As it’s a fascinating subject and we love talking about it, we’ll share some of our negotiation tips – so you can make sure that whoever is representing you is doing the best possible job on your behalf.
So firstly, a pretty obvious fact but one that often gets overlooked: the balance of power going into a negotiation is a critical factor in how you come out of it. And the easiest way to have the scales tipped in your direction is to have multiple options – in other words, have several people interested in buying your property.
In fact, it’s almost impossible to negotiate well when you’re desperate to do a deal. To really succeed, you want to communicate to the other party that you’re genuinely willing to walk away – because you’ve got plenty of options, and if they don’t like your terms then someone else will.
That’s why our favoured pricing strategy is to ask for “offers over” a reasonable price: we know that if we can price a property sensibly and get lots of people interested, we’ll be able to negotiate the price up beyond what our vendor wanted in the first place (which we achieve over 90% of the time). On the other hand, if we had set a whacking great price and scared off everyone except a few buyers, we’d have no power at all and they’d be able to call the shots, and in these circumstances they always do.
Another important factor to think about is incentives. People almost always behave in line with the incentives on offer to them…and this can be a problem when it comes to having an estate agent negotiate on your behalf.
Here’s why. An estate agent’s job is to get you the best possible price for your property. But in reality, if they get you an extra £10,000 the agency will make at best £200 – which for the individual estate agent means more like £20 in take-home pay.
So even though they’re meant to be getting you the best price, and they probably even convince themselves that’s what they’re doing, how motivated are they really going to be to put in even a few hours extra work to get you a better offer?
The rational thing for them to do is tell you that they’ve got a good offer, and that you’re probably best off just accepting it and not risking losing it. Basically, their incentives aren’t aligned with yours.
There’s no point in fighting this – it’s human nature to operate in this way. So instead, we’ve developed a model that re-aligns those incentives. We ask that if we achieve a price for you that exceeds your expectations, you pay us a better fee.
It’s so simple, but it makes total sense – to us, at least. We reckon that you’ll probably be happier paying us a little bit extra if we make you a whole lot more money, and it means that it makes financial sense for us to keep pushing for you rather than just giving up and moving on to the next deal.
Because of this you’ll more likely experience us telling you not to accept a good offer, because we’re confident of finding a way to increase it!
If you agree with us, how can you take advantage of this? Well, by working with us! But if you’d rather work with another agent, we’ve armed you with some ideas that will help you get a great result.
Set the price and conduct viewings in a way that is most likely to get you multiple offers (and tip the balance of power towards you), then suggest a fee structure that provides an incentive to push that price up as far as possible.
Or, of course, you could manage the whole process of selling your house yourself – and then you won’t have to worry about anyone else’s incentives whatsoever!
Well, we’ve basically given away all our secrets now. And we hope that you can make use of some of them when selling your own property.
If you’ve got any doubt that the theory works in practice, just check out these testimonials from our clients about how much money we’ve made them. If you’d like to add your own success story to the list, just give us a call on the number at the top of the page.
Even with all this information, we know that the actual process of selling a house can be pretty confusing and scary – particularly if you haven’t done it before, or not for many years.
So we’ve got one final thing up our sleeves for you: in a few days, for our final email in this series, we’ll send you a complete checklist of everything you’ll need to do – in order – to go from the very start to completing the sale and having a nice lump of cash in your bank account. We’ll see you then!