You need information

The best way to get this information is to ask a lot of questions. Remember to ask open ended questions and not closed questions. (Closed questions will prompt a simple yes or no answer whereas open ended questions will allow the other person to open up so that you can gain more information). Some fundamental questions to ask are:

Why are they asking this price for the property?

Their answer may show a flexibility about the price. That is, the seller really believes its too high because they say something such as: “I know it’s on the top end of the range, but we’ll listen to offers.” If the price hasn’t been based on recent sales or market value, this will strengthen your arguments when you offer a lower price.

If you have found a property that you like but it isn’t for sale and you decide to approach the owner about selling it, its best not to make an offer to buy it if the seller has not set a price. Being the first to make an offer disadvantages you from a negotiating point of view, as this discloses the starting point of your budget to buy the property. Strategically, its best to ask the seller to tell you what they want. This will generally result in them disclosing their budget and you’re therefore off to a better start in the negotiating process.

If a property isn’t for sale now but could be later, say to the owner: “Look, I know your property isn’t for sale but if you ever decide to sell, would you do me a favour, would you call me first?”

If they say yes (and why wouldn’t they, since the sale would be without agent’s commission?), you’ve just secured an unofficial right of first refusal. And you’ll be the first to know if it comes on to the market.

Who calculated the asking price of the property?

This question will reveal whether the asking price has been based on genuine comparison sales or has simply been artificially set too high by either an unrealistic seller or an incompetent real estate agent.

How long has the property been for sale?

To get reliable information on this fact, ask the real estate agent to give you a copy of their listing sheet. This will usually note the date that they obtained the listing.

Obviously if the property has been listed for sale for some months, the sellers will be softer on their price than they would be if it had just been listed in the last few weeks.

Why are the vendors selling?

From a vendor’s perspective the best answer is,” We’re selling for personal reasons, but be assured that we’re keen to sell”. This will avoid them being preyed on by unethical buyers simply seeking to source properties from desperate vendors who have to sell due to financial distress, divorce, death etc.

However, this question should always be asked, as the answer may reveal an opportunity to negotiate to buy the property which was not otherwise apparent.

What offers have they had on the property?

The answer to this question should tell you the price the property was originally listed at, and how much they have moved down in their price, or, if applicable, at what price the property was passed in at auction.

When does the occupant have to move out of the property?

Are there any real deadlines here that you can take advantage of in negotiations? It may also reveal the real reason for selling the property. A good way to lead into this subject is to ask the following questions: “Oh your not one of those many people who are moving to Queensland too?”

What’s your bottom line/ what price will you really take?

An unworldly or naïve seller or an incompetent real estate agent may reveal their bottom line to you. As a buyer, never reveal your bottom line or what your budget is, as an astute negotiator will take advantage of this and do their utmost to work you towards this figure. Sellers sometimes will not tell you their bottom line when asked this question. Try again by re-framing the question to: “What do you think it will sell for?” This will usually elicit the right response.

What’s included in the sale?

Many times, particularly with a tenanted property, you’ll be advised that “everything is included, apart from the tenant’s furniture”. From a buyer’s perspective, the more that is included, the more you can negotiate away in return for a reduction in the price. From a seller’s perspective, the less that is included the more they can later agree to leave as a concession to a buyer who is attempting to negotiate a lower price. And in this way the vendor might avoid having to lower the price.

How flexible is the seller with contract conditions?

This question relates to the contract conditions such as being subject to finance, pest and building inspections or the sale of another property. A seller displaying a flexible attitude allows you to frame an offer with more conditions than you would otherwise include. You can concede and negotiate away these conditions as part of the negotiating process in an attempt to drive down the price. Hard bargainers often also spend an inordinate amount of time arguing about some part of the transaction.

For example one of my clients always pushes hard for the sale to include all of the furniture or the need for a long settlement, and then gives in on that point in return for a concession on something that really was important to them. This is all part of the art of negotiation.

Is there anything else that is important for me to know?

You would be surprised at what things a seller may volunteer when you ask this question as it invites then to tell you anything that they believe will persuade you to buy the property.

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