Interesting Negotiation

[sonic]

Hey guys,

One of my deals just fell through. Disappointing but expected as I was lowballing . I thought I'd post up the email conversation I had with the agent in the last three days. Thoughts/comments on how I could improve are welcome... And do you guys think the really has a buyer or is just bluffing based on the email?

Just a bit of background the property is a 23sqm studio that went up for auction last Friday and there were only one other bidder besides me. Fair market value is about $130-$140K. (Thats what identical units sold for in the building last year). I opened the bidding at $75K hehe I think the auctioneer wanted to shoot me

The other bidder bid to $80K, then I tried to jump him by bidding to $105K. He bid to $110 and then I stopped.

Vendor bid at $130K and then the other bidder bid to $112K (basically bid against himself) and it got passed in. I have my suspicions about whether the other bidder was real or it was a dummy bidder, but thats another story.

Please read from the bottom up, Tim is me, Paul is the agent. I have deleted surnames and email addresses.

Comments/Feedback welcome. Cheers!


---------------------------------------------------
Hi Tim

We have just secured offer and acceptance on this property. I will let you know when the next one comes up and also when this one exchanges I can tell you the sale price.

Regards

Paul

Regards,


-----Original Message-----

Sent: Wednesday, 2 November 2005 2:42 PM
To: paul
Subject: RE: Offer


Hi Paul,



I will have to take a look at that unit before I could say how much Im willing to pay for it as I might like it more/less depending on orientation, size, the amount of light etc.



I can certaininly see your point of view. I dont fully agree with your point saying the market is supporting higher figures. Not everyone who examines the unit or makes offers can be considered genuine buyers as most buyers fall through with finance at the last minute (studios require 20%). As you know I am a genuine buyer in this unit I went to the auction, Ive performed strata searches and Im making a cash offer. However I take your point into consideration.



Im trying to accomodate the vendor with a very short settlement period with a cash offer. If they can take this into account and came back to me with a reasonable offer Ill give it my consideration. Alternatively Im willing to listen to any other needs the vendor has and try to accomodate them.



Furthermore I believe the vendor bought the unit for around $23K less than 20 years ago. An offer of $90K is four times what the vendor paid, this is much better than most of what others have achieved in the same period of time.



Regards,








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Sent: Wednesday, 2 November 2005 2:06 PM

Subject: RE: Offer



Hi



I might have another coming up in the building, but the vendor will not sell for $90k or even $105k, as you can see the market is supporting higher figures so if you want to buy I'm suggesting at least $135,000 for the next one - will you pay this?



Regards,

Paul


-----Original Message-----

Sent: Wednesday, 2 November 2005 2:08 PM

Subject: RE: Offer

Hi Paul,


Thats great news for yourself, I hope you are successfully in selling it. Im disappointed, however I dont feel the unit is worth $145,000 and wont be paying that price. Best of luck with closing the sale.



I will let you know if I have signed a contract and no longer looking. Feel free to contact me if things fall out with these buyers and the vendor is interested in negotiating.



Best of luck.



Regards,








--------------------------------------------------------------------------------

From: Paul
Sent: Wednesday, 2 November 2005 1:53 PM

Subject: RE: Offer



Hi



We are negotiating with 2 new buyers at a level very close to the asking price of $145,000.

Regards,

Paul

-----Original Message-----

Sent: Wednesday, 2 November 2005 1:12 PM
To: paul.
Subject: RE: Offer

Hi Paul,



No worries I understand given the owners circumstances. However since youve conveyed to me that the owner is looking to buy another place, Ive gone out of my way to borrow a lump of cash for a quick settlement in order to satisfy this need of the owner.



Do you feel its worthwhile to convey this to the owner? If they come back to me with a reduced price based on a quick cash settlement hopefully we can work something out. As I have already done a strata search and gotten a lawyer to review the contract if we can come to mutually agreeable terms I can sign the contract very quickly.



Regards,








--------------------------------------------------------------------------------

From: Paul
Sent: Wednesday, 2 November 2005 10:57 AM

Subject: RE: Offer



Hi



Your offer was not conveyed to the owner as he has advised me not to pass on anything under $135,000.



