- It can take confidence and chutzpah to make a knock out offer
- However, under certain conditions, you could end up paying a good price
- Some people are wary of this tactic, but it might be worth considering
In his ninth article in the series, investor, founder, author and media commentator Bushy Martin discusses the science and art behind property negotiation.
In the previous pieces, the topic 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, which you may feel is tipped against you, why cash is king how to know the prevailing conditions and that negotiation ‘starts with hello‘.
The next tip to consider in an overheated seller’s market – such as we have today – where there are more buyers than sellers, is to consider making what is called a knockout offer.
A knockout offer goes in fast for a quick, mouth-watering sale at an enticing price. It’s an offer that the seller is likely to accept, as it could be more than they may have expected, so quickly. It gets the whole process of selling their property over and done with, for a good outcome.
Not all sellers will accept a quick offer, but many would if they do not want a long, protracted sales process.
However, before contemplating this move, ensure the following are all in place:
- you’ve done your homework on the area and the property with the assistance of detailed property research reports from Core Logic (and The Property Tribune of course),
- you know what the true value of property is (which is often not the agent’s advertised listing price or range) based on properties that have sold recently around the area, and,
- you’re going to be holding the property long-term and understand that paying an extra $10k to $20k now will be worth a lot more to you in the future.
If all these factors are in place, then consider putting in a knock out price upfront and early.
This will be attractive to the selling agent who is often looking for a quick sale so they can be paid and then move onto spending their time on their other listings. A knockout offer also puts the competition at bay and should get the seller’s attention.
Over the years I’ve seen many buyers who are afraid to put in an early knock out offer, or bid if it’s at an auction. They wait for the competition to build over time and, ultimately, they can end up paying more than the price they would have done had they offered a knockout offer from the start.
So, know the value or how much you are able and prepared to pay for the property, and consider making a knock outoffer, particularly in a sellers market where many buyers are competing for fewer properties.
This just may blow the competition out of the water and secure your property sooner rather than later. And, long term, it could be a good deal. Certainly, it can be better than a long, drawn-out, emotional process.
Next article: ‘Negotiation is more than the price‘