Much has been in the press in recent weeks about property prices rising. Such news sounds great for those who are currently or about to be marketing their home for sale. However, it can be very easy to get caught up in all the hype and get ‘gold fever’! Beware, you could end up destroying your prospects for a smooth sale or even a sale at all, when it boils down to negotiating the final price.
Media hype usually refers to properties generally not specifically Your property in Your Neighbourhood, so, be cautious of becoming over-confident about the price You can achieve for Your property.
You may think that the ideal negotiation when selling your property is to get the very most that a buyer is willing to pay. In fact, while you just read that last sentence you were probably subconsciously nodding your head in agreement! It sounds right doesn’t it? Unfortunately, however, it rarely turns out to be the best outcome and let me explain why:
Buyer remorse (or more accurately in this case, prospective buyer’s remorse!), the feeling of regret that builds when they suddenly feel they have ‘paid’ (offered) too much. Usually buyer remorse kicks in once a purchase has been made and cash or credit card handed over. However, in property transactions buyer remorse can be triggered long before an exchange of contracts takes place. Some of the emotional triggers for this can be that the buyer hadn’t planned on spending so much, or a feeling they acted impulsively. Such feelings become heightened the closer the agreed price is to their budget, if they have exceeded their budget then you are in seriously dangerous territory!
Instead of being happy and relaxed the buyer will feel nervous and frightened, this alertness will prompt them to keep looking for alternatives rather than be satisfied with the deal they have. In addition, any slightly negative news could kill the deal. This negative news could be that the buyer receives a lower mortgage offer, a survey report identifies an issue, a relatively minor increase in anticipated costs or the transaction taking longer than initially planned. The spooked buyer will use such circumstances as a ‘legitimate’ excuse to abandon the deal based on the initial discomfort they felt when agreeing the deal.
Think of the transaction as though you were filling a mug with hot tea, pushing a buyer to their maximum is like filling the mug to the brim, how easy is it to deliver it without spilling it? How on edge do you feel as you take every step? That is how the buyer will be feeling!
To avoid this from potentially happening leaving some ‘money on the table’ in the negotiation is often the best insurance policy to ensuring that a transaction will conclude successfully. When the buyer would have been ‘prepared’ to pay a little bit more and the seller is ‘prepared’ to receive a little bit less leaves psychological breathing space for both parties. The gap between the two figures may not necessarily be large, however, it creates a ‘sweet spot’ where the psychological impact is dramatically reduced for the buyer. They feel more in control and can adapt more appropriately to slight changes of circumstances, as if they were delivering a ‘normal’ mug of tea!
Biscuits anyone?!
Max Fuller is the Founder and Creator of Mutual Pre-Portal Property Platform