There are certain phrases you hear over and over again dealing with real estate agents as a property developer.
“This one won’t last.”
“We’ve got a lot of interest.”
“There are other offers coming in.”
And one of my personal favourites: “If you want a chance at this, I need your offer signed by 8am tomorrow.”
Apparently, somewhere in Australia, an enormous number of property deals spontaneously combust at 8.01am.
Agents know that urgency works. If they can make you feel as though you are about to lose the deal, you are far more likely to stop thinking logically and start reacting emotionally. It is a classic scarcity tactic: there is only one property, several people supposedly want it, and unless you move immediately someone else will snatch it away.
The difficult part is that sometimes the agent is bluffing.
And sometimes they absolutely are not.
The Boy Who Cried Wolf
Experienced property buyers tend to become a little sceptical about agent urgency because we have heard it so many times. You eventually develop an internal translation system.
“We’ve had enormous interest” might mean twelve people downloaded the Section 32.
“We have another buyer circling” might mean somebody asked what settlement the vendor wanted.
“We need your offer tonight” might genuinely mean another offer is being presented tonight.
You simply don’t know.
We’ve all heard the boy-who-cried-wolf story so many times that property developers can become equally dangerous in the opposite direction, assuming every deadline is nonsense.
Occasionally there really is another offer sitting on the table, the vendor really is making a decision that evening, and the property really will be sold while you are still congratulating yourself on seeing through the agent’s “tactics”.
The trick is not to automatically believe the pressure or automatically dismiss it. The trick is to start asking better questions.
Ask About the Offers That Have Already Failed
If an agent tells me there are other offers around, one of the first things I want to know is how many written offers they have actually received.
Actual offers. If the agent is still chasing mine, I can reasonably assume that any offers already made haven’t resulted in a sale, which opens up the much more useful question: why were they rejected?
That question can tell you far more than simply asking what price the vendor wants.
Rather than blindly throwing another number at the vendor, I want to understand what hasn’t worked already so I can decide whether there is a way of structuring my offer that suits both sides. There is not much point enthusiastically charging into battle with exactly the same offer the vendor rejected yesterday.
Pay attention to how comfortably the agent answers as well. Where several genuine offers have been discussed over the previous few days, an agent will often be able to explain the broad issues fairly easily: “We had one at $920,000 but they wanted 120 days. Another was around $900,000 subject to finance and building inspection. The vendor wasn’t happy with either.”
They may not be able or willing to give you confidential details, and you shouldn’t expect them to, but there is usually substance behind the conversation. When the response suddenly turns into, “Well… there was this one guy… and I think he was sort of…” you may reasonably wonder whether we have crossed from negotiation into creative writing.
It doesn’t prove anything, but thoughtful follow-up questions can tell you considerably more than simply accepting “there are other buyers” at face value. It helps you distinguish genuine competitive tension from vague sales pressure.
Find Out What the Vendor Actually Wants
Buyers often assume that every negotiation comes down to price, but price is only one part of an offer. Ask the agent what matters most to the vendor. Is it money, timing, certainty or something else?
A vendor who has already purchased another home and needs funds quickly may favour a shorter settlement. Someone who has not yet found their next property may want more time. Another vendor might value certainty so highly that they prefer a slightly lower offer with cleaner terms.
Once you understand what matters, you may be able to strengthen your offer without automatically throwing another $20,000 at the purchase price every time the agent clears their throat. If you can give the vendor the settlement they need, accommodate a particular term or provide greater certainty around your offer, that may be valuable.
Equally, if what they need simply doesn’t work for you, you have learned something important before signing a contract. A property deal has to work for both parties. Your job isn’t to “win” the negotiation at any cost; it is to find out whether there is a deal available on terms that still make sense for you.
Remember That Buyers Have Scarcity Too
Scarcity doesn’t belong exclusively to the vendor. If I am genuinely considering another property, I have no issue telling the agent.
“I’d really like to put an offer on this property, but I’m looking seriously at another one as well. If I make an offer here, I need the vendor to consider it promptly because I can’t leave the other opportunity sitting there indefinitely.”
Suddenly the conversation is slightly different. You are no longer the desperate buyer desperately hoping the vendor will graciously allow you to purchase their property. You are a buyer making a commercial decision between competing opportunities.
That is exactly what you should be doing. Just don’t manufacture your own fictional competing deal. There is enough theatre in real estate already without everybody auditioning for a role.
Never Let Their Deadline Become Your Due Diligence Deadline
This becomes especially important when the pressure shifts from “make an offer quickly” to “make an unconditional offer quickly”.
