Getting into the psyche of a motivated seller is an important skill for property buyers. Find out how you can gauge a vendor’s motivation and how to use this knowledge to negotiate a fair deal.
Knowing how motivated a vendor is to sell a property is an important piece of information you can use as leverage. The more motivated they are, the better your odds of securing a lower price.
If you discover that the vendor is eager to sell, perhaps due to debt stress or due to a lifestyle change, you can use this knowledge to negotiate an agreeable price.
However, keep in mind that properties should be selected based on a range of merits, including location and capital growth potential, and not just price alone.
Learn more about the risks of stigmatised properties.
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What are the types of motivated sellers?
There are two types of highly motivated sellers: the ‘must-sell’ vendor and the ‘will sell’ vendor. Both have a keen interest to sell an asset quickly.
The ‘must-sell’ vendor may be eager to sell quickly due to financial hardship (such as defaulting on their mortgage), an interstate/overseas job transfer or a deceased estate. These vendors are most likely to sell even if the price is low, but they may prefer a shorter settlement.
On the other hand, the ‘will sell’ vendor may need to sell due to a lifestyle change, such as accommodating an extended family or to move to a school catchment zone area. They are not as driven by a short settlement period. These vendors will sell if the price offered is a fair price, but they are unlikely to accept anything below market value.Back to top
What are some situations where vendors want to sell quickly?
Why is it good to know the motivations of the vendor?
Knowing a vendor’s psyche can help you decide how much to offer, how to negotiate and what terms to include prior to settlement.
Although the real estate agent may not give too much away, it’s worth asking some questions to try to understand the mindset of the vendor.
- Why are they selling?
- What settlement terms do they want?
- How long has the property been on the market?
- How motivated are they to sell?
- What is their timeframe for selling?
- Have there been any reductions in the price?
If your offer is rejected, keep in mind that price may not be the only factor. Ask the agent why your offer was rejected so that you can adjust the terms accordingly.Image source: ShutterstockBack to top