Sydney Property Muppets
37. Exclusive Buyers Series - Counter offer versus the vendor
- Welcome to the Sydney Property Muppets podcast. My name is Kurt Lawther. I'm the real estate agent and with me, forever is... - Chris Clark, the buyer's agent. - Welcome Chris, so this is an exclusive series on the buyer's negotiation journey. - Yeah, loving it. Loving it so far, so we've covered off, you know, when you're making the first offer, we've covered off camera offer, when you're coming up against buyers, we've done, you know, putting offers in the four auction. - Yep, and today is counter offer against the vendor. - On your own, paying attention then. - No, no, no, always paying attention. Now, a lot of conversations I'm having with homeowners, buyers, and people just wondering about the market is, a lot of people are still seeing these prices going up, all these amazing prices, but what a lot of people don't realize these days is, back in COVID times? - Well, wait, let's just quickly say today's topic, so we're going to be following through, you know, give a bit of an idea now. COVID versus now, so to change you, what's going on? - Yep. - We're also going to talk about when you make an offer first, or when you get a counter offer, what does that kind of mean? And we're going to talk about how you rely an offer, through an agent, to a vendor, maybe to get some sympathy, and maybe a little trick at the end as well. - Sorry, bring it back in. - No, no, thank you for giving some context. - Thanks to COVID. - There's in COVID times. - Yep. - And when there's always that boom, often it's the buyers pushing the buyers up, and the prices are amazing. - Yep. - However, times have changed with the interest rate, all the interest rate rises, and where they're staying at, the market, the inflation, times being a little bit tougher, people not having as much cash or ability borrowing power. And often, it is one buyer versing the vendor. - Currently. - Currently at this stage. Not exclusive for that. - Oh, yeah. - But that's what we're finding a lot, and particularly in chat squad, and the loan offshore, some of those around chat squad, we're actually finding that quite a bit, that-- - Yeah, and I'm-- - The market sort of taking a bit of doubt. - Yeah, I think there's always a strong pockets and strong properties, right? But even from my standpoint, when I buy all over Sydney, there definitely no one where we'd put an offer in with an agent. Not being successful, 'cause they want more than what we're prepared to pay, and three weeks later, as I've called my agent before, he's called me three weeks later, going, are they still interested? No, he's not lowering what they're after, but he's obviously aware that my buyers, he's asking how my buyers still looking, and if so, they might increase their offer. But it shows that we were the only ones then at the time, or at least in the ball, you know, having discussions. So reinforces your point about, you know, having scenarios out there at the moment where there's one buyer, up against a vendor, yes. - Or, and the agent. - Yeah, and that's even just a little quick side note. When you go to an auction, you need to keep in mind that you're not just a versing other buyers. You're still versing the vendor, and what we actually tell the vendor, if the vendor doesn't want to sell, congratulations, you've repurchased your house. Because it's like, you purchased it at the price you were willing to sell at, which means that's sort of where your house is now valued, because you're not on technical paper better. - Anyway, you love this one. So, okay, so then following up on that, so you start the negotiations, and you receive a counter offer. I want to let you know, look, overall in principle, that's a good stop. We talked in one of the previous episodes. If you don't get a counter offer, if you don't hear back from the agent at all, or they come back and just say, you need more, it definitely indicates you're quite a way off. Get any counter offer is good. - So we're going to presume in this scenario, that there's no other buyers are there. We pretend that no other buyers are going to come in, and just say the property's been on the market for four to six weeks, maybe four to seven. - So in this scenario, we're describing, so there was initially a guy price of 3.7. - Yep. - Right? Is that good? - No, no, no, 3.7. You view the buyer walking through, you've decided to put forward an offer through various means in comparison. You've gone 3.9. - Yep, so you've gone above and beyond, but we'll just say the asking price of the guard. It's not going to auction 3.9. So you've done your bit. - Let's say the comparables are probably in the early fours area. - Yep. - You as an agent, you come back from the vendor and you can unveil, so the vendor said to you, not saying less than 4.25. Do you tell the buyer, you know, this is where the vendor was at, 4.25. Would you add some main as and top? - So I think firstly to give some context as well, some people view as watching, might be thinking, the guard's 3.7. The person's put an offer of 3.9. Isn't that accepted? - That'd have dusted. - The problem that you've got to realise is what the vendor wants and what the agent has to put. 