Gino De Iesi is the Principal at McGrath Northcote. He has spent 26 years in real estate, spending two years in property management before moving into sales, where he soon found himself hosting his own auctions – a skill he would develop and harness over many years.
Gino prides himself on his negotiation skills – which have led to record breaking sales, and to his current role as a respected Principal of a top agency.
Here, he shares his tips for negotiating with potential buyers, while managing the expectations of vendors. As Gino explains, it all comes down to motivation.
NEGOTIATING A HIGHER PRICE WITH A BUYER
Gino enters every negotiation armed with as much information as he can gather. By the time a potential buyer is inspecting the property, Gino has already identified what other properties they have considered, what the price range has been, whether they have made any bids, and what those were.
As the agent, Gino is already aware of the seller’s price expectations and their motives to sell, and so he avoids pinging back and forth between the buyer and seller with offers that he already knows are inadequate.
“If a buyer comes in and says, ‘I’m going to offer X dollars’, but it’s not quite at the expectation the owners have set, we would turn around and say, ‘Look, based on your number, that won’t buy it. If we were to receive another offer higher than this, would you still be interested?’”
“If they say, ‘No, that’s what we think it’s worth’, then, we’d probably just say, ‘well, it’s not for you’.
“However, we try to identify that [possibility] earlier, but if that’s the response, then we’d go into talking points, because each client and each property is case by case.
“I would start talking about the attributes of the property, the reason they want to buy that home, and try to feed that back through, in terms of the negotiation.
“When you’re face to face, there’s an emotional attachment to the home, so through those discussions you can see if the buyer is willing to pay a bit more for the property.”
At this point, Gino won’t have bothered the seller with the buyer’s initial offer, although he will make a quick call to keep them abreast of things.
Asked what this call might look like, he gives the following example:
“Look, guys, just to let you know, the buyer has come up with [number]. We have respectfully declined it on your behalf.”
“Generally, they are on the same page as us,” he explains.
“I already know the vendor’s situation; they’ve told us, and obviously they’ve trusted us to sell it.
“Every offer that we get, we do present that to the owner, but by the same token, if I get a buyer coming in and the offer is lower than what we’re anticipating to sell it for, I will tell them then, and stop them coming in at that kinda number.”
Gino doesn’t just take an offer for the sake of it, nor will he tell the potential buyer that he will try on their behalf if the figure is too low. He is clear about this.
“I mention from the outset that sort of figure’s not going to buy it.”
He explains this is to stop the buyer thinking their lowball offer is being documented and seriously considered.
“The buyer thinks, ‘I’ve got a chance’, and generally they’ll remain at that lower figure – and we don’t want that.”
IF THE SELLER HAS AN UNREALISTIC PRICE IN MIND
“We’ve got to establish from the outset their motivation for selling, and the reason they’re moving,” Gino explains.
Again, it is important that he finds out as much about the seller’s mindset going into the listing.
“If we go to an appraisal, and the owner says, ‘We reckon our house is better than the one up the road, and it’s worth $300,000 more’, realistically, we probably don’t take on the business,” he says.
“We would say, ‘Respectfully, based on the current climate, and what other properties have sold for, we don’t feel this is achievable’. So we probably wouldn’t do it.”
Sometimes the property is already on the market, and the owner wants to increase the asking price. This can be a difficult negotiation, as often their reasons for the sudden price jump are unclear.
“Then, it’s a case of asking where they are arriving at that figure from. We try and establish that, then it’s about showing them comparable properties that have sold, asking them their motivation for raising the price, and generally you’ll find that the owners come back to a realistic level – once they’ve seen evidence of other properties.”
It’s rare for a vendor to want to raise the price once a house is listed, and it’s usually due to them reacting to information that seems relevant to their situation (such a recent local sale) but isn’t.
Gino explains that communicating with the seller every couple of days usually quashes such issues before they arise.
“Look, occasionally you get owners who say, ‘Well, I’ve seen one up the road and it sold for this, so mine’s worth that’.
“It then comes down to finding out, and explaining, what the interest was like on that property. Every property has a different level of interest – and with competition, generally property prices go up.”
WHEN TO PUSH THE BUYER TO OFFER A HIGHER PRICE
This will, again, often come down to the vendor’s motivation for selling, and the buyer’s desire for a particular property over others.
“Do [the sellers] need a bigger place? Are they downsizing? Maybe they want to make a change to a completely different area. There is always something.
“The seller is never just looking for an opportunity: ‘I’ll just put it on the market and see if I can get a good price’. Generally, the owners will be motivated to sell.”
It’s a lot easier to command a higher price from a potential buyer if they have been house hunting for a while, especially if the owner isn’t particularly motivated to sell, and the buyer feels the property is perfect for them.
“You do have situations where buyers have missed out on properties, and they’re keen to buy something, and they’ll say, ‘Can you approach that owner? We’re really keen on that property, if they’re interested in selling’.
Gino stresses this isn’t something that happens often, but in these instances the owner might float a high figure and say they’ll sell if offered that price.
“You might [then] have a buyer that has missed out on a number of properties who may not mind paying a little bit over to secure that particular property – but it all goes back to that same point: we want to establish their situation and motivation from the outset.”
TRANSPARENCY WILL ALWAYS HELP YOUR NEGOTIATION
The best negotiations happen when trust is involved from all quarters.
Gino will have already established “where the buyer is coming from” and will already be aware of their needs and what current problem will be solved by them buying a particular type of home.
He’ll also know the seller’s situation, and will balance the two. Again, it’s about motivation – but above all, it’s about clear communication.
“It all comes back to getting that understanding, and communicating, and having trust between agent and buyer, and also trust between agent and the seller,” he says.
“The negotiations become easier when everyone is transparent. That’s really important.”