I recently had a client that was about to put in an offer on a property and was feeling me out about what price they should put on the offer. This gets to be a very complex question depending on both the buyer and the seller. In my mind the main focus should be on facilitating a transaction. If there is no sale, neither the buyer nor the seller are happy. No one wins. The word “ wins” is very telling. It’s amazing how buyers go from a state of warm and fuzzy with visions of enjoying the property to gaming mode in the blink of an eye. When I say gaming mode, I mean they do a Jekyll and Hyde, Werewolf transformation. All of a sudden it is not about buying the property they want, it’s the competition, it’s the game, the ego. It’s the “ them or me” state of mind. The property becomes secondary.
With any negotiation, there will be two starting points. The sellers price and the buyers price. The negotiations will hopefully settle out somewhere in between. This client quoted the XYZ University School of Business and Marketing that said “ In order to get the best negotiated price you have to start with the lowest initial offer”. With all due respect to the academics who probably have never actually had any shoe leather on the mean streets, that is horse hockey. As soon as you put a low ball offer out you have thrown down the gauntlet challenging the seller to a dual. Game On! Is what you are saying. The property is now secondary. This spring while the sales activity on Salt Spring has been the best in many years, the number of deals that fail to come to a successful negotiated conclusion has also increased dramatically. It’s not about the price or the property, it’s the win / loose competition that takes precedence. In the end, much of the time, no one wins because they never get together.
My advice for buyers is to listen to your Realtor. I have heard the “ This isn’t my first rodeo” statement and “ I/we have bought and sold lots of properties and we know how to play the game.” Most of the Realtors on this island have been involved in probably hundreds of buying an selling negotiations. They do know more than you. Think hard about what is the top price you would pay for a property as the value relates to your wants and needs. Be Real. Make an offer that is a little bit lower than that but be prepared to do a little negotiation. When offers go back and forth with counter offers and more counter offers, after the second round the odds of coming to an acceptable price for both the buyer and seller get pretty slim. The first offer and the first counter offer sets the tone. How motivated are they for buying and how motivated are they for selling.
John Cade, Pemberton Holmes Salt Spring Island