'Cause the agent puts on the agency with AC value. So the agent might see a value 3.7 plus 10%, 3.7 to 3.9. However, the vendor may not be willing to sell until they get a set number. That could be 4.2, 4.3. It could be 5 million, whatever. - Whatever it is. - So that's why, for example, it's not a done deal and people sometimes get confused because the agent's got to present the property where... - Particularly the property is a 3.7, 4 million. So a lot of those people selling, maybe they're down sizing and doing a lot of buying. Either, yeah, they'll say they don't all have mortgages. I do, but a lot also buying their area cash buys. - Yep. - 'Cause there's a bit of a... - Yeah, the people selling don't have to sell. - Don't have to sell. - They're not in mortgage stress. So for example, they might say to the agent, unless we get this number, we're not gonna sell, but understand people will see value. - So do you come back with some mayonnaise on top of 4.25 or a loo to the... Yes, the vendor has come back with a counter offer and how transparent or how much do you guide a buyer in that scenario? - In this context, in this scenario, I wouldn't come back with a set number 'cause at the end of the day, 3.9, they're still $300,000 off. - Yeah, it's just a significant way up here. - And until we start, until you're starting to get in ballpark figure, because the vendor might have made it clear, you know that anything below 4.1, there's no point in discussion and you could actually ruin the negotiations once you get the buyer up there, if you've already started trying to encourage something around that. So I'm probably saying the 3.9 being like, "Thank you, it's great offer." Oh, I might just say, "Thank you, thank you for the offer." - Maybe not saying great offer. - "Thank you for the offer." I'm gonna discuss, I'll discuss with the vendor. If the offer was at the guide or the asking price, I'd probably be like... - To get in two different things, we are going. - Yeah, I'll probably just see, thanks for the offer. I'll pass it on to the... - And it's like, throws onto an ex-point talking to you about, you know, when you're presenting an offer, we're relying that offer to an agent, you know, giving some weight to it. Oh, I generally believe, if you just give the offer to, if I say, "Oh, 3.9 and get off the phone," or send an email, there's not a lot that they can really carry with them as an agent to the vendor or whatever. So by explaining to them, you know, it's your morning lender, you know, it's maximum where you can get to, or look, it's been your dream property, but you know, if this doesn't work, you'll have to choose a different suburb. You may also, you may also, you may have a property yourself that you need to sell them, might be an apartment in the area, that's worth half that level. You could indicate the agent, would you like to do an appraiser for me and lean on that? - Now, if you're an ethical agent, you, it's not gonna make one eye odor of difference, what the person is saying in terms of, you're not gonna sell the property any easier, or give any buyers a little discount. - Yeah. - For me. - You think so? However, as a buyer, you're trying to find the agent that may work. - May bend. - May. Well, and also, like there's a selling, there's the part there I talk about selling you, probably, so let's move that aside. But even on the other side of the emotion of, look, this is my mortgage stress curd, this is my maximum where I can go, like a car, you know, we're both working two jobs and so forth. All that does really is gives it, at least provides you a bit of ammunition to go to the buyer, sorry, the seller, and explain where they've come up with his number and why, and maybe in some situations. - Can I say a mistake a lot of buyers make when they do try and provide evidence? - Go on. - You're only providing negative evidence. So just say, we're guiding 3.7 and we see, so if someone is wise enough to offer evidence, they're never offering what the vendor might be seeing, they're only ever offering below your cherry picking what you think as a buyer. So instead of, you know, you don't just show the positive, but you show a full range, just say you were to show six or seven properties, if there are six or seven comparables, one might be 3.5, 3.6, 3.7, 3.8, 3.9, 4, 4.1. And you can say where your offer fits in, look, I understand the vendor may see X, Y and Z in their property and they may be thinking up here, as a buyer, I'm more seeing the property fits in, in this range, so 3.7 to 3.8. I'm willing to go 3.9, just $200,000 above or so much percentage points or whatever above. - And I do agree, absolutely. - As I was gonna say, as an agent, I would feel that, okay, they're actually genuinely doing their work. They've done the due diligence. - Yep. Well, I was just gonna say the only thing is I've had a scenario doing that even myself, and so, providing a range against using this scenario, providing properties that have sold from four to 4.2 to 4.4, right? I've had agents literally just remove ones that I've sent and openly go, you can't compare with that full mean or the