The problem:
Many buyers rarely consider the counterparties… the Vendor, Agent Legal team, and the property itself.
Sun Tzu in the ‘Art of War’ advocated…
‘know yourself, the battlefield, and your opponent’… if you don’t you will succumb’.
Acquiring a property is no different…
Sun Tzu … ‘Art of War’ provides valuable insights
Many buyers have Champagne tastes on a beer budget or are unaware of their strengths and weaknesses.
Getting purchasers aligned to the reality of the market or the current fair value of a property (battlefield) and their personal position (yourself) can be an interesting dilemma and a conundrum for a Buyer’s Agent. Correctly aligning the purchaser and the Buyers Agent is very important as understanding a vendor situation and how his selling agent performs in the current market is also very insightful.
Not enough consideration is given to strategically handling the vendor and his agent (your opponent) as the majority is too focused on their self-interest. Big mistake – preparation is everything.
Many smart purchasers revert to using a Buyer’s Agent when they realise their situation and strive to give themselves the best possible market advantage. Understanding yourself and your realistic property requirements can be a challenge.
Education about the market prices is one thing, however, what about the question: ‘How can the vendor’s price expectation gap get closed to where the actual market price is?’ This is a current problem as vendors are struggling to meet the market. This is also exasperated by the situation if they sell “What else can they buy” or “Rents are high I will just rent the property”.
Using a Buyer’s Agent can give you a level of influence in this process while providing a handle on the real housing values in your areas of interest and how to approach acquiring the property you want. This includes a strategy and process to negotiate effectively with the Sales agents and their vendors.
Being unable to get clarity and certainty when purchasing (or selling) is a major problem. This dilemma can cause procrastination and despondency in Buyers and Sellers alike.
Consider the vendors as well…they get frustrated when they: Cannot achieve their dream price, had numerous low offers made, encounter changes in market sentiment, lower purchaser numbers, increasing interest rate rises (reducing purchasers) complicated by increased Days on Market, increased discounting and lowering Auction clearance rates. etc.
Many vendors’ properties are just not achieving the price they want or need, their neighbourhood is showing a general price decline and more than ever the selling agents are delivering bad news about their price situation versus the euphoria of last December and buyers making competing offers.
I often hear purchasers describing vendors as asking, ‘too much money for what is on offer, or ‘The quality is just not there… Yes, the market has shifted. You also cannot control the market…just how you operate within it.
The move from the sellers to the buyers has been fairly quick and it is a very real transition or “free fall” for some. Everyday properties sell due to such drivers as the need for a family home, births, deaths, marriages, divorce, downsizing, job relocations, investment etc… the market is always transacting. There is always a property to purchase or another that will come up. Fear of Missing Out has also dramatically changed with Purchasers.
When acquiring property, it is essential to consider all the participants that might be involved in the transaction and not just being self-directed and absorbed. Professional negotiation is all about preparedness and knowing the playing field and its participants. An experienced Buyers Agent can help.
The importance of understanding market value in a rising market is very important and even more so when the market is pulling back or cooling. A professional Buyers Agent can save you a lot of money by not overpaying, money that stays in your pocket and isn’t drawn down from your loan or liquidated from other assets. Money that has a long-term cost (like 25-year additional interest repayments).
The real issue for many purchasers is the inability to differentiate accurately between property and their value propositions, understand true market value, and ultimately be able to formulate a plan and then execute it. Without being able to get certainty and understanding of the market, decisions are flawed and can’t be made. This then propagates another non-purchase.
Buyers often “don’t know what they don’t know” until they have been through the process or utilised a Buyer’s Agent service. Fast forward to a concluded transaction and many Buyers reiterate that they could not have done it on their own, or they would have spent so much more money, fallen into a poor contract, made a bad purchase decision, skipped on some much-needed due diligence, overpaid (pricing pitfalls) or there were so many twists and turns that had to be navigated that their probability of failing in the execution would be very high.
In many cases, while you are at home with the family on a Friday night or on the town your Buyers Agent could be doing a property contract exchange on the bonnet of a car.
