One of the most frustrating things that can happen in a property deal is losing to another buyer just when you thought it was in the bag. Usually this means that your offer was “shopped around” to other buyers who also held contracts, leaving your offer vulnerable to higher bids.
While you may feel the agent has given you the short straw, it’s always wise to remember that the sales agent is employed by the vendor to get as much money from the interested parties as possible.
So how can you avoid getting trapped into scenarios where you’re forced to increase your offer further, or worse still, lose out on the deal altogether?
There are a number of tactics you can employ as a buyer that can increase your chances of having your deal accepted rather than having it shopped around to other interested parties.
1. Put a timeframe on the deal
People naturally respond to pressure and if you’ve put forward a reasonable offer that is likely to be considered then putting a timeframe on the offer can get the attention of all parties quite quickly. If it’s relatively early in the campaign it can also catch many other buyers / contract holders off guard and unwilling to counter-offer within such a quick timeframe.
The two pre-requisites to make this tactic effective however, are 1) that the offer is a competitive one, and 2) you must be willing to walk away from the deal if the selling party doesn’t play ball or get back to you in time. Agents hate losing legitimate buyers though so if they know you’re serious they will usually respect your deadline and do what they can to make something happen.
2. Have the vendor sign the contract at the agreed price first
This is a good way to test the commitment of the buying party once you’ve come to a point in the negotiation where you think both parties will meet. You may be reluctant to push to a higher price in the negoation for fear of being dragged further into a dutch auction or hitting your limit.
In this case, propose a price that you’re willing to offer under the condition that the vendor signs their side of the contract first. You can then ask for a photo or copy to be sent through to you to confirm that the signature has been made. Once confirmed, you just need to turn up with your signed copy to complete your end of the bargain.
3. Give them what they want
This may go against the grain for all the bargain hunters out there who were hoping to squeeze the last drop of blood out of the seller. However, it’s important to ask yourself, “Am I looking for a bargain?”, or “Am I looking for a property that will be bring me the best returns in the long run?”. While it would be ideal to have both, many great investments have been lost because the buyer wouldn’t budge the extra $5K or $10K needed to get it across the line.
If it’s a great property and it means stretching yourself to get it, then take a step back and consider the big picture. You don’t want to lose a great deal because your ego didn’t want to budge an inch further. If it’s a property that you would be proud to have in your portfolio in ten years time, pay the money and get on with it.
4. Be prepared to walk away
Last but by no means least, this tactic needs to be engaged to make the earlier tactics truly effective. There’s no point trying to set parameters if the agent calls your bluff and you don’t have the wherewithal to walk away from the deal.
Being able to walk away also tells the agent that you mean what you say. You may lose this deal but you have also set up the ground rules with that agent the next time you come together – that you’re a straight shooter, you mean what you say and you’re looking for a fair price.
So next time your faced with selling agent antics, remember they’re just doing their job. That doesn’t mean that you need to play by their rules though. Outline your strategy before you go into the deal, employ the tactics just mentioned and your chances of success in securing a great investment will increase tenfold.