There is an asking price from the seller on the property. The price is either negotiable or non-negotiable. Sometimes the asking price can seem very far away yet its actually very near. They might feel its a waste of time to even make an offer, and thus not make an offer.
At other times, some buyers want to save time and skip the whole negotiation process. The buyers want to know what is the seller’s lowest acceptable offer. They intend to squeeze the seller dry for the lowest possible deal and to max it out rock bottom. As it is, sellers want to sell high and buyers want to buy low.
Nevertheless, making an offer shows that the buyer is serious. The buyer has narrowed down the shortlist to a specific property and is seriously interested in it.
Continuing the story of Mr & Mrs Tan in the previous post; they’ve viewed a few units in RG condominium and have shortlisted to this RG condominium unit.
- Floor: Mid floor
- View: Pool view
- Type: Corner
- Built-up: 1355 sq.ft.
- Furnishing: Fully furnished
- Bedrooms: 3+1
- Bathrooms: 3
- Car parks: 2
- Asking price: RM700,000 (negotiable)
Prior to Mr & Mrs Tan, there have been a few interested buyers. However, Mr & Mrs Tan were not only interested, but they were also very serious about the RG condominium unit. They decided to take a step forward and put action to words. They formally made an offer for the property.
They made an offer of RM630,000 – 10% less from the asking price. Furthermore, they cited that they were a young couple and first time home buyers. The property market was also soft and it was a buyer’s market. They could buy an even cheaper unit elsewhere, but they loved this unit and hence actually made an offer. They thought they could get a good deal.
From my experience as a real estate agent, the lower the value of the asking price; the smaller the margin for negotiations. For example, if the asking price is below RM1,000,000, there is a small margin of RM10,000 – RM20,000 for negotiations. Then, the higher the value of the asking price; the higher the margin for negotiations. If the asking price is above RM1,000,000, the margin of negotiations goes by the percentage. For example, if the asking price is RM2,500,000, there is approximately a 5% (RM125,000) – 10% (RM250,000) margin for negotiations.
Going back to Mr & Mrs Tan’s offer of RM630,000. The seller had an asking price of RM700,000. The seller felt that the offer of RM630,000 was too low. Upon hearing such offers, other sellers might have tuned out and completely rejected the offer. In addition, some sellers might not even go back with a counter-offer and remain adamant with their asking price; expecting the buyer to increase the initial offer.
However, this seller knows that the buyer is serious but the offer itself was not serious. Nonetheless, the seller has decided to counter-offer. The seller counter-offered at RM680,000.
In negotiations, its a cat and mouse game. Both buyers and sellers do not want to show desperation. They will only reveal their hand at the right time. Negotiation is a game of time. Negotiations can take hours, days, or even weeks. Mr & Mrs Tan made the initial RM630,000 offer in the morning. The seller counter-offered RM680,000 in the same day.
Since the counter-offer, there was much negotiations back and forth over the next few days. Mr & Mrs Tan counter-offered slightly higher. The seller refused to budge from his counter-offer. The seller maintained his position. Then, both parties agreed to meet in the middle. They agreed to close the deal at RM670,000.
- Asking price @ RM700,000
- Buyer’s 1st offer @ RM630,000
- Seller’s counter-offer @ RM680,000
- Buyer & Seller’s agreed price @ RM670,000
The names and details have been edited for storytelling purposes.