- The real estate agent negotiates professionally, you (as the buyer) probably don't
- You also don't get to talk to the seller, so that puts you at a disadvantage
- The playing field seems to be tipped against the buyer
In his fifth article in the series, investor, founder, author and media commentator Bushy Martin discusses the science and art behind property negotiation.
In the previous four pieces, the topic of property negotiation was introduced by explaining how you may need to change your outlook, build good rapport by using Mirroring and Labelling techniques and the perceived power position.
Let’s now turn to the specific negotiation of buying a home, and for the purposes of this discussion, we’re going to focus on the situation of when you’re buying a home that is advertised by a real estate agent.
Generally, in these situations, the perceived power is slanted in the direction of the seller, depending on prevailing demand and supply conditions.
Why do I say this?
Because this is a situation where you are potentially only one of many competing buyers of which you know nothing about. You are all dealing with a selling agent who is effectively a professional negotiator that is negotiating all day every day, and generally you don’t know who the seller even is.
This situation is a bit like you being the small shepherd David up against the giant heavily armoured ogre Goliath and his army.
You really need to be able to craft the negotiations in a clever way that allows your slingshot offer to hit the real estate sales agent Goliath between the eyes in a way that your offer looks better and feels more appealing to both the agent and the seller – and generally, you only get one shot at it.
This is especially true in a hot market, such as now.
You are trying to make your offer more appealing than all of the other competing buyers to the professional selling agent and the unknown invisible property owner, seller or vendor.
So, the playing field and perceived power are well and truly slanted towards the seller. This is a very challenging and difficult competitive environment to negotiate in.
Unlevel Playing Field
According to a reputable survey in Australia, the average home purchase takes over seven months, soaks up over 90 hours of your after-hours time, involves looking at an average of 12 properties that results in over six offers before you finally secure your property.
That’s a lot of time, stress and headache. I’m sure this is why buying a home is considered one of the major stressors alongside death, divorce and public speaking.
So how stressful is buying property?
Well according to surveys conducted by Allianz and Home.com:
- 42% of buyers feel overwhelmed,
- 51% of buyers feel very stressed when buying a home (Allianz survey),
- 13% feel they paid too much for their property (Home.com), and
- 28% are heartbroken that they didn’t get the property they wanted (Home.com)
So, let’s be clear, buying a property is hard, costly, time-consuming and stressful, and this all comes to a head in the final price offer negotiation.
The time when you’re making an offer signals to the selling agent and the property seller that you have a clear interest in the property and the point when they hold all of the cards.
You are likely to be negotiating on a property only a few times in your life in a situation where you are dealing with a professional full-time independent negotiator in the selling agent who is doing this all day every day, and he knows where you sit relative to other buyers that you aren’t even aware of.
NEXT TIME: We will discuss how to level the playing field.