Common mistakes made by property buyers.
Category Advice
Common mistakes made by property buyers.
Those attending an ancillary talk by Rowan Alexander, Director or Alexander Swart Property, were told the following: "If you are serious about buying a property and have the means to do so, don't try to be "too clever" to prove to yourself or others, that you can drive a really hard bargain". This was the theme of one of the agency's regular evening Property Education sessions, at their Brackenfell head office.
- The first common mistake, said Alexander, is to think that if you are paying cash, you are automatically in a privileged position and entitled to a discount; because, in theory, your deal will go through faster. "In an ideal world," he said, "a cash sale WOULD usually go through quicker than one linked to a bond. In practice however, we find that the cash is often not readily available e.g.it is tied up in shares or the money market or some other asset class and may take one to two months to be in the buyer's bank account (although this is of no importance to the seller, it can be very expensive to the buyer to get the necessary attorneys' guarantee that the cash will be coming through. The guarantee may be only for a few weeks but it could cost as much as 1% of the total sales price).
- A second often-made mistake is to think that dogged perseverance in trying to beat down the price will pay off. This, says Alexander, is very seldom the case. Not only are there likely to be other buyers out there who are more reasonable, but the seller can easily lose patience and feel insulted-even to the point where he breaks off the deal completely. "There is a fine line between getting a fair price, one that is market related, and a bargain basement price," said Alexander. "Such deals only take place in times of huge crisis."
- In a recent case handled by Alexander Swart, a prestigious Southern Suburbs home listed at well above R10 million, a buyer tried to push through an offer R1, 5 million lower than the asking price. Realising too late that this was wholly unacceptable to the seller and that others were interested in the property, he upped his offer by R500 000-but was now second in line, his first offer having been rejected out of hand. The rival offer was then accepted, even though it was lower than his, and he lost out completely.
- A third common mistake, said Alexander, is closely related to the two already mentioned: it is to protract and extend the negotiation period. Often this is done by the buyer trying to get a better price, by coming up with extra conditions to be written into the contract or raising objections which have to be put right before he will sign. All too often, said Alexander, this results in the whole deal becoming "fatigued" and the seller losing interest. He may refuse to see or consider further proposals, even when these are much improved on the originals.
- A fourth mistake, again related to those above, said Alexander, is for the buyer to appoint a third party, often an attorney, to negotiate on his behalf. The danger here is that the representative may feel that his reputation depends on getting a really good deal, so the mistake of overdoing the hard bargaining effort is again made, usually with the consequences already mentioned. "Everyone involved in a property transaction must accept that a fair deal will be achieved only if a willing buyer and a willing seller both feel that a true market value is being achieved and that EVERYONE involved is benefitting. There may be rare occasions when a real bargain becomes possible but in general negotiations will only be successful if the participants respect each other's' views".
- A fifth often encountered mistake, this time on the part of the buyer, is to fail to be wholly open with the agent about their position, thereby losing out on the knowledge and expertise of the agent. "When a buyer withholds information about his total situation and assets, he can make it difficult for the estate agent to use his years of experience to the buyer's full advantage. Time and again we have been able to show, that with our understanding of the property and financial markets, we have been able to think out of the box and find innovative, unorthodox solutions to deadlocked negotiations where others have thrown in the towel."
For further information, contact Rowan Alexander on 082 581 3116 or email: rowan@asproperty.co.za
Author: Independent Author