one, they just remove, like, no, no, no. It wouldn't be saying you do, but there's a part of like buyers going through this, going, well, I can't, I'm doing what you're saying, going, I'm gonna provide various properties that it can mean. And an agent to come back and almost make them feel stupid to go, nah, nah, nah. The one at 4.6 is pretty, that's comparable. - Can I provide a harsh reality? - Yeah. - Is the agents doing their job? - Yeah, but I guess, let's, I agree they are. But we also need to have an open conversation to say, you're saying to do this to provide list comparables, and I'm saying when they do, they get beaten away and told the three at the bottom are definitely not even worth comparing. - So if it's a harsh reality, I get it. - But for me, if you don't do it, you're making your life a whole lot harder. - Yeah. - If you, I guess, well, what we're saying is prepare for a, - It's a pair of whiteboard, I've always said, real estate is not a rainbow colored glass industry. You're trying to acquire a business, it is personal, is business, it can get heated. You know, sometimes it can be amazing, it can be smooth, but sometimes you've got agents, and their job is to get the best price for their, and they may know that 3.6, and their job is to make the-- - 100%. - Which is where you need to get thick skin and realise you're going into battle. - I agree, I'm just saying that by sending in comparables, expect buyers, and be completely count of this, that you're probably going to get told too, if you provide five, that two of them aren't even worth. And that's okay, Kurt, I'm not correcting you. All I'm saying is buyers would be prepared for that, not retaliation to prepare for that pushback. - Like in a provider solution? - You said, have thick skin, yeah go on. - I was going to say, so in our scenario, the guide is 3.7, or the asking price is 3.7, you've put in 3.9, and the agents come back and smacked you and said, that's rubbish, get rid of all those ones below 3.7, then all you need to understand is that that agent, legally, must move that guide price, or the asking price I should say, up to 3.9, which is the advantage of going above and beyond, because particularly in just a for sale campaign, or an asking price, if they don't, that's where you can gather your evidence and send off to fair trading, because if they do get found out-- - And you've put an offer and effectively been rejected, they have to update the asking price or the guide price from there, to match that level. - Now, if they haven't done it in one day or two day, because of the negotiations, but if they've clearly rejected your offer, and said 3.9 is not going to, we are not moving forward on 3.9, then, or they don't, for example, they just don't respond to that it's been a week, that's when I'd be noting down the evidence, and if you want, send it to fair trading. - Yeah, and it is the way you should be going. I talk to buyers, they're quite often, they're in for tea, they're looking for a while, they really know that agent, basically what they do, instead of going to fair trading, they're quite often just going, we actually won't look at it properly with that agent, and actually what we're going to do is tell everybody not to use that agent, not to talk to that agent. So, there's damage done, but not by fair trading. All right, I think we've landed a quite, in a way, quite nicely there, overall. Now, today, a bit of a different one, so let's get some weight on this holiday. - Well, going away on a holiday, not to, so I can speak Danish, spend a lot of time there, and so I'm going to test Chris on three Danish little sayings, it's not too complicated, it's just easy, it did say he's going to, the way he says them is going to somehow give a little bit of a hint. - Yeah, so Chris, I want you to imagine I'm your loving partner. - Right, okay, go on. - Yay, else, good day. - I love you today. - John, I'm going to give it to you. - I love you. - I love you all. Well done. - Okay. - Okay. We're strangers and I might meet you. They're gonna do, how are you? - Ooh, what's your name? - Oh, what's your name? - Wow. (laughs) - What's more this game? - What's I really afraid you'd say? - Okay, last one. - It's getting around maybe six o'clock. - Yeah. - The scale be space. - What's with dinner? - Should we? - Ah! - Do you know what? I'm going to give it to you. - I get a half a point. - But again, I'm only getting that because at the time I tell you my friend, not getting what you said. - So a lot of people, random side note, when you're learning languages, people get freaked out, but it's all about context and body language. - Yeah, of course. - But I'm going to give you two out of three. - Oh well, you're very generous. I'm not, we know that from history. - Well, thank you all. Anything last to say? - Sure. - If you know someone in their 40s. - Yep. - They are negotiating. - It's not old, by the way. - Not old. Yeah, if you know someone in their 40s who are negotiating or about to negotiate, starting their property journey, I think this is a perfect property podcast for them. - Tell them, jump on to Sydney Property Muppets. - Like, share, subscribe, fireworks.