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Vancouver Real Estate Buyers Negotiating Strategies For A Downward Market
Vancouver real estate buyers will learn how to capitalize on the downward real estate market to ensure a very good buy.
By: Kevin Lynch
get them by.
However, if you want to get a great deal on your next purchase, it won’t happen by accident. You need a strategy that exposes the most serious sellers and helps you get exactly what you want.
There is a fine art to negotiation that few people use or even know about. Years of selling real estate has given me an inside track on how to use different techniques and strategies for every buyer regardless of their position.
When considering your buying strategy, you’ll need to understand the market you’re buying in. Since we’re just coming out of a 10 year seller’s market, most agents and buyers only know one simple strategy based on this market. It’s a strategy that is completely geared for
the benefit of the seller, where there is low listing counts and high demand.
Over these years, so much of the negotiation has been geared toward getting buyers to move on their terms and price. Buying in a Seller’s market takes away most your negotiation positioning. Fortunately for today’s buyers, that has all changed.
You’re now in a market where prices are slipping, where there’s a dramatic over supply of housing, where people are waiting to buy and where, for the most part, there are between two and ten sales for every one hundred listings on the market (depending on community).
If you are serious about buying your next home now, your timing is fantastic if you follow this powerful negotiation strategy.
Get Your Financing In Order.
It might sound funny but the first step is always coming from a position of strength. Go to your bank and get your financing approved before you do anything else. If your buying is contingent upon selling a property, stop.
Sell your property first.
You don’t need to worry about being stuck without a home in today’s market. If you have your financing in place and don’t have to rely on the sale your home or property, you position yourself very well in the eyes of all serious sellers.
Why Are Your Buying?
Next, determine why you’re buying, what you want, what are your 'must haves 'and your 'wants' are. This is the first stage of the all important research you need to address.
You’ll want to find at least 3 to 5 properties that meet most of your needs and that you could live in. Take the time you need to search for your favourite homes, even if it takes a little extra time.
This is critical because it gives you the leverage you need.
As you search you’ll want to learn about the seller’s motivation. The best way to do this in asking insightful questions like why are you selling? Have you already bought?
When do you need to move? Where are you moving, locally or are you relocating?
Other questions that are a little more candid can be used like a pre-negotiation. You or your agent might ask things like, have they had any offers? How long have you been on
the market? Have you reduced your price? How far have you come down so far? What is the lowest offer they’ll look at?
Prime the agent.
Asking leading statistical questions is a great way to learn the mind set of the seller and their agent. When you indicate you’re up to date with leading questions like:
Have you seen all the news lately? What percent have prices fallen in this area?
And more personal questions like, How’s the market treating you? How are your other
listings doing? What’s the overtone at your office right now?
If you find the agent is hungry, there’s a great chance they could become a negotiation partner of sorts (even if they don't know it). If they need the commission and their motivation is high it’s more likely they’ll want to put something together – even if it makes them
a little uncomfortable.
The Serious Research
You need to know your market, current values of properties in your market, the number of homes available, how long they’ve been for sale, how many homes have failed to sell, how many homes have reduced their prices, how much homes are selling below their asking prices, where sales prices are in relation to their assessed values.
Once you’ve accumulated all these statistics, and you’ve determined which properties you’re most interested in.
You make your offers.
Start low. Your statistics should give you a good gaige of where to start. If you feel it's too low, then you're probably on target. If you're not sure, then go a little lower. Remember the market is still falling, so take into account at least another three to six months of decline.
If the seller doesn’t flinch on your initial offer, you’re too high. It should be a little painful for them. Remember, you’re in the power position here. If they are serious about selling and they haven’t had any other offers, they’ll have to give your offer serious consideration. Especially, when you or your agent goes over all the statistics they probably have not seen. This is powerful because you blind side them a little and the evidencen is clear.
Statistics are VERY powerful if used correctly. They become your case study.
Making Your Offer
This is where the stats come in to play. At the beginning of the presentation, you share everything you know.
It's critical to show confidence in the value of the offer.
If you/your agent looks nervous or uncertain, you can forget about it. This is time to show you know your stuff and know your offer is good.
Going through the facts you actually share how they’re actually one of the lucky few to even get an offer.
You print off all the statistics. Tell them, I know your agent is great but before I present my offer, I want to make sure you have all the most up to date market information.
You show them pages and pages of expired listings, price reductions and competing properties on the market.
Then you show them the list to sale price ratios, how long properties are sitting on the market and of course the low percentage of homes that have sold.
There are many other sub-tactics within this negotiation strategy that I’m happy to share but they need more verbal and personal communication for a complete understanding.
The flinch, the gasp, being dramatic, timed anger or frustration, and my all time favourite and the most powerful of all, the take away.
Finally, stay emotionally disconnected to buying, understanding if you don’t get this one, you can always move on to the next. Getting a great buy in today’s market takes time, energy and commitment, and if done right you can find a better deal than you ever thought possible.
Patience in this type of negotiation can pay major dividends. By patience I mean, you can always walk away, try some other properties and come back later if they don't work out.
Finally, once you've got the best deal you can get, ask for more.
How can they sweeten the pot. In some cases, you can use the inspection to open up further negotiations.
All statistics indicated, inferred and supplied herein are approximate and are for informational purposes only. This information does not replace a home estimate, property appraisals or other professional services. All parties are strongly advised to do their own research prior to making any real estate related decisions including (but not limited to)
having multiple, comprehensive home and market estimates, surveys, inspections, appraisals and legal advice. Not intended to induce or cause breach of an existing relationship.
by Kevin Lynch
"for all your vancouver real estate news and information"
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Vancouver's top real estate news resource for buyers, seller, media and press, realtors and investors. Kevin Lynch is Vancouver's premier real estate agent helping people realize their home ownership and real estate investment dreams.