Unfortunately, it is once the process has been used that Buyers understand the value of the Buyers Agent process. It is a Trusted environment helping people spend substantial sums of money in the biggest purchasing decisions of their life. Ultimately it is about providing a great customer experience, reducing their stress, and saving them time and money. It is a relationship of trust and expertise.
Understanding the buyer’s journey and where they are up to in their purchasing is critical. However, so is the Buyer’s understanding of where they have potentially been failing and what has to happen next to effectively execute on buying a property.
Many will seek help in their journey when they become aware of their deficiency or lack of traction. Surrendering to professional advice and expertise could be a challenge at first however it will accelerate your probability of getting the property you desire.
If you are ready for a professional service and are prepared to pay money for this advice, it stands to reason you should listen to it. Not always so. Getting alignment can sometimes be an issue as old habits and processes are challenged. Non-compatibility as well can just frustrate the relationship, affect the process, and lead to a termination of the arrangement. A great way to start is to be open with yourself and your partner and complete a SWOT analysis of yourself and your capability. Strength, Weakness, Opportunity and Threats (SWOT) can be revealing and very beneficial to your cause and professional relationships.
S.W.O.T – ANALYSE YOURSELF
YOUR STRENGTHS– Are your finances ready and a pre-approval in place? – This means you have purchasing power and performance at the ready. Can you make a decision? Are you and your partner (other buying stakeholders) aligned in what you want and where it is? Do you outsource something when you don’t have the expertise, time or commitment to perform the task? Do you have to sell your house first? Can you pay a ten per cent deposit, and settle in 42 days or less? Are you aware of why you may have failed in trying to purchase previously?
Understanding your strengths and weaknesses is essential to how you will engage and participate in the property market.
YOUR WEAKNESS – not financially ready (if your funds are not ready you are just wasting your emotional energy and time – it is a folly), Unable to decide on the right area and location? Having unrealistic expectations (Champagne taste on a beer budget)? Not having the financial capability to meet the market you are trying to enter (look at the median price point for the house and suburb)? Are you emotionally driven, or can you be pragmatic? Can you make time to respond in a timely fashion to key questions asked by the Buyers Agent? Can you follow a plan? And are you coachable? Are you controlling? – where it is an excessive trait that blocks third-party advice and input (then perhaps the service is not for you). Do you think that because your budget is “x” the house should be worth that amount and anything over this is ‘just ridiculous (it happens!)?… You cannot control the market.
YOUR OPPORTUNITIES – Being ready opens doors and beats those who are not ready – simple! Can you focus on acquiring property and make it a priority – urgency and execution will also outperform many other competitors trying to purchase? Having a Buyers Agent gives you an advantage with Agents and accessing off-market opportunities that as a non-professional you want to see.
Having an edge on price and value protects you from overpayment. Having a professional negotiator can create leverage opportunities in price or get concessions on terms or skew the outcome to meet your requirements. Having a strategic plan in place and executing this is a major point of difference… the strategy, offers and execution are where most fail.
Having professional who knows the whole end-to-end process and can influence the process is a major advantage and competitive edge against others.
THREATS – Outperforming other buyers is critical. Being able to negotiate premarket, before Auction always provides an advantage – not being capable in these areas threatens your chances of purchasing the property you want. Being too familiar with Selling Agents can be a major threat to your wallet as you will be influenced in your relationship.
Not having a professional bridge between you and the selling agent can be emotional, frustrating, and expensive. Not having professional due diligence, property and process oversight can also be very expensive if not performed correctly…even challenging your legal representative over contract terms or settlement conditions can drastically change the experience for you… and the risk. There is no substitute for experience.
Not many BUYERS have a defined strategy to acquire property it is a key concept and process in achieving success. Understanding the whole picture is where an experienced Buyers Agent can be invaluable. Having a purchaser aligned and aware of themselves, the market, their counterparts, and their strategy is a key component of success.
Get in touch with me if you would like to gain strategic insight into how we can acquire a property for you.
Book a Property Strategy Session or contact Gary at [email protected]
