By Guest Blogger, Leanne Pilkington, CEO,
Laing & Simmons and Immediate Past President REINSW
With listings tight and plenty of buyers looking to compete, vendors can be confident that some attractive offers will be coming their way. With this confidence comes comfort, because vendors know if their property is the right fit, buyers will go out of their way to make it happen. So how can you create some urgency on the vendor side? How can you channel The Godfather and make them an offer they can’t refuse? Laing+Simmons CEO Leanne Pilkington has some thoughts on the best way for buyers to frame their offers.
Making an offer is when the purchasing journey shifts up a gear. You go from looking to participating, from spectator in the stands to the centre of the arena. By this time, you’ll need to have done your research.
Investigate like-for-like sales in the local area, attend as many open homes as you can to understand buyer demand, eyeball your competition, look at suburban price movements in recent weeks and months, and speak to those on the ground – local agents who deal in the market you’re interested in, day in, day out. This will give you an idea of perceived value.
A relationship with a buyers agent can provide a unique and valuable perspective, as they will have an independent view of a what a property is worth, and the offer needed to secure it.
Once you have a figure in mind, and assuming it’s within your budget, it’s a matter of making your offer as attractive as possible to the vendor. Without overpaying.
There are a number of ways to do this. You can put an expiry deadline on the offer to heighten the vendor’s urgency. You can put your offer on a contract in writing and deliver it directly to the agent.
Both these tactics will mean that, should your reasonable offer be refused, the vendor and agent will have to increase the price guide. Their desire for a quick sale might mean they consider your offer more seriously.
Similarly, if the property is to be offered at auction, this shouldn’t stop you from making an offer beforehand. If the offer is declined, and it’s in line with the pre-auction guide, then the agent will have to adjust that guide.
This can mess up a campaign strategy and can therefore be a good negotiation tactic. In the current market, it can be hard for some buyers to obtain lending approval to bid at auction, as banks will typically want to value the property themselves and don’t want unconditional exchanges. Bidding before the auction can work well for buyers in these instances.
Whenever you make an offer, the objective is to make it as attractive as possible. It must therefore present as secure and stable, and unlikely to “fall over”. One choice to make is whether you can offer a conditional or unconditional exchange. A buyer’s willingness to offer an unconditional exchange makes the offer very attractive to the vendor.
Either way, your offer should include details of when you intend to settle along with any extra inclusions you would like, such as fixtures and fittings.
Other items to include with your offer are the deposit amount and whether your finance is pre-approved. Vendors in the current market are looking for a buyer with a strong ability to settle and move in quickly. They may even be comfortable accepting a lower offer compared to a buyer who hasn’t secured lending and has a smaller deposit. The tightening in lending has had a dramatic impact.
An agent is compelled to pass your every offer onto the vendor. Whether this means you should put your best foot forward straight away, or adjust your offers as your correspondence with the agent continues, will depend on the individual circumstances. Your research to understand the weight of demand for the type of property you’re interested in, as well as its location, will help dictate how hard you should go from the outset.
However, if your offer – and subsequent offers - are not getting the cut-through you want, bide your time and be prepared, if needed, to walk away. The most important thing to remain mindful of is your budget. It’s never worth extending yourself, as many buyers through the pandemic are currently realising.
Happy hunting!
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