16 May The Two Types of Real Estate Buyer
When selling a home, you’re likely to encounter two different types of buyers. Henry terms them ‘the first and final buyer’ and ‘the pivot buyer’. In this vlog he goes into more detail about the two different types of buyer and how they can be handled. Here’s what he says:
Hi, I’m Henry Wong. We’re here today to talk about the two different types of buyers. Say, for example, you’re looking to sell your home and you’re asking $800,000. So $800,000 is the price that you will sell your home at. Here we go. $800,000. Now, our first buyer is what we call the first and final buyer. These are the buyers that make the best offer and they say, “Henry, take it or leave it.” For this example, this buyer is going to make an offer of $780,000.
Now, in our negotiations with the buyer, are you going to say, “Mr. And Mrs. Buyer, if another makes an offer that’s higher than yours, $795,000, are you happy to let them have it?” If they say, “Henry, they can have it. $780,000’s where we’re at. We don’t want to muck around. We’ve already lost our one other house. We don’t want to muck around. Take it or leave it.” Then we get back to them. “Okay, how about $790,000?”
“No, I don’t care. I don’t care, Henry. If someone comes in at $780,001, they can have it. $780,000’s where it’s at. You can tell the owner we do want to buy. We’re not going to give a low ball offer. They want $800,000. We’re going to offer $780,000. So we believe our offer’s reasonable. $780,000. If the owner comes back to negotiate, that’s it. We’re going to buy something else. We don’t want to muck around. We don’t want to waste your time, you don’t want to waste our time.”
So this is what we call the first and final buyer. Now, the other buyer is… My definition is the pivot buyer. And the pivot buyer, what they do is, they say, “You know what? Everyone negotiates so we’ll start $750,000. Make a reasonable offer, we’ll start our offer at $750,000.” And you, as the owner, go, “Henry, we do want to sell to this buyer. Let’s see how much they can come up with. They know we want $800,000. Let’s just countersign at $800,000.”
So we just countersign at $800,000 and this buyer goes, “Look, Henry. We do want to buy this property. Of all the houses that we’ve seen, we do like the home but $800,000, we don’t see value in $800,000. How about we meet them halfway?” So $775,000. That’s where they’re at. This is what I call, in my definition, the pivot buyer. So I guess there’s advantages or disadvantages to both but you need to really identify, or the agent needs to present to you, what type of buyer we’re dealing with.
Now, if we’re dealing with a first and final buyer, the last thing you want to do is negotiate with them, especially if they won’t budge after multiple attempts because you will actually lose them. So in this example, let’s say they are the highest buyer at $780,000 and your second highest buyer is at $760,000. Now, if you push them anymore and you countersign $800,000, chances you are probably most definitely going to lose that buyer and you’ll have to deal with the second buyer at $760,000. So you got to really, really bear that in mind where you’re going to get back to this buyer at because you don’t want to lose this buyer, especially if they are your best buyer.
And your second, the pivot buyer, now you can go back and forth with the buyer but just like you and just like the buyer, there’s only so many times you can go back and forth before a buyer gets fed up or you get fed up. So you can go back and forth, I guess, a couple of times. We’ll meet you halfway and you don’t want to overstretch it. You don’t want to test a buyer’s patience. Same with a buyer. You don’t want to test your seller’s patience so there you go. You have the first and final buyer and then you have the pivot buyer. You’ve just got to know which buyer you’re dealing with.