How to negotiate in a softer housing market

Seller expectations are high but buyers want low prices – what’s to be done? Two real estate agents detail how to negotiate in a declining market.

After years of rapidly rising house prices, the recent slowdown took many people by surprise – not least those with a home to sell.

“For a while we had a situation where buyers were aware the market was dropping while sellers still assumed it was strong, so there was a big gap between their expectations,” says Anton Zhouk, Director of the Buxton Real Estate Group at Boroondara in Melbourne’s eastern suburbs.

“Now people have had time to adjust so, when it comes to negotiation, the gap isn’t quite so wide.”

Whatever the state of the market, every negotiation is based on the same premise – vendors want to receive the highest possible price while buyers want to pay as little as possible.

Both, however, need to give careful thought to how they approach a negotiation when the market is in decline.

Be realistic

“From a vendor’s point of view, it’s crucial that you price your property correctly from the start,” Zhouk says. “The most incredible homes in the world won’t sell if they’re  overpriced.”

Jane Booty, Principal of Stone Hills District Real Estate in Sydney, agrees that vendors must   be realistic.

“Some potential buyers are waiting for prices to fall even further so there fewer actively looking,” she says. “They have more properties to choose from so  it’s  harder  to  convince them to pay a premium price. And the longer a property stays on the market, the less likely      it is to sell at a higher price – buyers can look up how long it’s been for sale and will use that against you.”

She suggests that vendors try not to think in terms of losing money.

“Unless you bought in the last two years or so, you’re probably going to get a higher price than you paid,” she says. “And, of course, if you’re selling to buy, you’ll be  paying  less yourself. It can be more helpful to think in terms of the changeover price, rather than fixate  on the price you may have been able to achieve a few months ago.”

Take offers seriously

If a property is on the market now, it’s there for a reason.

“This isn’t a time to be testing the market or selling a property if you’re not in a hurry,”     Booty says. “If you do need to sell you should be prepared to take every offer seriously, even   if it’s not at the level you were hoping for. At least enter into negotiations to see how far you can get your potential buyer to go.”

When buyers have the upper hand, presentation is particularly important.

“You need to be clear about the attributes of your home – the unique selling points that make it desirable,” Booty says. “It’s also worth spending some time and money on minimising anything that would cause concern. You don’t want potential buyers to go away with the impression that there are another five homes they’d be equally happy with.”