Regards,

Paul


-----Original Message-----

Sent: Wednesday, 2 November 2005 10:46 AM
To: paul.
Subject: RE: Offer

Hi Paul,



Thanks for conveying my offer to the owner, I appreciate it. What is their counter offer? I am willing to consider all reasonable offers. If they dont have one then Ill stop wasting your time.



Regards








--------------------------------------------------------------------------------

From: Paul
Sent: Wednesday, 2 November 2005 9:46 AM

Subject: RE: Offer



Hi



Your offer has been rejected.

Regards,

Paul


-----Original Message-----

Sent: Wednesday, 2 November 2005 9:32 AM
To: paul.
Subject: Offer

Hi Paul,



I am making a cash offer of $90,000 in writing for the purchase of xxx xxx Avenue. As the offer is cash I am able to settle the property within the week. I will be considering some other properties this weekend and hence this offer is open till 5:00pm on Friday 5/11/2005.



Please convey this offer and to the owner and give me a call back. Thanks.


Regards








--------------------------------------------------------------------------------

From: Paul
Sent: Monday, 31 October 2005 9:47 AM

Subject: RE: Request to Owner



Hi



The vendor will now take $135,000 - is this of any interest to you?

Regards



Paul

-----Original Message-----

Sent: Friday, 28 October 2005 9:36 AM
To: paul.
Subject: RE: Request to Owner

Hi Paul,



Thats great news, thanks for chasing that up for me. I am OK with the changes and presume they will be reflected in an updated contract.



Ill see you at 2pm 345 George Street, Level 4.


Regards,










--------------------------------------------------------------------------------

From: Paul
Sent: Friday, 28 October 2005 9:20 AM

Subject: RE: Request to Owner



Hi



I spoke to my vendor last night he agrees to a 5% deposit, 90 day settlement and if you are to have the keys has specified $150/week to be paid.



Regards



Paul

-----Original Message-----

Sent: Thursday, 27 October 2005 4:54 PM
To: paul.
Subject: Request to Owner

Hi Paul,



Following up our telephone conversation Id like the following points amended in writing on the contract.



1) Changing all occurances of 10% in the contract referring to the deposit to 5%.

2) Changing the settlement period from 42 days to 90 days.

3) If I were to purchase the property, I am to be provided with the keys to the unit as soon as contracts are exchanged and the deposit as been lodged with the agent. I retain the option to lease the unit out or move in it myself before settlement. If I were to do so the current vendor would receive weekly the lower of $150 or the tenants weekly rent until settlement.



Early access is important to me and would influence my decision on the purchase. I would appreciate it if you would convey this to the vendor. I am also still waiting back from you regarding whether the owner is aware of any issues regarding contamination of the unit or the land in which the unit resides on that I should be aware of. Thanks for your help.



Regards

 

[sonic]

Whoops if one of the moderations could delete the signature of the agent on the email (i.e. the office where he works ) it would be much appreciated!

 

[geoffw]

I've made the changes- but you should also be able to change your own posts.

 

[Smethem]

Fascinating exchange! Are you often successful with this approach?

 

[Alanna]

Interesting that the agent did not even present your offer. In WA it is considered unethical to not present offers to the vendor, after all, the agent does work for the vendor.
Certainly I would expect a little more info (and manners) from an agent with whom I was dealing.
Read an interesting snippet in this month's API mag: The deal of a lifetime comes by around twice a week. Quite true I thought

Alanna

 

[sonic]

Fascinating exchange! Are you often successful with this approach?

Nope because the market is so flat in Sydney and I'm not in a hurry to buy (I bought one 2 months ago), I'm just lowballing hoping to get lucky.

So far conversion rate is around 1 / 20 offers. I've def. looked at over 100.

Any tips on improving my score rate? I usually try to be polite with agents because you never know they might be selling the next one dirt cheap.

I think my strategy only really works if there is one buyer interested i.e. me and the vendor is really desparate to sell.

