Stop relaying offers – start actually negotiating them

Why passing numbers back and forth isn’t negotiation, and what to ask buyers instead to protect your vendor’s position.

One of the biggest mistakes I see agents make when negotiating with buyers is that they work in absolutes, or they make decisions based on assumptions from their own perspective.

In some cases, they are not really negotiating at all. An offer comes in, the agent passes it straight to the owner and waits for the owner to decide what happens next. That is relaying information. It is not negotiation.

The negotiation process should begin well before the offer is presented to the vendor. It starts with gathering as much information as possible about the buyer’s position, their motivation, their limitations and what has influenced the number they have put forward.

Without that information, how can we make a meaningful recommendation to the owner?

Understand the position before trying to move it

If a buyer makes an offer, one of the first questions should be: how did you arrive at that number?

Have they based it on other properties they have inspected? Is it driven by their borrowing capacity?

Are they comparing the home to a recent sale nearby? Are there concerns about the property that have influenced their position?

It is also important to understand whether price is actually the issue. Sometimes the real hurdle is finance approval, settlement timing, a property they need to sell, access before settlement or another term that is influencing the buyer’s willingness to move.

If we do not understand those things, we are negotiating with one hand tied behind our back. Like any conversation, we need to understand the other person’s position from their perspective, not ours.

The questions we ask at this stage can make an enormous difference to the outcome.

Be careful with absolutes

Another mistake I see regularly is agents giving buyers a number too early. For example, a buyer has made an offer and there is a $50,000 gap between their position and the vendor’s expectation.

The agent goes back and says,

“We are $50,000 apart. If you can increase your offer by $30,000, I think I can get it done for you.”

The good old “split the difference” approach.

There are two problems with this. Firstly, does the agent actually know they can get the deal done at that number? Probably not.

Secondly, they have just given a large amount of the negotiating power back to the buyer. Even if that buyer may have been prepared to move by $40,000 or $50,000, the agent has now suggested that $30,000 may be enough.

The buyer no longer needs to decide how far they are willing to move because the agent has made that decision for them.

Let the buyer decide what “more” means

A different approach might be to say,

“We are getting very close here. The good news is the owner is willing to negotiate from their original position, but realistically I need you to give me some more to work with.”

The buyer will often ask, “How much more?”

My response is usually, “How much more are you willing to give?”

That question is important because my version of “more” and the buyer’s version of “more” may be completely different. Until the buyer actually gives you an increase, you do not know what they are prepared to do.

If I ask for another $20,000 and they were willing to pay another $50,000, I may have just cost my owner a significant amount of money simply because I rushed to provide a number.

Good negotiation is not about being clever with words or trying to pressure somebody into making a decision. It is about understanding the situation well enough to know which question to ask next.

Slow the process down

I see agents rush negotiations far too often. An offer feels exciting. There is pressure to get something agreed.

The vendor wants an answer and the buyer wants to know where they stand. But this is exactly the point in the transaction where the agent needs to slow down.

Ask another question. Understand where the number has come from.

Find out what is really preventing the buyer from moving. Know what matters to the vendor beyond price, then make a recommendation based on information rather than assumption.