Is a reduction justified?
After months of searching for the right property, the joy of finding a suitable home is soon replaced with the work of securing that property for the lowest possible price. In understanding who any unreasonable party in a negotiation might be, it is important to remember that fear is pulsating through both the buyer and the seller. The buyer’s fear of overpaying for a piece of real estate is equaled only by the seller’s fear of underselling their family home.
What should be a normal negotiation process can quickly descend into a ‘the sellers are greedy’ and ‘the buyers are bargain hunters’ battle of wills. An important point to remember about modern real estate transactions is that the Internet has enabled buyers and sellers to become quickly and thoroughly informed about the market and how it relates to their property or their search for the perfect home.
The Internet has been a great leveller in many respects because transparency in real estate transactions favours the fair-minded, informed and decisive.
The best homes are the least negotiable
Sometimes relating general market conditions to an individual sales campaign can be an error. A seller who puffs out their chest and states categorically that it is ‘a boom out there, so we want top dollar or we’re not selling’, may inadvertently send their best buyer packing.
Even in a booming market, some sellers still decline the highest offer, only\ to sell for less later on. Conversely, in a soft market, a buyer who negotiates with an attitude of ‘I am going to low-ball every vendor I can until I pick up a bargain’ will be pipped at the post by fair-minded buyers. Even in a soft market, good properties are still contested by multiple buyers.
When a buyer’s primary goal is getting a low price rather than buying quality real estate, that buyer may nab a bargain but they are unlikely to attain a sound investment. Cheap is rarely good and good is rarely cheap. If prices continue to drift lower in the market, asking a seller to price their home at next month’s or even next week’s prices to match your low offer, will almost certainly cause that seller to continue to search for another buyer.
Regardless of where you think the market price may go, every property has a market price for today, whether the market is rising or falling. A bargain hunter waiting for prices to crash usually ends up waiting, as opposed to buying.
There are two key questions to ask yourself when making an offer to purchase:
1) Can we afford to pay the owner’s price?
2) Is the owner’s price fair and reasonable in the current market?’
To suggest that an owner should come down in price because the wider market conditions are weak won’t work. If the agent and seller have priced the property correctly for the current market, there is no need for the owner to come down in price. As a buyer, if you find the right home at a fair market price you can afford, pay the price before someone else does.