 

[sonic]

Interesting that the agent did not even present your offer. In WA it is considered unethical to not present offers to the vendor, after all, the agent does work for the vendor.
Certainly I would expect a little more info (and manners) from an agent with whom I was dealing.
Read an interesting snippet in this month's API mag: The deal of a lifetime comes by around twice a week. Quite true I thought

Alanna

Yea I get really annoyed when agents don't but I haven't found a way around it. I have considered calling the vendor up myself (I have his name and found his number up in the whitepages), and conveying the offer myself.

But I think the agents here don't have to convey the offer is the vendor said (I'm only interested in offers above $135,000), correct me if I'm wrong someone.

 

[Smethem]

Did the agent say the seller wanted a quick settlement? Or did you infer that because he said the seller was looking to buy elsewhere? Doesn't sound like he had bought elsewhere from the email exchange.

You come across a bit like you're lecturing the agent when you challenged him on the 'market support'. I imagine he knows what the chances of the offer he's got falling through are. Doesn't help to build rapport?

I'm still surprised that you get 1/20 offers like this accepted. Makes it well worth the effort, eh?!

 

[myoung]

Hi all, I've been in the situation where an agent refused to put forward my offer. I went to another agent in the area, and got him to put it up(it helped he use to be my brothers boss). As soon as he did this for me, the original agent was on the phone to me, complaining they had a sole agency agreement and they had to submit offers. So i said SUBMIT IT, they did and I got the deal(although i wasn't as far below asking as the situation here).

 

[sonic]

Hi all, I've been in the situation where an agent refused to put forward my offer. I went to another agent in the area, and got him to put it up(it helped he use to be my brothers boss). As soon as he did this for me, the original agent was on the phone to me, complaining they had a sole agency agreement and they had to submit offers. So i said SUBMIT IT, they did and I got the deal(although i wasn't as far below asking as the situation here).

Hey thanks for the idea I never thought of that I might try it another time when my offer is closer to the mark!

 

[Jacque]

Hey Sonic
Good luck in getting a lowball soon
As far as submitting offers go, in NSW REA's are obligated to let their vendors know in writing as soon as practicable after the submission of the offer. (however the very wording here can lead to some abuse)
However, if the vendor has specified in writing to the REA specific instructions such as "Do not present any offers less than $xxx" then the REA is obligated to follow these instructions. After all, they are employed by the vendor.

 

[Dos]

I haven't really tried the lowball approach but can understand that the law of averages means that you will get one every now and then.

I have had the same problem with agents before in regards to their approach with people. Only yesterday I got a response from an agent that was short and unfriendly. I had asked specific questions and got back 1 -2 word answers on separate lines. That might be how they operate but I wouldn't. You then get the impression that they don't think you are serious and where the potential for lecturing becomes increased. I honestly feel like replying and saying "I have already invested in the area and I am a serious buyer. If you don't have the time, please let me know of someone in your office who does". But that might be over stepping the mark!!!

Dos

 

[Panic]

Sonic,

You did great. I like your approach, classic!

Lowball's dont work often as you know, but they are very worth when they do.

Thx
V

 

[Bantam Roosta]

RE Agents are just like any other profession. You will get some very helpful, accomodating people and you will get some rude, arrogant, scum-of-the-earth people and a mixture of in-betweens.

I certainly like the idea of lowballing in a market like this, especially if you are not fussed either way on whether it goes through or not. I just have trouble finding a couple of suitable properties let alone 100 +.

BR

 

[mitch]

Gday Dos ,

perhaps you should use the phone. lm in sales and dislike email enquires.

Why ? l find alot of email enquiries lack substance ,
people seem to think l sit in front of the computor all day just in case l get email and get annoyed when l dont respond quick enough ,
its nigh on impossible to qualify a buyer over an email ,
l dont carry a computor with me but have my phone and message bank on me all the time and l can get alot more done with a phone conversation than with Mr Anon on the other end of a computor.
l also dislike giving out specific imformation in this way.

l relise that this is the way of the future but l dont think its the best way for a sales person to do their job.

Regards Mitch