The ability to influence a buyer and negotiate a favourable outcome for the seller is an art that I honestly believe is a little lost in real estate sales.

I received an e-mail from a reader last week who asked me why I thought this was the case when an agent’s primary job is to ‘negotiate’.

To me, it all comes down to one word…’Need’.

The old saying goes…’The one with the highest need usually loses a negotiation’…which means that the party with the lowest need often comes out on top.

It’s why a buyer often asks the question…”Why are the owners selling this property?” 

What the buyers are really saying is…”Please establish to me that the buyers have a high need to sell so that I can make a low-ball offer and win this negotiation”.

It goes without saying that a good agent will never disclose an owner’s need to sell if they really do ‘need’ to sell the property…but that’s a discussion for another day.

In a real estate transaction, there are 3 parties involved – the sellers, the buyers and the agent.

Often times, the party with the highest ‘need’ can actually be the agent.

If the agent has little to no commissions due to be paid, they’ll often be looking straight down the barrel of no income for some time and if so, their need to make a sale can outweigh the need for the seller of buyer.

If this agent is the party with the highest ‘need’, then it is pretty clear that their agenda is somewhat blurred and a seller must ask themselves if the agent is truly working a buyer as hard as they can in order to achieve the highest possible price or whether they are falling short and leaving the seller short of what they could obtain.

Many times, a buyer will tell us they will walk away from a negotiation and within a few days or weeks, they return with an offer that is higher.

An agent that isn’t desperate for their next commission is the agent that is often prepared to let the buyer walk away if the offer isn’t to the sellers’ liking.

It’s honestly why I truly recommend that any seller doesn’t list with an agent that only has a few listings…otherwise, you could be the next seller that is coerced into taking an offer that is lower than what you really want.

So, is this all just a good theory or does this really work in practice?

I can tell you that it does really work in ‘real life’ negotiations.

A few months ago, we took an offer on a property (a home that was listed for ‘Offers above $675,000’) and we had a buyer that loved the home, first offered $600,000 and then moved to $620,000 before he drew the line and said that this was his highest offer.

I asked him why he wouldn’t move from this figure and he discussed a sale in the same street (only a few doors down) that sold for $625,000 that he thought was comparable.

I had actually appraised this home a few years earlier and as such, I knew it very well.

We prepared a report for the buyer where we made the following comparisons…

• Whilst the block was 30m2 larger, the Council land value was $40,000 lower because the home we had for sale had some city glimpses…and this property didn’t
• Whilst they were both renovated, the kitchen and bathrooms in the home we had for sale slightly smaller, they were finished to a much higher level…and we could prove that the fixtures and fittings would have cost at least $15,000 more
• Whilst the internal area of the home was larger at the home down the road, the outdoor area of our property was least 40m2 larger and far more usable.
• The home we had for sale had the ability to increase the floor area downstairs by taking out some land at the back of the garage…the home down the road had no ability to extend or enhance.
• There was 90 day timeframe that had elapsed since the sale of the home down the road and I could prove that house prices had increased by almost 1.5% since this sale was made…which equated to a figure of approximately $10,000 in capital growth.

I entered a friendly negotiation with this buyer over the course of 4-5 days where I debated these points at length with him…and eventually, this buyer paid the asking price of $675,000 for the property.

The owners were really happy with the result as the figure was more than they thought they’d achieve for the home when we listed it.

My conclusion today…the agent can have a significant impact on the final selling price so make sure you engage an agent that doesn’t have a need to sell that’s higher than your need.

Until next week…Happy Listing and Happy Selling.