One time very long ago in my career, I had a client that wished to purchase a unit in a well known central Tokyo tower. The asking price of that unit was ¥500,000,000.
At the time I wasn’t blessed with the experience I have today and asked the seller’s agent what the lowest price the seller would accept an offer at. The seller’s agent told me they felt about ¥450,000,000.
I had enough experience then to know that if the lowest price admitted was X, then my buyer should submit a starting price lower at Y which is what we did. We submitted an offer of ¥420,000,000 in the effort to try and negotiate as far as we could below ¥450,000,000.
Despite best laid plans, everything fell apart when the seller’s agent replied to our offer. The seller wasn’t willing to entertain any offer on the property lower than ¥480,000,000. Our offer of ¥420,000,000 was far too low to even elicit a counter offer.
At first glance this might seem like something changed on the seller’s side but in fact it hadn’t. The previously mentioned ¥450,000,000 wasn’t a price point the seller’s agent actually had spoken to the seller about but was only the seller’s agents opinion of how low the seller would be willing to negotiate to.
I learned a big lesson that day to make seller’s agent directly ask the seller what their lowest acceptable price would be and report back to me the answer. Once the seller’s agent confirms to me what that level is, then that price point begins the negotiation.
Needless to say my buyers were not happy with the resulting ¥480,000,000 price point. I tried to explain with great detail how purchasing around that price was still a good price but they would have none of it.
The price wasn’t the issue as the client had the budget to purchase over the ¥500,000,000 price. It was more that the buyer felt that they were being taken for a ride. Despite all objective evidence presented that the property was still a good buy, they passed on the opportunity because they were angry at the outcome of the negotiation.
I maintained contact with those clients and they ended up purchasing another property. Since that time the original property we were looking at has risen over the past 4 years to now be worth well over ¥600,0000,000, almost a 30% price increase.
The client is of course happy with the unit they ended up purchasing, but had they continued negotiating on the original unit, they would have been that much happier. Whenever we speak, that lost opportunity always finds it way into the conversation with the tone of being the one that got away.
Moral of the story; during negotiations, try to not let emotions cloud judgement too much. Buyer’s of course should be vigilant but despite setbacks, if the trade still makes sense on a numbers basis then move ahead with a purchase.
Editor’s Note: Shirley is Sales Director for Housing Japan. She has sold billions of yen of real estate and arguably has the highest client satisfaction rating in the industry. Shirley writes a weekly column for Housing Japan readers to help illustrate common challenges buyers and sellers have when trading Tokyo residential property.