Negotiating offers as a private seller in NSW

An offer is more than a number

The price is the headline, and it is not the whole of what you are being offered. Two offers at the same figure can be worth materially different amounts to you.

• The deposit, and whether it is the standard 10 percent or a reduced amount
• The settlement period, commonly six weeks but negotiable in either direction
• Whether the offer is subject to finance, and how far the buyer's approval has progressed
• Whether it is subject to a building and pest inspection, and by when
• Whether the buyer needs to sell their own property first
• Any request for an early release of the deposit, or for access before settlement

What each term is really telling you

A buyer with formal finance approval and a willingness to waive cooling-off by providing a section 66W certificate is telling you they are ready. A buyer who needs six weeks to arrange finance and wants a long settlement is telling you something different, and neither is wrong.

A shorter settlement is worth something if you have already bought. A longer one is worth something if you have not. The same term is an advantage or a cost depending on your own position, which is why the minimum you set should account for terms and not only price.

An offer subject to the sale of the buyer's own property carries real risk, because your sale then depends on a campaign you cannot see or influence. It is not automatically to be refused. It does need to be priced accordingly.

When more than one buyer is interested

The strongest negotiating position is more than one interested buyer at the same time. That position is created by the campaign rather than by tactics, which is why pricing and reach matter more than technique.

Where it happens, the fair and effective approach is to tell each interested party plainly that there is more than one offer, give them a common deadline, and invite their best offer by it. Everyone gets the same information and the same opportunity.

Inventing a competing buyer is a serious mistake. Buyers talk, conveyancers talk, and a vendor who is caught doing it loses the real buyer as well as the imaginary one.

Countering

A counter-offer keeps the conversation open and signals what would work. It is more useful than a flat refusal, which ends the exchange and gives the buyer nothing to respond to.

Countering on terms rather than only on price is often what closes the gap. A buyer at the top of their borrowing capacity may not be able to move on price and may readily agree to a shorter settlement or a larger deposit.

Vendors who move in decreasing increments signal that they are approaching their limit. Vendors who make one large concession invite the buyer to expect another.

What is binding, and when

In New South Wales an accepted offer is not a contract. Nothing binds either party until contracts are exchanged and the deposit is paid.

That cuts both ways. You can accept an offer and still receive a higher one before exchange, and a buyer can withdraw after their offer is accepted. Where a property is being marketed until exchange despite an accepted offer, both parties should understand that is what is happening.

After exchange, a buyer in a private treaty sale has five business days of cooling-off, ending at 5pm on the fifth business day. A buyer who rescinds in that window forfeits 0.25 percent of the purchase price. A buyer who provides a section 66W certificate has waived the cooling-off period, and their exchange is unconditional.

The practical consequence is that speed to exchange matters. An accepted offer that takes two weeks to reach exchange is two weeks in which the buyer can change their mind.

Where private negotiations go wrong

Two patterns account for most poor outcomes, and both are avoidable.

The first is negotiating without a decided minimum. A vendor who has not settled on their number in advance is making the decision under pressure, in a phone call, with the buyer waiting. A minimum decided in a quiet moment against comparable sales is a much better instrument.

The second is treating the first offer as an insult. Early offers are frequently low, and they are also evidence that the campaign is working. A response that is calm and specific keeps the buyer engaged, and buyers who make a low first offer often improve substantially.

It is also worth remembering that the buyer is not an opponent. They want the property, or they would not be making an offer at all.