When the Vendor Got too Greedy

This was one of our earlier negotiation-only engagements, in between the COVID pandemic lockdowns.

This beautiful farm on 2.9 hectares (29,000 sqm) of land in Gippsland was listed for $1.75 million. It came with a five-bedroom, three-bathroom, 400 sqm owner-built home, plus a swimming pool.

Back then, there was a lot of hype about moving regional. There were fewer people, more freedom, fewer restrictions, and during that time no lockdowns. Residential properties in regional Victoria were in high demand, so at the time, the asking price was justifiable.

But things work differently in regional locations. A $2 million property is a HUGE investment. This wasn't a tiny 400 sqm block with a four-bedroom non-descript house in Balwyn. The pool of buyers willing and able to spend $2 million on a regional property is much smaller.

Our Negotiation-only Client

Our client loved this farm, and we were engaged for the negotiation after they found it too difficult to negotiate directly with the agent and vendor.

Our offer of $1.7 million was accepted verbally.

The next day, the vendor wanted $1.8 million. We agreed, but they were still unable to produce a written contract.

Two days later, we received another call from the agent. The vendor was now considering that he needed to pay GST on the sale because it had been his business property. It was then suggested that we include his GST liability in our offer price.

In other words, they wanted the buyer to pay his GST. That was getting too much.

We Said No

We rejected the counteroffer and frankly told the agent that we believed the vendor was being too optimistic about the property. As an owner-built home with documented defects, we believed it would be difficult to find another buyer at this price point.

We added, more importantly, we didn't believe the pandemic conditions would last forever. Businesses would eventually want employees back in the office, at least for part of the week. When that happened, some of the demand for regional properties would disappear, and this farm would struggle to justify its original $1.75 million asking price — never mind the roughly $2 million the vendor was now seeking.

Of course, the agent and owner understandably had a different view. So we walked away.

Five years later - Delisted, Not Sold

Our assessment of the pandemic-driven regional boom proved correct. Many businesses now require employees to be back in the office for at least part of the working week.

And this particular property? Five years later, it was delisted, still unsold.

Its valuation had fallen to around $1.2 million. That is roughly $600,000 below the $1.8 million price we had been prepared to pay, and around $800,000 below what the vendor ultimately wanted.

What does $600,000 look like in that part of regional Victoria back then? It's equivalent to a 500sqm double storey French provincial mansion in Balwyn.

Walking away turned out to be the best negotiation we could have made.

Negotiation isn't Always About Winning

We don't negotiate just to "win". We negotiate using facts, evidence and a clear understanding of what a property is worth.

And when the counteroffer gets too much, we will not hesitate to walk away. No ego. No fear of missing out. No emotional attachment to getting the deal done just because we've already spent time negotiating it.

That's also why some buyers prefer to engage a third-party negotiator. When hundreds of thousands, or millions, of dollars are involved, having someone without the emotional attachment can make a very big difference in success and ego.

If you need a hand with a property negotiation, get in touch.