This is what property buyers deal with when they don’t have a negotiation expert
Originally published on Linkedin.
One of the biggest challenges that home buyers face is understanding what they should be paying for a property, and when the house no longer represents a good deal. You can have plenty of research and understand pricing in the area, only to be emotionally manipulated into paying more for a property through a series of simple tricks that agents often use on buyers.
A recent example of how we were able to secure a dream home for one of our clients highlights just how agents will be able to play with numbers, and how many opportunities an agent will have to manipulate the pricing of a property, to the point that the actual property value can seem to almost become irrelevant.
The client was looking to purchase a comfortably large property in Wahroonga, on the upper-north shore of Sydney. This is one of those areas that has experienced a massive spike in pricing over recent years, but has just started to cool. This has subsequently led to a change of behaviour from the local agents, and buyers in this market that are not careful can easily find themselves paying well over what they should.
There was a property that fit with the client’s needs, and as the opening salvo, the agent said that there had been a previous offer accepted at $3.7 million, which had fallen through. They told us that the vendor was looking for around the same, and there had already been a lot of expressed interest.
Fast forward a week and the agent was now saying that at around $3.4 million the vendor “may consider selling.” We offered $3.1 million, which was rejected, with the agent saying the vendor would consider offers from the $3.3-$3.4 million range.
What was interesting, however, is that just three hours later, the online marketing for this property changed to an advertised guide price of $2.9 million+, meaning that the legal selling range was NOW between $2.9 million and $3.19 million.
What struck us as a little strange – why would a $3.1 million offer be rejected for being “too low” when the guide price on the marketing was immediately lowered below that? And why was the seller/agent not engaging with our offer of $3.1 million, when it was well within the ballpark of what they were legally required to consider? I confronted the agent over what was clearly bait advertising, and was told that the vendor was now motivated to meet the market and would look at all offers over the reduced guide price. Whatever the truth, this made it clear what kind of agent we were dealing with here.
A day later, the agent told us that there was an offer of greater than $3.1 million, to which I responded that we were no longer interested, as the property lacked value to us beyond that.
Even though we had pulled out of the “race”, the agent messaged again a day later to see if we wanted to bid further. This led us to believe that the offer that the agent had cited was not real, and was an effort to create a fake floor that would convince us that we were close to losing the home and should fight for it at a higher level. We re-iterated that we were no longer interested in the property.
Simultaneously, we had found another property that had met the client’s needs, elsewhere in Wahroonga, which we were able to secure for $70,000 under the target price (securing it for $2.78 million). This one had also been underquoted in the initial public guide price ($2.4 million+, meaning a legal selling range of $2.4 million to $2.64 million), before jumping to $2.75 million “due to sheer interest in the property” following the first open home. The agent claimed that it would take $2.9-$3.0 million to convince the vendor to sell prior to auction, however, our research suggested differently, and we were able to subsequently negotiate hard with this agent to secure the right price for our client.
Meanwhile, ten days later, that first property still hasn’t been sold. So much for finding that offer that was “greater than $3.1 million,” and the agent is still quoting “$2.9 million but expecting higher offers today.”
This story should highlight what we talked about in a recent blog. With the market now starting to soften in parts of Australia – particularly the major cities – the agents are changing their strategies and often becoming more aggressive when setting the guide prices and using misinformation to try and drive up prices.
Without our negotiating support, the client in this story may have been sorely tempted to buy the first property in at least four instances. Coupled with the emotional engagement and fear of missing out, they could have ended up paying as much as $3.7 million when, in the end, they were able to secure a comparable house, in the same area, and that gave them the same lifestyle, for almost a million less.
The value that Hello Haus offers our clients is that we recognise these tricks. We know when to call agents out on what they’re doing, and the agents, in turn, quickly realise that we don’t fall for those tricks, and that only strengthens the negotiating position.
If the thought of tussling with agents in negotiation gives you stress, contact Hello Haus today. We will make sure that you find your dream home and buy it on your terms.