They are two completely different things.
There have been periods in strong markets where buyers felt that anything containing the words “subject to” was treated as though it had arrived carrying a contagious disease. Vendors wanted clean contracts, competition was fierce and buyers felt they had no choice but to remove conditions simply to be taken seriously.
But an agent wanting an unconditional contract does not magically remove the risks associated with the property. If you need finance approval, you need finance approval. If you need to understand planning controls, you need to understand them.
If you are purchasing a development site and still need to establish whether the project stacks up, signing an unconditional contract because somebody gave you an 8am deadline is not due diligence. It is gambling.
That does not mean you have to abandon every property with a tight deadline. Experienced property developers can move quickly because they have systems, consultants and a clear process in place. They know which questions need immediate answers, who to call and what information is absolutely essential before they commit.
Sometimes you can compress due diligence. What you should not do is confuse compressing it with skipping it entirely. There is a considerable difference between moving fast and simply closing your eyes and hoping for the best.
Reality check - once you start adjusting your numbers because you are frightened of missing out, you are no longer assessing a deal. You are competing to win a property.
Sometimes You Will Lose The Property
This is the bit nobody enjoys.
Sometimes, despite asking the right questions, doing the right due diligence and putting forward the strongest offer that still works for you, you will lose the property. The agent may have been telling the truth all along. Someone else may offer more money, better terms or simply something the vendor prefers.
That is part of property development. If you are learning how to assess opportunities and make decisions based on the numbers rather than emotion, this is exactly the discipline developed through programs such as the Property Development Formula course.
But that doesn't mean you made the wrong decision.
Property development is not about buying every property you investigate. It is about buying the properties that work.
There will always be another deal.
So when the next agent tells you the offer absolutely, positively, without-fail needs to be signed tonight, don’t panic. Ask questions. Find out what is really driving the vendor. Understand what other offers have failed and why. Work out whether you can safely move faster without compromising your due diligence, and then go back to your numbers.
If the deal still works, make the offer.
If it doesn’t, let somebody else “win” it.
“This one won’t last.”
“We’ve got a lot of interest.”
“There are other offers coming in.”
And one of my personal favourites: “If you want a chance at this, I need your offer signed by 8am tomorrow.”
Apparently, somewhere in Australia, an enormous number of property deals spontaneously combust at 8.01am.
Agents know that urgency works. If they can make you feel as though you are about to lose the deal, you are far more likely to stop thinking logically and start reacting emotionally. It is a classic scarcity tactic: there is only one property, several people supposedly want it, and unless you move immediately someone else will snatch it away.
The difficult part is that sometimes the agent is bluffing.
And sometimes they absolutely are not.
The Boy Who Cried Wolf
Experienced property buyers tend to become a little sceptical about agent urgency because we have heard it so many times. You eventually develop an internal translation system.
“We’ve had enormous interest” might mean twelve people downloaded the Section 32.
“We have another buyer circling” might mean somebody asked what settlement the vendor wanted.
“We need your offer tonight” might genuinely mean another offer is being presented tonight.
You simply don’t know.
We’ve all heard the boy-who-cried-wolf story so many times that property developers can become equally dangerous in the opposite direction, assuming every deadline is nonsense.
Occasionally there really is another offer sitting on the table, the vendor really is making a decision that evening, and the property really will be sold while you are still congratulating yourself on seeing through the agent’s “tactics”.
The trick is not to automatically believe the pressure or automatically dismiss it. The trick is to start asking better questions.
Ask About the Offers That Have Already Failed
If an agent tells me there are other offers around, one of the first things I want to know is how many written offers they have actually received.
- Not how many people came through the open
- Not how many people downloaded the contract
- Not how many buyers have been “showing strong interest”
- Not someone whose uncle’s neighbour might be interested
Actual offers. If the agent is still chasing mine, I can reasonably assume that any offers already made haven’t resulted in a sale, which opens up the much more useful question: why were they rejected?
That question can tell you far more than simply asking what price the vendor wants.
- Perhaps one buyer offered plenty of money but wanted a six-month settlement
- Perhaps somebody made an unconditional offer but the price was too low
- Perhaps the vendor needs a shorter settlement
- Perhaps they need additional time
- Perhaps the price expectation is simply nowhere near where the market currently sits
Rather than blindly throwing another number at the vendor, I want to understand what hasn’t worked already so I can decide whether there is a way of structuring my offer that suits both sides. There is not much point enthusiastically charging into battle with exactly the same offer the vendor rejected yesterday.
