The power of negotiation is what sets agents (both buyers and sellers agents) apart. The skills of negotiation are something we can all use in our everyday lives – not only when we are buying and selling real estate. Cate Bakos has some tips.
Listen to the interview now:
Kevin: I want to talk about a subject now that’s near and dear to my heart, and that is something that professionals in the real estate industry are practicing all the time, and that is the power of negotiation, your ability to negotiate. Don’t always leave it up to your agent or your buyer’s agent to do it. This is something that you, as a buyer and/or a seller, need to understand and maybe practice a bit.
Joining me to talk about this, someone who does this professionally, Cate Bakos, who is a buyer’s agent out of Melbourne.
Good day, Cate. How are you doing?
Cate: Hi, Kevin. I’m well, thanks.
Kevin: Let’s have a look at some of the less confrontational ways of negotiating if you have to do it hard. I’ve asked Cate to put together a list for me. She’s done that and given us four, which I want to talk to you about.
The first one you say: blaming the cash flow requirement on the price offered, Cate.
Cate: Yes, it can sometimes be a gentle way… Obviously, it’s not adversarial. You can say to an agent that you’d love to buy the property but the price tag that’s on the property is not working for you because of the cash flow that you require.
Particularly if you do feel the price is a bit too high, you can wind it back and demonstrate the going rental yield in the area for that kind of dwelling being a mismatch for this particular property.
It’s a really easy way of saying it’s priced too high or the price tag is not going to work for me, and it takes the focus off arguing about the price. You can blame the yield, and that’s an easy argument for an agent to have with a vendor without getting them off side.
Kevin: Professional buyers and investors should be looking at it in that way anyway, as treating it like a business, Cate.
Cate: They absolutely should. Sometimes if the price tag is too high and the yield just won’t work, the property won’t sell to an investor. They may get lucky and have a home-buyer who falls in love with the property, or if it’s an investment type property in an area that’s booming because of investment activity, that the vendor will eventually meet the market.
Kevin: I love the next one you gave me: playing good cop/bad cop with a partner. How often do you see this happening? Is there a stereotype of who’s going to take the hard role?
Cate: Yes, it happens all the time. Sometimes I use that when I’m talking to an agent about a property and I’m genuine about it. I’ll often say “Look, the husband is not so keen. He’s just not all that interested. He’s not saying no, but he’s the one who we need to get across the line.
“The wife is really keen. She’s really happy with the price. But it’s not going to happen. They’re not going to agree to it, so what can you give me to go back to the husband and wife with so that he feels he’s having a little bit of a win and she’s not losing grasp on getting the property of her dreams.”
Kevin: Yes. And a couple on their own who may not have the benefit of having a buyer’s agent can play the same… I was going to say “game,” but it’s not a game. Have the same rules.
Cate: Yes, absolutely. Sometimes I’ve seen it work really effectively when if it’s the husband who’s saying no, he might say to the agent, “Look, I’m just not there. My wife loves it, but you’ll need to convince me. This is where I think value sits, for these reasons.”
Or she could go to the agent and say, “What can you do to help me talk to my husband about where value really sits? How could we have this negotiation because I love the property but he’s still saying he’s not there at that level?”
Kevin: Yes, very good thoughts. Another one: dual offers with differing terms. Is this with the one set of buyers maybe offering up different alternatives?
Cate: Absolutely. Yes, it’s a little bit of a bluff, but you have to be prepared to go through with it if they do choose the option that you prefer they didn’t. In other words, if you think that the vendor wants a fast sale, you could make a sharper offer on a 30-day settlement term, and then you could also offer a price tag that’s closer to their asking price on something like a 120- or a 150-day term, hoping that they see that you’re trying to make their figure, but you need time to do that and they will favor the shorter term and the negotiation will move in your favor.
It often goes to plan, but if you find that the vendor is more fixated on price and can find a way to play this to your longer term, you might have a yes on a higher figure on a longer settlement, and if that doesn’t suit you, you should never have put it forward.
Kevin: Yes, good thought. And finally, just quickly, and this may relate to the first one we talked about: pleading budget constraint and being very positive and emotional about the property.
Cate: Yes. This one is really appealing to the vendor’s emotions as well. A lot of vendors who love their home and are feeling quite emotional about the sale will get a lot of comfort from knowing that a buyer who purchases the property loves the home as much as they did.
So, sometimes, particularly when it’s the last thing that you’ve got up your sleeve, if you have hit the rev-limiter on your budget, it’s all you have left, and that is to try and play to the vendor’s emotions and have them sell the home at a price that they might have been a bit reluctant to do so, on the back of how excited you could be about buying it.
It doesn’t always go to plan. It’s not a very reliable tactic, but every now and then, it can pay off. I’ve had situations where vendors have chosen a slightly lower offer over that of someone who might have been a developer or an investor who was unemotional about the property because the purchaser has been able to demonstrate to the vendor, via the agent or via me, how much they love the property.
Sometimes it’s just a really heartfelt, well-written letter that’s passed on to the vendor. So, people need to think creatively when they really are hitting their budget and they absolutely love the home.
Kevin: See, this is the reason why it’s great to deal with people like Cate Bakos. They are professionals. They know how to do this. They do it every single day.
Cate Bakos is a buyer’s agent out of Melbourne, and if you’d like to use her services, all you’ve got to do is Google her – you’ll find her; she’s very easy – Cate Bakos. I don’t mean easy; I mean you’re easy to find.
Cate: Thank you, Kevin. That’s really lovely of you.
Kevin: Good on you, Cate Bakos. And thanks, Cate. We’ll talk to you again soon.
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Originally published as: https://realestatetalk.com.au/negotiate-like-a-pro-cate-bakos/
Kevin Tuner worked in radio as General Manager of various east coast radio stations. He started in real estate in 1988 and was ranked in the Top 10 Salespeople in the state until he was appointed as State CEO 1992.
He operated a number of real estate offices as business owner and was General Manager of several real estate offices in Christchurch.
He now hosts a real estate show on Radio 4BC and a weekly podcast at www.realestatetalk.com.au. He is the host of a daily 7 to 10 minute podcast show for real estate professionals at www.reuncut.com.au.
To hear more podcasts by Kevin Turner, click here
Disclaimer: while due care is taken, the viewpoints expressed by interviewees and/or contributors do not necessarily reflect the opinions of Your Investment Property.