hey guys, just wondering if there are any strategies out there that anybody uses when making an offer on a property. I made an offer today, well below asking price, and was told by the agent that an offer had been submitted and accepted today just under the asking. All this was fair enough, but, the REA wanted to know my offer before she told me this. This got me thinking, was the agent planning to gazump the accepted offer if I offered more? (Does this happen often?) Or was this a ploy to raise my offer?(Which may have been unrealistic- 25 percent below asking) Has anyone experienced anything like this and can anyone offer any advice or insight into how agents can manipulate the negotiation process? Are there any common stategies or schemes REA’S use to gain their maximum commission? Is there a better way to make an offer? Or was my offer just too low? Hopefully some answers may give me a better chance of knowing what’s going on in the middle man’s head or at least better prepare me for the next time I make an offer.[blink][blush2]
Hi MrSmith
Interesting you should ask, I’ve been thinking about negotiation strategies myself lately. The negotiation process is not transparent – hence why owners/REA’s can make money out of property by getting someone to pay more than the going rate if buyer doesn’t do due diligence/falls in love with property etc.
Without being able to see inside the REA’s head, it doesn’t seem from your description that anything untoward was happening here. I’m not a REA but it would be standard negotiating tactic to ask for the details of your offer first. Sometimes negotiating is like a game of chicken – the first one to reveal their true intentions may feel at a disadvantage! But that’s not necesarily the case – your offer was made in good faith, and for all you know, could have been the only one.
Investors who put in offers need to have nerves of steel to prevent them putting in full price offer, sometimes! REA’s wouldn’t be above using any subtle pyschological tricks – and can you blame them? You need to know the tricks and how to counteract them – I personally use barefaced cheek!
The REA is meant to put all offers to the owner – so it’s up to the owner to decide whether to gazzump. Also REA should act with integrity towards you as commission isn’t paid until settlement – only approx. one third of offers turn into a contract. You’re still in the game and she knows it.
I put in a low offer recently on an IP, which was rejected, and waited 2 months for vendor to come back to me saying he couldn’t find another cash buyer higher than my offer! It’s a sweet feeling! But I was beginning to think should I have offered more – good thing I didn’t, patience was a virtue in my case. I held my position even though my emotions were telling me to pay more ‘cos I liked the property!
The negotiating process doesn’t necessarily have to be quick, easy or concluded in one conversation! And as a potential buyer, you are probably the party who is most in the dark – you just have to make your best offer according to the market.
Of course it could all be over if the other offer goes thru – in which case you count this as valuable experience and move on the the next negotiation.
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