Why the highest price doesn’t always win the day

Many buyers falsely believe that sellers are only after the highest price for their properties, when this is often not the case at all – even in strong market conditions. 
In fact, whenever a buyer is aiming to secure a private treaty negotiation, while price is always important, it’s not the only factor that they should consider when they’re preparing their offer for the seller.  

Indeed, having attractive terms in your offer can help it stand out from the crowd, and can sometimes make the difference between being the best successful buyer or not.  
The multimillion-dollar question, of course, is how are you supposed to know what a vendor actually wants from the sale? This is where experience and networks count the most. 
Attractive terms 
We are usually buying a number of properties for clients in strategic investment locations, which means we get to know the top sales agents and probably have done a few deals with them already. 
These sorts of existing relationships mean we usually have the ability to learn more about the vendor’s motivations, including what would constitute an ideal offer for them.  
Now, I’m not saying that vendors don’t want to achieve a strong price for their properties, but there are often other considerations that can mean just as much to them.  
The key is to understand what these are so you can incorporate them into your offer – as long as they also suit you and your personal risk profile.  
Below are some of the negotiable terms that we often use in property offers for our clients. But it’s vital that you always seek advice from qualified and licenced professionals, such as solicitors and mortgage brokers, before deciding whether any of these are the right fit for you. 
1. Cooling-off clauses 
All vendors want certainty that their sale is going to proceed through to settlement day.  
One of the ways to provide this certainty early on is to remove the cooling-off clause, which is generally five business days. 

2. Finance clauses

Finance clauses allow the buyer time to organise the mortgage for the property that they have signed a contract to buy by private treaty. Sales by auction are generally finance unconditional contracts.  
In hot markets, some buyers may improve their chances of being successful by shortening the finance clause from, say, 14 days to seven days. Some other buyers, who are confident that finance will be approved or perhaps have loan pre-approval already, are removing the finance clause altogether and making an unconditional offer – but this can be a risky strategy, so it’s not for novices or anyone with a more conversative risk profile.    

3. Building and pest clauses 

It generally is never a good idea to remove the building and pest clause because of the risks of purchasing a termite-riddled lemon. However, you can sweeten your offer by reducing the clause duration period down from seven to five days as an example. This is especially for experienced investors who already know a building and pest expert in the area.  
4. Deposit size 

We usually recommend that buyers only pay a reasonable-sized deposit into the agent’s trust account to secure the deal. This means that you don’t need as much cash up front to pay for the deposit. However, most vendors do find a larger deposit appealing, so this could be a way to make your offer more attractive to them.  

5. Settlement period 

 Most vendors have an ideal settlement time for their own plans. Perhaps they want a shorter or longer settlement than usual to marry up with the purchase of their next home? Sometimes, they could actually want an extended settlement or even to rent the property back from the buyer for a period as they have yet to secure their next home. The key is knowing what works best for them and then include it in your offer, but only if it suits you, too.   
6. Communication  

 Improving your chances of being the successful buyer is as much about how you communicate your offer as is what the offer includes. What I mean is that how you structure and submit your offer is also of utmost importance, which means making it timely, professional, and legally relevant for the property’s specific state or territory.   


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