Sealing the deal: Why you need to choose an agent with exceptional negotiating skills

When city-wide auction clearance rates were hovering at 80 per cent at the peak of the boom last year, selling a property was less complicated than now. The record low interest rates and easy access to finance at the time meant just about anyone who could afford a home was buying.

When clearance rates are higher, more properties sell under the hammer and, in high-demand areas, fewer properties are listed for sale through private treaty.

This year, a higher proportion of properties have passed in at auction as demand from investors eases and the market normalises.

Just over half of auctioned properties sell under the hammer, with clearance rates of between 50 per cent and 60 per cent.

Passing in isn’t necessarily a bad thing because most properties sell within a few weeks of the auction. But lower clearance rates are an indicator that vendor expectations are higher than what buyers are prepared to pay at auction.

Fortunately for vendors, there’s a not-so-secret weapon that can be deployed before the auction or in post-auction negotiations to maximise your chances.

The negotiating experience of real estate agents is their most desirable attribute, especially when we are in a buyer’s market. Agents have fewer opportunities to use these skills when the market is booming and auction prices soar past reserves.

But, when the gap between vendor expectations and what buyers are prepared to pay is significant, agents’ negotiation skills are well worth their commission.

• Related: The ultimate guide to selling
• Related: What do property agents do?
• Related: How to prepare a property for sale

Experience counts

The way in which agents respond to challenging market conditions depends on their experience, according to Laing+Simmons managing director and Real Estate Institute of NSW president, Leanne Pilkington. “We have seen markets like this before when clearance rates are falling and days on markets are getting longer,” she says. “It’s part of the real estate cycle.

“Not all real estate agents have experience in this kind of market because they haven’t been in the industry long enough.”

Inexperienced agents may overestimate a property’s worth to secure a listing, according to Richard Matthews Real Estate director Richard Baini.

“You’ll know who those agents are because the asking prices on their properties are coming down every couple of weeks and the properties stay on the market,” he says. “The more experienced agents are probably selling within 35 days.”

Test their skills

One of the best opportunities to find out if an agent is a good negotiator is at the initial meeting, according to Pilkington, especially when it comes to negotiating fees.

“If they’re a good negotiator they will be able to demonstrate to you the value in the service they’re providing for the price they’re providing it,” she says. “If they’re not able to negotiate a good fee for themselves, how will they negotiate a good price for you?”

Baini says vendors should test agents by suggesting an unrealistic asking price. If agents agree without evidence, they may be simply telling you want you want to hear. But if they argue for a more realistic price, it’s a chance to see their negotiating skills first-hand.

“It’s got to be based on fact,” Baini said. “And the only facts you’ve got are the comparable sales.”

Do your research

It’s crucial that vendors remember to always ask agents for references, Pilkington says. “Definitely speak to people who the agent has successfully sold for in the current market conditions.”

Ideally, these are references from recent sales that required a degree of negotiation by the agent to get a good result for the vendor.

If the price is unrealistic and the agent is a poor negotiator, there is a risk that the property will become stale, Pilkington says.

“The very frustrating thing about selling property is, if it stays on the market too long, people start to wonder what’s wrong with it and the price starts to fall.”

But with an experienced negotiator with local-market knowledge on your side, you’ll increase your chances of a rewarding result.