How to Make the Best House Offer
Making offers on properties is a tricky business. As my friend and mentor Steve McKnight has said though, there is an art form to it. There is always a way to use the situation to make the best offer. He says the only way to do this though, is to disconnect yourself emotionally from the sale. There is always another property and if you are too involved you will compromise and not be able to negotiate effectively.
So, here are some ways on how to make the best house offer.
How to Make the Best House Offer #1
– The Walkaway
One of Mr McKnight’s biggest tools is the walkaway. The famed negotiation technique where you simply let go of a sale, even though you secretly want it. This can force people who are holding back their best offer or trying to push you around to give up. It plays on their desire to sell and puts the power in your court.
I have seen it work time and again, when you know a properties worth and understand the sellers mentality it can be your strongest card. This is often used best in tandem with an upfront strong offer. I have seen Steve McKnight use this by giving a fair but well cut deal for him that the vendor has attempted to negotiate. After a couple back and forth’s he will use the walkaway to cement his position.
From this point there is not too much negotiation that can be had, so be sure of your offer. But often you can bring in little extras to negotiate to the same price while allowing them to think they are winning. This comes in the form of the method below:
How the Make the Best House Offer #2
– Negotiable Extras
Extras are a buyers (and sellers) best friend. These are things such as cooling-off periods, tenant lease contracts, fixtures, extended settlements and payment schedules. All of these, if framed correctly, can give you extra bargaining power.
With the walkaway this can be a way to stay true to your offer while allowing them to feel they are getting something in return. For instance, offering an extended settlement with a higher deposit can make the vendor feel they are getting something in return for their lower price.
If you play this right, you can use things that may not affect you much but are of benefit to the vendor. Especially when it comes to vendors who are moving homes, a longer time to move out, a leasing plan while they find a new home or just an extended settlement can be of great benefit to them. Whereas, if you are not too rushed to move in, these things can be given easily.
Be careful and make it out that you are actively giving something, make sure they are tools that work for you.
Also remember to always be ethical, don’t try and prey on weaknesses in particular clients such as age or disability.
Our negotiable extras will come directly from tip number 3 below.
How the Make the Best House Offer #3
– Perspective Taking
Here is where you frame yourself in the vendors position. Are they in a hurry to sell, are they moving overseas, do they have children, are they downsizing. You need to begin working out what their current position is.
Here are some perspectives that are common and what they may mean.
- Vendor has secured a home to move into – providing a stress-free transition is paramount. A locked in and simple settlement date with enough time to move out will be desirable to them
- Vendor is moving overseas – if they are moving far away they don’t want the hassle of coming back and forth to settle things with their old property. Have a non-negotiable settlement date that gives them adequate time to move. Furthermore, offer a potential small lease or rental sum for them to live in the property after settlement but before their final move, to help them avoid frictional costs
- If they are on a property search – offer the option to rent the property back from you for a time until they have found a place to move into
- T&C’s – often in a negotiation vendors will bring up any terms and conditions they might have. If they don’t, feel free to raise the question yourself and then build it into the offer
Hopefully these 3 top tips on how to make the best house offer have helped you to negotiate for your next purchase. If you want to know more about the buying or negotiating processes check out some of the articles below.