How Negotiate a deal when Price becomes a Problem
Sometimes during a property purchase negotiation, you reach a point where the seller digs in on price and refuses to budge. Suddenly, things grind to a halt.
Even for buyers’ agents, who close multiple deals each year and who have encountered every delaying bluff-and-bluster tactics imaginable, there are some negotiations that hit a wall where no-one seems willing to move on the dollars.
What do you do? Do you give up and move on or is there anything you can do to turn things around?
Well, this is where experience can help you or your representative step up and drive the deal over the line.
Here are some of my thoughts about worthwhile manoeuvres to get the negotiation process not only going once again, but finalised in a satisfactory fashion once price has become the sticking point.
Why is the Vendor Selling?
Now is the time to be bold about what it will take to get the contract signed.
Put it out there on the table – you have reached your absolute limit in a financial sense and won’t go any higher. So, what does the seller want apart from more money? What can you do to get the deal done?
You want to buy the seller’s property. That part is simple. But find out what the seller is trying to achieve. What is their bigger picture? Are they selling because they want to downsize or upgrade to another property? Are they moving overseas? Is the property being sold as part of a deceased estate or a marriage breakdown?
Understanding the seller’s intentions may assist you in putting forward an offer that meets their needs and objectives so they can move from one part of their lives onto the next. For example, how important is the settlement date to the seller and are there any other terms that may appeal to them?
Add a Sweetener
Sometimes, the standard settlement length isn’t long enough for vendors. This will particularly be the case if the seller hasn’t yet found and purchased their next property. Or, they may have already purchased and need a shorter settlement timeframe so that they can settle on their new purchase.
Negotiate the settlement terms to include shorter or longer timeframes that suit their circumstances. Ask the seller what would work and be flexible if you can.
Some vendors who have been burnt by failed deals in the past will appreciate the offer of a 10% deposit over a smaller deposit. Most sellers, particularly in the sought-after areas of Sydney will be unlikely to sell unless you are offering to exchange on an unconditional contract.
Also, think outside the square a little. For example, if the vendor plans to move interstate or overseas, or is downsizing to a smaller property, they might appreciate not having to transport furniture or bulky whitegoods. Perhaps you can work this into the contract and offer to take their furniture and white goods as part of the deal with a slight price increase. Perhaps ask if they’d consider a leaseback scenario, where they sell and get the cash but keep living in the property – paying you rent, of course – while they finalise their affairs. Have your lawyer advise you on how best to organise a leaseback so that everyone is on the same page about the arrangement.
No matter what sweetener you plan on presenting, be certain you’re actually in a position to make the offer and follow through before putting it forward – especially when it comes to your loan arrangements.
Sell your Personal Story to the Seller
Some vendors are emotional about parting with their property, particularly if they have been there a long time, it belonged to a parent or they’re downsizing from a family home where they raised their children.
Why do you want to buy the home? What it is about the place that you love so much that you can picture yourself living there?
In these cases, it might be worth telling the vendor your story. Describe what you plan to do to make their house your new home. Explain that you’re looking forward to raising your kids there and making it your family home over the next 10 – 20 years.
It is not a guaranteed method of course, but it might appeal to certain sellers who want to know the next people to move in will cherish their home as much as they do rather than knock it down to build units for example. I have used this particular strategy numerous times to negotiate favourable outcomes for my clients and it has been very successful.
Not every seller is motivated by securing every last dollar for their property but somehow, if you can, it is worth subtly reminding them that they should not be so greedy with their price expectations. Selling your story to the seller often cuts through the impasse as it may serve as a reminder that there is more to life than just money.
There are techniques to help reach agreement on a sale after price becomes a problem. You, or your representative, just need to understand the options and work with the flexibilities so all parties feel satisfied with the outcome.
For any assistance negotiating your next home or investment property purchase, call me today on 0405 134 645.