Knowing how to respond to a real estate agent’s questions can boost your chances of securing a property for a good price. In this edited extract from his book, Australia’s Home Buying Guide, real estate agent Todd Sloan shares three common questions agents ask and the best way to answer them.
A lot of the time, the first part of getting a great price is knowing that the negotiation has already started. It doesn’t start when you make your first offer – well, at least not if you want a good deal when you’re buying a property.
A good negotiator will have most of the information they need before the offer is even made; so you’ll need to learn the art of extracting information and protecting your vulnerabilities.
I like to think of negotiation as a game of tennis: every question that is asked can either be hit back to me with a skillful response, or it can be missed – the other player can’t return the shot and I get the information I need to strengthen my side of the negotiation. Whether you realise it or not, this is precisely what’s happening when you’re talking with a good sales agent. They’re continually trying to get as much information as possible and cause you to miss the shot.
You may not play tennis; you may not even like tennis. However, I want to use this analogy because it’s easy to understand and makes the property negotiation process much simpler to follow.
It doesn’t matter if I’m the agent selling the property, trying to get the best price for my vendor, or if I’m the buyer negotiating with the agent. It’s always the same approach: hit the ball over the net inside the square and be ready to see if the other player can hit it back over the net inside the square.
Questions the agent may ask and the best way to respond
Unfortunately, there is no 100% foolproof way to win at negotiation. But, by using these scripts to hit the metaphorical ball back over the net, you’ll significantly increase your chances of securing the property for a much better price.
While I could write an entire book just on these kinds of questions, I’m going to keep it to three. These three questions, if answered correctly, could save you an incredible amount of time and money.
Once you have an understanding of how the tennis match is played, you’ll be able to quickly pick up when a loaded question is coming your way. If you’re ever in doubt, make sure you take a step back and play it cool; it could end up saving you thousands.
So without any more chit chat, grab your sweatband, racquet and ball, and get ready to start serving up some Q&A to win the game like a real estate Roger Federer!
Agent’s question: If this offer is not accepted, just so I know, what would your next offer be?
Agents will typically use this question to see if they can get the price higher quickly. Sometimes it’s just these 16 words that can be the difference between an extra $10,000, $20,000 or even $50,000 for the vendor.
Bad response: Oh, I’m not sure… I guess I’d go up another $20,000, but that’s it!
As soon as you say this, you have just paid another $20,000. I am always blown away by how many people push their own offer up by sometimes tens of thousands of dollars in a matter of seconds by simply giving the answer to this question.
Pro response: Yeah, good question. I’m not really sure at this stage. Why don’t you just let me know what the vendor says first, and we can take it from there?
Responding like this keeps you in control and makes you come across as calm and confident; you’re not giving away any additional information, but you’re also not shooting yourself in the foot and saying that’s your best offer, which could also potentially cost you the home if another buyer walks in only $1,000 higher than you.
Agent’s question: If I listed a different property that was the same size but newer, would you be happy to pay more for it?
This question is usually asked of a buyer who has a friend or family member walking around the home loudly picking out every problem with the property. I find this is really common with first home buyers who bring Mum and Dad along with them to the inspection. The parents walk around banging walls, opening every cupboard and shaking their heads in disapproval in every room.
Bad response: No, this is the top of our budget; we can’t afford a newer home in this area.
If a purchaser says this, the agent now knows that pointing out the so-called ‘flaws’ in the property is a negotiation tactic, because buying a newer property that is in perfect condition is not an option for the purchaser. So when they put in an offer with a long list of things that need to be fixed and heavy price overestimates of how much it’s going to cost, the agent can take this with a grain of salt.
Pro response: I’m happy to look at some different properties. I like this type of home, but never say never.
This response doesn’t give away any extra information and keeps the game open, with you calmly hitting the ball back over the net as cool as a cucumber.
Agent’s question: What is it that makes you want to live around here?
Everyone’s answer is going to be different, and sometimes not too much comes of this question. But every now and then, a buyer will provide the agent with a piece of negotiation gold.
Bad response: We need to find a house in this street because Mum’s just five doors down, and she needs a lot of help around the home. Or: The swimming centre is only down the road, and our little David is going to be the next Michael Phelps.
It can help the agent massively if you give a specific definition as to why a property is important to you. If, later on in the negotiation, you then start using another property that’s on the market to justify a low offer, the agent can respond that the other home isn’t close to Mum, or the pool, or whatever else is really important.
Pro response: I just really like the area. It seems like a lovely place to live/invest.
Responding like this shows you’re genuinely interested in the area and possibly the home, but you’re keeping your cards close to your chest without ignoring the question.
By Todd Sloan, award-winning real estate sales agent, professional renovator, author of Australia’s Home Buying Guide (Major Street Publishing), and host of one of Australia’s fastest-growing property investment podcasts, Pizza & Property.
Note: This blog was originally posted on Canstar.com.au.