Negotiation - Is It Really Happening?
Negotiation is one of the main reasons a vendor pays their estate agency a bigger fee.
What's important, though, is to make sure it's pure negotiation and not simply messages back and forth, as they are legally required to do, between buyer and seller.
Let's take the example of a property on sale for £700,000.
When an agency is charging a fixed fee of £999, there are several factors to take into consideration. The available time they can allot to the sales process is limited. The longer the process takes, the more hours that are involved in the essential services required to achieve a premium price, the less their efficiency. The competence of any agent is partly determined by how well they can persuade and negotiate their fee. With a low fixed-fee, there is no negotiation. There is little persuasion required - it's cheap, take it or leave it!
So low-cost, fixed fee agencies often don't have the best negotiators in place and when the sales process reaches that critical point of negotiation, they either don't negotiate, or they lack the skills in that area.
So, let's say they achieve £690,000 for that property. Not bad. The homeowner has paid £999 and, as a result, the net proceeds are now £689, 000 and that all important pound.
But not good enough. When a skilled negotiator achieves the asking price, the net proceeds for a homeowner are £693,000.
The homeowner is better off financially with the more expensive agency and that assumes that the cheaper fee agency will value the property identically. Often they deliberately value higher. The homeowner pays whether, or not, the agency sells the property.
Twelve months down the line, there is always that money-back guarantee from the fixed fee agency, but the likelihood is that if a property hasn't sold in a year, the price will have been reduced enough to make one's eyes water.
The point is this: a good negotiator will achieve far in excess of the difference in an agency's fee.
Negotiation, though, isn't always about talking.
Oren Klaff, best-selling author of Pitch Anything explains the difficulty of staying silent when a vendor has made an offer.
"That's because society has taught us to take conversational turns. Most people are a product of social conditioning. An untrained negotiator that talks at the wrong time will lose deals. At the same time, they are socially conditioned to talk at exactly the wrong time in a negotiation."
Any kind of silence feels awkward, but it is an effective negotiation tool.
Simply telling a buyer that their "low offer probably won't be enough, but that we will put it forward for consideration" isn't negotiation. It's a messaging service.
Here at DM & Co., we pride ourselves on our ability to negotiate the very best offers. It's not a quick process. It takes time to explain to an interested buyer why they should pay more. Or, to a landlord considering a buy to let property,for income and capital growth, why they will still achieve an acceptable yield by increasing their offer.
It's one of the first questions that any homeowner should ask an estate agency:
How good are your negotiating skills for similar homes? Can you provide examples of how you negotiated a premium price?
There are enough uncertainties and variables when dealing with any estate agency - make sure you instruct one that can negotiate on your behalf.
Here's the numbers you will need when instructing the very best:
Dorridge: 01564 777314
Solihull: 0121 775 0101