When negotiating, who should make the first move?
When negotiating, who should make the first move?
Both a buyer and the seller are ready; they want to cut a deal. So who makes the first move when a property sale is on the table?
It seems everyone has a theory on how to start a negotiation in real estate.
Some say the vendor should set the pace and advertise a fixed sale price for the home. Others insist it is wiser to keep figures off the table and simply list the home for sale then wait until a prospective buyer makes an offer.
Buyers Agents says it is the buyer who “normally” – but not always – makes the first move in the property negotiation process.
You do this by making a written offer.
According, it is strategically sensible for buyers to make the first move because if the price is pitched right it will quickly get your seller to the negotiation table.
But be warned: “If you make your first offer too high it will only act to feed the seller’s expectation.”
“The buyer will normally pitch their offer at their lowest price with the expectation that the seller may be in a hurry to sell the property, therefore a way forward is to provide the buyer with a counter offer which then sets the range for negotiation.
“The best way for a buyer to put their best and final offer forward is on a signed contract with a 66W (Certificate) and deposit cheque.”
A Section 66W Certificate waives a buyer’s right to a cooling-off period in relation to purchasing a property in New South Wales.
Buyers need to note that Sellers are less likely to take you seriously until you have made a written offer
Having said that, the question of who should jump first also depends on the sale method and the market.
“If the property is being offered for sale by private treaty, then the seller has already made the first move by putting an asking price on it.”
“An interested buyer needs to make the next move in the form of an offer and, in the event of no forthcoming offers the seller would probably need to reduce their price.”
“If the property is being offered for sale by auction, then the buyer has an option to make the first move via an offer prior to the auction or wait until auction before making a bid.”
“The selling agent can inviting offers prior to auction then buyers usually read that as a sign that the seller don’t have much interest in the property.” However this may not be the case and if a buyer is interested and waits for auction day, they may miss out on the property if the seller sell the property prior to auction.
“If they are discouraging offers, then you can be confident that they have loads of buyer interest.”
The bottom line according to expertise is:
- In a seller’s market you will see the buyer often making the first move in order to limit competition from other buyers;
- In a buyer’s market you will see the seller making the first move in order to entice a buyer to the negotiating table.
“Bucking the system usually costs you money.”
- Buyers need to make sure the selling agents are aware you’re keen to purchase the property
- As a buyer and you’re keen on a property let the agent know because many agents won’t follow up. And if they don’t know you’re interested they may sell it to another buyer before you submit your offer.
- Sellers are less likely to take you seriously until you have made a written offer.
- So when you put your offer in, try to put it in writing, clearly stated with all terms and conditions.
- If the offer doesn’t meet what the vendor is after they are more likely to counter offer on the contract.
- And at this stage of negotiations the buyer now have a more engaged seller and are much clearer on what the seller is expecting for their property in terms of price and settlement terms.
Buyers’ fatigue: Don’t get caught making a fed-up purchase
Agents says any property listed with a sale price has already revealed its seller’s top price point.
“The seller should not put their final price as the asking price; they should leave some room for negotiation.”