Pay attention to how comfortably the agent answers as well. Where several genuine offers have been discussed over the previous few days, an agent will often be able to explain the broad issues fairly easily: “We had one at $920,000 but they wanted 120 days. Another was around $900,000 subject to finance and building inspection. The vendor wasn’t happy with either.”
They may not be able or willing to give you confidential details, and you shouldn’t expect them to, but there is usually substance behind the conversation. When the response suddenly turns into, “Well… there was this one guy… and I think he was sort of…” you may reasonably wonder whether we have crossed from negotiation into creative writing.
It doesn’t prove anything, but thoughtful follow-up questions can tell you considerably more than simply accepting “there are other buyers” at face value. It helps you distinguish genuine competitive tension from vague sales pressure.
Find Out What the Vendor Actually Wants
Buyers often assume that every negotiation comes down to price, but price is only one part of an offer. Ask the agent what matters most to the vendor. Is it money, timing, certainty or something else?
A vendor who has already purchased another home and needs funds quickly may favour a shorter settlement. Someone who has not yet found their next property may want more time. Another vendor might value certainty so highly that they prefer a slightly lower offer with cleaner terms.
Once you understand what matters, you may be able to strengthen your offer without automatically throwing another $20,000 at the purchase price every time the agent clears their throat. If you can give the vendor the settlement they need, accommodate a particular term or provide greater certainty around your offer, that may be valuable.
Equally, if what they need simply doesn’t work for you, you have learned something important before signing a contract. A property deal has to work for both parties. Your job isn’t to “win” the negotiation at any cost; it is to find out whether there is a deal available on terms that still make sense for you.
Remember That Buyers Have Scarcity Too
Scarcity doesn’t belong exclusively to the vendor. If I am genuinely considering another property, I have no issue telling the agent.
“I’d really like to put an offer on this property, but I’m looking seriously at another one as well. If I make an offer here, I need the vendor to consider it promptly because I can’t leave the other opportunity sitting there indefinitely.”
Suddenly the conversation is slightly different. You are no longer the desperate buyer desperately hoping the vendor will graciously allow you to purchase their property. You are a buyer making a commercial decision between competing opportunities.
That is exactly what you should be doing. Just don’t manufacture your own fictional competing deal. There is enough theatre in real estate already without everybody auditioning for a role.
Never Let Their Deadline Become Your Due Diligence Deadline
This becomes especially important when the pressure shifts from “make an offer quickly” to “make an unconditional offer quickly”.
They are two completely different things.
There have been periods in strong markets where buyers felt that anything containing the words “subject to” was treated as though it had arrived carrying a contagious disease. Vendors wanted clean contracts, competition was fierce and buyers felt they had no choice but to remove conditions simply to be taken seriously.
But an agent wanting an unconditional contract does not magically remove the risks associated with the property. If you need finance approval, you need finance approval. If you need to understand planning controls, you need to understand them.
If you are purchasing a development site and still need to establish whether the project stacks up, signing an unconditional contract because somebody gave you an 8am deadline is not due diligence. It is gambling.
That does not mean you have to abandon every property with a tight deadline. Experienced property developers can move quickly because they have systems, consultants and a clear process in place. They know which questions need immediate answers, who to call and what information is absolutely essential before they commit.
Sometimes you can compress due diligence. What you should not do is confuse compressing it with skipping it entirely. There is a considerable difference between moving fast and simply closing your eyes and hoping for the best.
Reality check - once you start adjusting your numbers because you are frightened of missing out, you are no longer assessing a deal. You are competing to win a property.
Sometimes You Will Lose The Property
This is the bit nobody enjoys.
Sometimes, despite asking the right questions, doing the right due diligence and putting forward the strongest offer that still works for you, you will lose the property. The agent may have been telling the truth all along. Someone else may offer more money, better terms or simply something the vendor prefers.
That is part of property development. If you are learning how to assess opportunities and make decisions based on the numbers rather than emotion, this is exactly the discipline developed through programs such as the Property Development Formula course.
But that doesn't mean you made the wrong decision.
Property development is not about buying every property you investigate. It is about buying the properties that work.
There will always be another deal.
So when the next agent tells you the offer absolutely, positively, without-fail needs to be signed tonight, don’t panic. Ask questions. Find out what is really driving the vendor. Understand what other offers have failed and why. Work out whether you can safely move faster without compromising your due diligence, and then go back to your numbers.
If the deal still works, make the offer.
If it doesn’t, let somebody else “win” it.
