CMA Associate Rebecca Stowe offers her advice in response to a recent query on a property purchase:
Q. I’m trying to purchase a house, which has been advertised as “private sale” by a real estate agent. The price the vendor has specified seems ambitious, and as a purchaser, I’m keen to pay as low a price as possible. While I know the agent’s priority is to represent the vendor’s interests, what can I do so that the agent will assist me in reaching an outcome I’ll be happy with?
Sometimes we make the incorrect assumption that agents are solely driven to represent and meet their client’s interests. Reality is, agents always have interests of their own, and in order for the agent to view your offer favourably and even support it, it’s critical you take into consideration the agent’s interests and the state of your relationship. If you want the agent to help you, you need to think about what you can do to help the agent as well.
Think about the agent’s interests
The agent needs to represent the interests of the client, but it doesn’t stop there. The agent will also have his own personal interests. Don’t assume that the only driver for the agent is high commission. The agent presumably has a strong interest in reputation and securing future clients too.
Put forward options that meet the agent’s interests
You may be looking to sell your house if you are going to purchase a new one. One option might be for you to offer a price for the house (in line with market value), and then incentivise the agent to influence the vendor to accept this offer by proposing that if the vendor accepts, you will commit to getting the agent to sell your house. You may also mention that you are regularly discussing property with friends and colleagues at work, and would be happy to recommend them as an agent.
Make sure your offer is justified with objective standards
While of course you’d like to get the lowest price possible, in order for the agent to take you seriously and to avoid damaging the relationship, it’s important you come up with a price that is fair and reasonable. You should do your research by looking at auction results from other similar properties in the area, as well as general trends in the market.
Building the relationship
The type of relationship you build with the agent will strongly influence whether they will want to work with you. Remember that all relationships are based on assumptions. Often we make assumptions that agents are the ‘enemy’ and are ‘untrustworthy’. These assumptions are likely to influence the way we communicate with the agent and may lead to a hostile and adversarial approach to negotiations, however the agent is likely to better respond if they know that you are trying to work with them.
Your behaviour will also influence the assumptions the agent is making about you, so be careful! Indicate a desire to work with the agent and set the tone for joint problem solving by demonstrating an understanding of all parties’ interests, and signalling a willingness to explore a range of options together. Help them understand that you are facing the issue together and are trying to come up with options that will meet as many of each party’s needs as possible.
So, next time you’re in negotiations with an agent, think broadly about ways to build a positive working relationship. Consider their interests and how you can create extra value for them, and meet more of your own interests in the process!
To learn more about interest based negotiation, we recommend the book “Getting to Yes by Roger Fisher & William Ury.”