Offer low and work your way up. This is the standard bargaining tactic Singaporeans are all too familiar with. But when it comes to negotiating for a condo you’ve got your eyes on, it isn’t so simple.
The magic number is often a function of many factors. Apart from the usual suspects - such as the area’s transaction prices and volume - it is also influenced by both parties’ motivations to buy or sell.
With these nuances in mind, we share 3 negotiation strategies and whom they will help most.
1. Step ladder approach
Let’s start with the old but gold method of making the first offer with some buffer to the seller’s asking price. There is no hard and fast rule to this margin, but sussing them out can help you make a more informed offer.
Is the seller relocating to another country in a matter of months? Or are they retirees looking to downsize their homes? These motivations hint at their urgency, which affects your bargaining power.
Delivery
Don't be the first one to offer when there is no asking price. If you must, quote a range instead of a fixed number. Telling your agent he can come back with a counteroffer also shows that you are open to negotiate
Works for
Buyers with a high level of interest will find this useful. To keep your offer at the top of the pile, remember to stay active in your communications.
2. Highest and best offer
Have you noticed how beauty parlors always bait women with early bird prices that expire "at the end of the day"? This tactic works both ways. By quoting the seller your "highest and best offer", they may feel more compelled to act decisively.
As the old adage goes, a bird in the hand is worth two in the bush. If the seller is in a rush to transact, it may just be your lucky day. The downside? There may be no recourse if they think you are lowballing them.
Delivery
Name your highest and best offer at a listing and tell the seller you are ready to deal today.
Works for
This tactic is suitable when you have no lack of options. In fact, a rejection would help you move on to other listings before incurring further opportunity costs.
3. Trade terms instead of price
Fans of the reality television show Shark Tank would have observed how the sharks (investors) negotiate with the entrepreneurs. When the two parties cannot agree on cash and equity amounts, other terms like royalties, loans and advisor’s equity come into play. In the same way, you can consider factors like the unit's condition and the seller's timeline
Delivery
Lower offers can sometimes be justified when the unit is poorly maintained and requires restorative work, or when buyers who are in no rush to move in let sellers extend their stays.
Works for
Buyers with relatively flexible timelines.
If all else fails
Last but not least, there is the hail mary offer buyers quote out of sheer hope. The truth is, for every asking price, nobody really knows what the seller’s deal price is. So if your realtor appears to encourage it, taking a long shot may just pay off. Of course, this applies only if you are not urgently looking to purchase. Looking for a realtor to represent you? Reach out to me (Harvey Chia) at 9199 9141.
Comments