BUYERS COMPETING AGAINST THEMSELVES

The problem:

FOMO reigned supreme (Fear of Missing Out), the Selling Agents were in an unprecedented Sellers’ market, they were in control, properties were selling in days not months, and buyers were competing to acquire property often forcing early offers and prices that were not aligned to value. Often it is said the ‘market has spoken’ when a sale takes place. This is true however there is the question of silly money versus value.

Situation:

A young couple combined with their mother (as the bank) had been chasing Northern Beaches property for a long time, always missing out, always following the agent’s lead, getting very friendly, but always just missing property or having to make uncomfortable offers. They were good on their value estimations but could not effectively negotiate with the Agents.

Christmas was approaching and they were getting desperate – there was the moving, the registrations for a new school, etc

I was introduced by their legal representative as a referral from a similar situation.

Once the brief was understood a strategic negotiation with Auction fallback was agreed upon. A strategy plan was designed around the Agents, the agency, and the vendor. No agents or agencies are the same and some reach a ‘rock star’ level based on good marketing and perception… but this is for the vendors.

I was able to identify the agency’s style of operation and how the agents participated and interacted. This formed the basis of the approach. It was obvious that agents were heavily conditioning the vendor in the buoyant market (Their big fear is losing a listing to a competitor and not keeping the high dollar return alive). The strategy involved conditioning the Agents and Vendors over a period. The Agents were frustrated as it slowed their approach, but they remained engaged because the Offers were formal and specific with deadline calls to action for them to respond to. These detailed offers had to be tendered to the vendor. Hence the background work and conditioning had begun. A series of four offers had been placed over 2 weeks before the property had been sold before the Auction.

In this case, understanding the market was also critical as was understanding the client. Their emotions and desperation were involved. A Buyers agent is not affected by this and remains objective. I became the ‘unreasonable friend’ telling them when they should pull back and how to do so. I could provide advice to the client that they are best being removed from any negotiation or relationship with the agent, they were now anonymous participants.

Professional representation was a frustration for the agent as they had not been used to a shift in show property would be sold. This is very much about the personality and ego of many agents in a strong market, allowing them to take the glory of a sale but doing so at an acceptable price for the client. Interesting dilemma.

Solution:

* The client learned to let go and stop competing against themselves

* Once they trusted the process, they became excited as they could feel a shift in the entire process

* Offers had been formed and presented that were safe and comfortable for them. Their stress was transforming into excitement as we progressed with each offer and counter.

* I was able to identify ‘crowbar toehold’ areas in a property where the owner knows they are the problem but like to keep quiet and often the Agent is unaware or not interested in the problem. These toeholds are the starting point of price reduction and negotiation as “all that glitters is not gold.” When strategically utilised combined with the sage approach of “These are your problems…if we purchase, they become our problem”

* Greed and fear are emotions that drive all markets – understanding how to tap into these elements can provide a decisive advantage in a negotiation.

* Ultimately finding the sweet spot where a deal is tolerable to both parties is best – no one feels as though they stole the show, but they can live with it seems to be the logical final resting place.

* This property was acquired well under the client’s expectations saving them $200K which went toward a property upgrade needed to modernise the new family home.

* The Agent was a bit disappointed in the price, but they worked to close the sale with the vendor as we had appeased some of the vendor concerns and timings. The Agents got to claim a ‘Sale’ and do the marketing promoting this.

A win-win.