When you are about to negotiate the biggest purchase of your life it’s important that you know how to avoid making a costly mistake. As the excitement builds during your search, there are certain words that shouldn’t come out of your mouth when talking to a real estate agent. For your own protection, read on…
1. “We are pre-approved up to $500k!”
Do you realise that real estate agents* are duty bound to pass on any and all information to a seller which might influence their decision? If you tell a salesperson you are prepared and approved to pay up to $450k and then offer $430k the salesperson is being negligent if they don’t pass on all the information to the seller when presenting your offer.
What do you think that seller is going to do after hearing that you might be prepared to go to $450k? How do you think they are going to respond?
Sellers are the ones who pay a real estate agent a commission, and while that agent has a duty of care when working with any buyer, you have to remember who they are working for at all times.
What should you say instead? Sometimes it can be handy to give salespeople an idea of the price range you are working in so they can direct you towards the right kind of properties or keep you informed of new ones coming on the market. I would suggest talking in ranges: “We are keen to look at properties in the low to mid 500’s.” or something like “We are still working on what we can afford to buy, in the meantime, we are considering properties in the $400’s.”
2. “We don’t have to buy… we aren’t in a rush.”
Otherwise known as the “I just want to take things slow” speech. By the time you finish saying these words, the agent has probably already lost interest. Buyers think they are protecting themselves by saying this but in reality what happens is that as soon as a salesperson hears these words you will instantly go to the bottom of the pile and become a low priority client. Unless they are desperate, in which case hang on to your hats because you are in for a fun ride!
If an opportunity comes up to buy a home without it hitting the open market (rare, but it does happen) you will probably be the last one to know about it. Real Estate salespeople are paid by commission and 99% of them do not receive any sort of salary so it is in their best interest to prioritise working with and helping their most motivated clients first.
Tip: Agents will also be more flexible around viewing times when working with highly motivated buyers.
3. “We are going to offer ‘X’, but we are willing to negotiate.”
Just like point #1. When you say things like this the salesperson is obliged to pass that information on to the owners. If you say “we want to offer $400k but come back to us if they say no!” you might as well just up your offer the first time and save everyone time.
Instead say: “We are offering X” and shut up. Let the seller decide whether they come back asking for more money or not. Don’t make the decision for them.
Tip: Watch out because salespeople are trained to come back with a response/question like “do you want me to come back to you if the owners say no?” or something like “that price level has already been tested, what is your next offer?”
Your possible answer to this could be: “We have given the property a lot of consideration and that is our offer.” Stick to your guns and don’t give away more information than you should.
4. “If someone else makes an offer, let us know what it is and we’ll beat it!”
It might seem silly after reading the points above and I might be guilty of repeating myself here but you would be surprised how many times we hear this type of comment. If another offer comes in a few thousand dollars above yours the salesperson shouldn’t divulge the specific details of that offer to you.
Just think, if you were the top offer in that situation would you want to be played off against another buyer just below you? Would you want them knowing exactly what your offer is? Didn’t think so.
Be aware that it is common for salespeople to say things like “You are one of the top 2 offers, the owner has asked us to come back to you both. What can you do to make your offer more attractive?”. That sort of approach is pretty common and you should take it as a positive sign that another buyer sees value at a similar level to you.
5. “We need 15 working days for finance.”
Any offer with longer than 5 working days for conditions is simply going to struggle to get accepted in this market. Especially if you are in a multiple offer situation. If you are the only offer on the property you might get away with 10 working days. Possibly.
We receive offers on properties subject to “20 working days for finance” or similar on a weekly basis and they never get accepted. Owners are after a prompt answer and for most builders and banks 5 working days is more than enough time to complete due diligence on a property.
Putting down more time than you need as a sort of ‘safety-net’ is a really common mistake made by rookie buyers. The problem is, most of the time this will cost you the house. I have seen countless owners accept the 2nd or 3rd highest offer because it was unconditional or had shorter conditions.
While I recommend making sure you have conditions to protect yourself if you haven’t completed your due diligence before offering, putting anything longer than 5 working days will probably cost you the property in a multiple offer situation.
Read: How to make unconditional offers (if you want to)
Thanks for reading. I hope these negotiating tips save you some property heartache in the future.
Stay safe out there,
Need help specific to your situation? Book a one-on-one consultation online.