Inconjunction Real Estate

Once the offer has been placed, one of four things may occur: -

The agent declines to present the offer
Under normal circumstances, an agent is obliged to present all offers to the vendor. If the offer is way too low, there is a risk of offending the vendor - This can damage the prospects of a successful negotiation (the vendor may adopt a hard-nosed approach to subsequent offers or may even request not to have any further contact). Before any offer is received an agent may seek written approval from a vendor to reject very low offers on their behalf.

Having this agreement in place may help protect the buyer-vendor ‘relationship’ and gives immediate feedback to the buyer. If your offer is rejected by the agent, then your choices are simple – either re-offer or pass on the property.

The offer is rejected without a counter-offer
This is a similar scenario to the previous one, though, in this instance, the vendor has rejected the offer outright. Failing to get a counter-offer may indicate that you are too far from the minimum offer that the vendor will contemplate accepting. When no counter-offer is received you need to work with the agent to understand why the offer was rejected. Was it the price or were some of the terms unacceptable? At this time, you need to communicate with the agent – ask questions like: -

“Can the vendor indicate an acceptable price range to re-start the negotiations?”

“Are there any terms that we can change that would allow us to start negotiating?”

“What was the vendor’s reaction?” (try to find out if they’ve been offended!).

The point here is you need to get the negotiation process started. Normally the agent will provide guidance here – even though the agent is working on behalf of the vendor, they will be less emotional about the process, and will try to work together with you and the vendor to reach an acceptable situation where both parties are happy.

The offer is rejected with a counter-offer
Receiving a counter-offer is a good sign. It signals the start of the negotiation process. If the counter-offer falls within or near to your pre-prepared buying range then there is a high chance of a successful outcome. There are two key areas that you must focus on: -

Control your emotions - Recognise that the process can often be emotionally-charged. You’re providing direct feedback to the vendor on how much value you place on their property – For some vendors this can be confronting, and may solicit unusual behaviour. Regardless of the response, you must always conduct the negotiations on friendly terms. Again the agent will help in this respect, but, if either or both parties become aggressive or nonchalant, it can only damage the negotiations.

Look for non-monetary concessions - Consider what may be important to the vendor, but is not-so-important to you. For example, the property may have a mobile-home that was included in the offer. You may not need (or want) this – offer it as a bargaining chip. The aim during negotiations is to show that you are trying to work towards a middle ground.

The offer is accepted
Of course, this is your desired outcome. When you reach this stage, then you’ll move on to the next phase – the Closing Process.

TIPS: NEGOTIATING;

When offers and counter-offers are received, keep the momentum moving forwards. Respond quickly, and create a sense of urgency;

Ensure that all offers and terms are documented, it’s easy for agreements to be missed in the final contract;

Be flexible – if some of the terms are hard to meet (i.e. need early settlement), consider what the workarounds may be and see whether you can accommodate them;

Avoid getting frustrated, petty or hot headed. You’d be surprised how often a impasse is reached when both parties are so close. You may be within a few thousand dollars of agreed terms, when both parties decide “that’s it!” Frustration kicks in and one or both parties decide " We have had enough of all this backwards and forwards it is taking too long. They are putting up too many unacceptable excuses - it's all over!” This is a very difficult time with alot of pressure on both parties. For most people, negotiating is not a common part of their life – especially on something as important as a home. It’s important to stay detached, calm and focus on the end-goal.

Understand the market conditions – If you are in a seller’s market you may need to concede more or risk losing the property. At any stage there is risk due to a higher offer being submitted by a third party interest. As soon as a property has received offers, other buyers (that may have been procrastinating for a while) may be spurred into action. In fact, the vendor's real estate agent will ring around all the parties that have expressed interest in the property and advise them that “Offers have been received” – submit an offer now or lose your chance. The agent works for the vendor to secure the highest price. So, if you want the property act quickly.