to whether the agent passed on the offers. The outcome was that I called them out on it and progressed to another property immediately. The agents doing this are massively exposed and not representing their vendors best interests. As a buyer’s agent I saw superb value elsewhere in a competing property which was acquired at a far better value level for the client. Serendipity.

Bidding against yourself starts with your rapport with the agent. Often this relationship will be exploited to get the best price. Some consider it being influential others may call it manipulative but at the end of the day you should be aware of it and have no illusion as to the position you both operate from. This paradigm can be interrupted by using an experienced buyer’s agent – knowing value and having a solid strategy.

For example, understanding the market and researching a true fair value for the property in the current market is essential. Negotiating around this price point is intrinsic to getting a quality deal and a good price. Listening to the agent is not going to get the same result as you are having negotiations around your fair value price. It is about expectations. Mine is Fair Value and improving on this. The exception is if the agent is desperate to move the property and close out a sale to realise their commission.

Technically when an offer is submitted and rejected the Agent must realign and change their price quotation to give a fair representation of the market value and what the vendor may accept. Does it happen? … sometimes. Most prices “Starting from…” “Price guide of…” are indicative values or “bait balls” to get people in around a price point with the hope of seducing them to a higher value.

The truth is that in a tough market there is less emotional credit to gain price increases like those being achieved 6 months ago. The practice has created a lot of ill will in the market where agents have knowingly underquoted prices to gain more inquiry and hopefully more buyers. Part of salesmanship perhaps?

The regulation around this behaviour is designed to protect consumers from unfair practices. In some cases, it also must be seen as depriving vendors of a maximum price. Ethically though it is area in regulation that is black and white but in practice carries so much grey area.

Having a professional buyer’s agent is a great way to circumvent or navigate these issues and get to the true core values or ‘cut-through’ on price. The reality is you can’t be precious around these points, the best method is to handle it and have a contingency plan to beat it or work with it.

I often hear sales agents using lines like “I appreciate your offer, but this will not get the vendors attention” or “Thank you for your offer would it be acceptable with you if I ask around with the other interested parties to see how they feel about the offer”. My response is “No problem I understand you want to shop it around, have a Dutch auction, however my offer stands and is only valid till…, I suggest you forward this to the vendor immediately for their consideration”

The aim of time-controlled offer is to eliminate the competition, catch them unprepared an stimulate conversation with the agent around a negotiation. Many people will talk about money and offers but unless you have it in writing or on a signed contract with payment it does not account for much. The other part is giving the offer enough gravitas for it to be tendered to the vendor for their consideration. A solid offer that is written is “one in the hand versus two in the bush”.

It is important to remember that vendors want certainty as well. Most sellers have started a selling campaign for a reason, to sell, against a timeline, so they know they will have funds by an anticipated date. They have made the decision to go to market, to sell, and want an outcome typically. Buying and selling real estate is about all the parties having certainty and comfort that the counter party will perform in a timely manner.

YOU WILL NEGOTIATE AGAINST YOURSELF without some of these considerations and awareness. When the agent says “Are you happy if another buyer purchasers the property at a higher price” take comfort that you know your numbers, your offer is on the mark, and that gamesmanship is a two-way street. Wait for any formal rejection, you can always go again.

It is amazing how many people will counteroffer very quickly with an offer that is substantially higher than their last offer. Often their elevated offer is based on the agent’s word that another counter party is offering more. This whole approach is appealing to your emotional requirement of not wanting to miss out (FOMO) or the dislike of rejection. Try having patience and holding your position.

Having patience and poise when making offers will also flush out whether there is any true competition or not. If the agent continually calls after the alleged counterparty offer date… you know they have nothing, or the other party has failed to deliver. Your next position or offer does not mean you have to elevate your offer to be a contender… show patience and let the offer work for you. If your offer has expired let them solicit you to have your old offer re-ignited. If you, don’t you are competing against yourself… again.

If you want insurance for not competing against yourself, changing the locus of control from the seller side to the buyer’s side then consider using a buyer’s agent. The buyer’s Agent does not carry the emotional attachment and will have the patience and strategy to test the waters rather than just always jumping in. The savings made through not bidding against yourself often more than provide a return on investment (ROI) for the services of the buyer’s agent.

Need help? Call Gary Damp on 0425 232 115 and create a buyer’s advantage