Negotiation Tips needed pleeeease

[sunshine]

My friends have found their dream PPOR. The negotiation is now at a stale mate. The vendor's wont budge and there is only $5K difference.

My friends are almost at their limit, considering they need to buy furniture for their dream home.

They have tried offering the extra $5k and the vendors leave in some furniture - HA - the vendors said same price and furniture an extra $2.5K if you want it. (I actually think the REA could be the problem here!)

OK, need some creative negotiating tools, apart from playing the who can wait the longest game.

Any ideas??

Sunshine

 

[The Y-man]

What is the value of the property?

Cheers,

The Y-man

 

[sunshine]

Haven't had it valued professionally, but research (although it is a sellers market) indicates its worth around the $500K. My friends offered $520 but vendors want $525.

They realise that even if they do get a contract, it is subject to valuation.

Sunshine

 

[The Y-man]

My friends are almost at their limit, considering they need to buy furniture for their dream home.

This is the bit that worries me.

$5k is less than a percent of the price. If this amount is the limiting factor, my first inclination is - "stretching too far".... Now I might be totally wrong - they may have a buffer already calculated, but I get seriously worried when I see "$5k for furniture for dream home" type things... There could be unforeseen repairs required after settlement that could be a lot more...

Tried varying settlement times? e.g. settle in 2 weeks etc.

Cheers,

The Y-man

 

[Kenster]

What is the chance for getting gazumped/missing the deal while they haggle for $5k?

 

[sunshine]

I think they are Ok Y-man, no need to worry. They are checking with their MB to see what the shortest settlement is. We know the vendors are keen to move on, so shall try this path.

Apparetly no other interest at this stage (or today anyway). A few were looking at the open. Been on the market for about 9 weeks, in first week they were offered $530 and knocked it back. Lots of lookers since.

Its a nice home, but not a great family home, suits my friends to a T. The vendors built this one, and are ready to build again as they now have a young family.

Sunshine

 

[GoAnna!]

Can they ask for a long settlement? Or offer a shorter one? If it will cost them to hold the property a longer settlement could save them a decent amount of money. A shorter own might entice the seller to lower thier asking price.

Are there any other special conditions the vendor wants which they would be happy to provide?

 

[Joe D]

Where did the negotiations start? ie. What was the asking price of the property and what was your friend's first offer?

Obviously if the Vendor had initially knocked back an offer of $530k they are kicking themselves for not having accepted it when they now will take $525k.

I would either offer the full price $525k with or without a long settlement (say 3 months), or walk away at the previous offer of $520k.

I'm sure if they do walk away, the RE will coming running after them once they realise they have now lost a second opportunity.

Remember, your friends can always swallow their pride and make another (full) offer at any time in the future, even tommorrow!

Good luck!

 

[Peter_Tersteeg]

Seriously, for the sake of $5k...

One of the best negotiation tools I've found is to use silence. Silence makes some people very uncomfortable and they start talking to fill the void, especially if you just look at them. Sometimes some interesting information comes out as a result.

I don't know if that helps or how you can apply it, but it's one of the best tools I've ever used.

 

[michaelg]

Hi,

In $5k is req. ask the vendor to defer the $5k or $10k for 6mths after settlement with a caveat (vendor finance) so to speak.

Or pay the $5k in installments over 6-12mths(?)

Just a thought
Michael G

 

[redsquash]

Maybe the problem is, the vendor knows the buyer thinks of it as a dream home, so he has the upper hand.
Silence and waiting are good tactics provided you don't miss out.
PlanB will be needed anyway if th evaluation doesn't come in as expected

Start looking elsewhere or pay 1 % extra. Use the same RE so the seller will know that your friend is actively looking.

 

[tubs]

An extra $5k is less than $8 a week in repayments. Maybe they are stretching it a bit. Just one interest rate rise of 0.25% will be an extra $25 a week.

Anyway, back to the point, they could hold firm, and tell the RE Agent that Christmas is coming up, there are interest rate rises tipped very soon, people are getting scared by the election and so on. This might be the best offer they get until Feb next year.

I know someone who got stuck in a negotiation like this, and the RE agent ended up chipping in some of their commission just to help close the gap and move the property.

 

[hschmid]

presumably there is an agent involved.

They should be fighting harder.. this looks like a deal from every angle.

Suggest the agent reduce his commission by 2.5k to close the deal.

 

[Kenster]

Suggest the agent reduce his commission by 2.5k to close the deal.

A sensible agent would not accept 2.5k cut in his own commission, as 2.5k is a huge cut.

(Assuming the REA gets 8k on sale of this property, then the listing agent would get 4k (50%) and the selling agent 4k (50%). Forfeiting 2.5k is the same as cutting 62.5% off the selling agent commission. He would halve his commission again if a referring agent is involved)

 

[Mrman]

It looks as though the vendor/agent know your friends are really keen so they are waiting till your friends cave in and pay 525k.

Put in an offer of 521k with a 24 hour expiry date and make sure the agent is aware of any other properties your friends are interested in.

Also as mentioned before silence works very well.

 

[Glucose]

My friends are almost at their limit, considering they need to buy furniture for their dream home.
Sunshine

If it really is their dream home, pay the $5k extra to secure it - it's insignificant in terms of the purchase price.
What about making do with cheap secondhand furniture for the time being?
Then buy good individual pieces as finances permit.

 

[steveadl]

I really like the idea someone mentioned earlier of asking the agent what else he has available in similar properties for under $520k, as that's their limit. Or would this be too see through?

 

[wealthyjay]

Suggest the agent reduce his commission by 2.5k to close the deal.

I have done this, and a bit more than that. At the time it seemed a good idea, and for me got the deal done quick.

However, given what Kenster has said I feel a little bad now.

Thats said, I have heard that you can't negotiate unless you are willing to walk away from the deal. Otherwise, you can find yourself going into a situation you may want to avoid for fear of losing out ie paying more etc

 

[willair]

Haven't had it valued professionally, but research (although it is a sellers market) indicates its worth around the $500K. My friends offered $520 but vendors want $525.

They realise that even if they do get a contract, it is subject to valuation.

Seems simple to me you either pay the price or walk,unless the contract is on paper and lets face the facts,they don't know the value till you have the property valued,it may well come in under the value,maybe the vendors can see through this and don't want the problems of someone playing games with subject to whatever clauses, and holding up the sale under-contract for 7 weeks while another investor comes along and is prepared to pay the asking price..
willair..

 

[kathryn d]

Over the many purchases we have used many of the suggestions here.
1.Our REA did take a reduced commission.
2.We told the Vendor we wouldn't pay any more and walked away...they came after us
3.Vendors have provided Vendor Finance
4.Vendors have included fridge, stove and a tank full of heating oil, that weren't otherwise included.

If this was my dream property, I'd pay the price and make do with my furniture. There are always sales and don't pay for "whatever" months deals for furniture.