Shaking the monkey tree with your first offer
Posted by markharrison on November 13, 2006
I’d like to make it clear at the outset that this is a metaphor. I’ve never actually hunted monkeys 🙂
When you are looking to buy investment property you’re trying to hunt down a few good deals – the deals where the vendor is willing to take a below-market price in exchange for something else (normally involving speed of transaction.)
This is like hunting for monkey in a forest of palms. (Work with me on this!)
The way that many investors hunt for monkeys is to pick one particular palm (a deal) and hope that there’s a monkey (a receptive vendor) up it. Then they spend their whole day concentrating on that one tree, shaking it, shouting at it, hitting it with convenient branches and so on.
What you need to do is spend your time more efficiently – go to every palm in the forest, and give it a quick shake, and see whether the monkey squeaks.
The quick shake you can give is a low offer – I normally start by offering about 20% less than the asking price (yes, even in a boom market.)
When I do this 90-95% of vendors tell me to “go away” (at least, that’s what I think those words mean.)
However, the other 5% of vendors say “no… but……” and it really doesn’t matter what they say after the “but”. The fact that they’ve answered this way means that you know there is a monkey up that palm.
It doesn’t mean that you will catch that monkey – far from it – but it tells you which palms to concentrate on.
I’d far rather rule out 95% of vendors in a two minute phone call than spend hours negotiating with someone who was in a strong position! There are a lot more monkeys out there in the forest.