Attracting buyers as part of a traditional sales campaign involves planning, time and resources. But what happens when a potential buyer approaches you out of the blue?
We are regularly contacted by people seeking advice on this exact scenario. So how should you react and assess an unsolicited selling opportunity?
Genuine interest?
Firstly, it’s important to gauge how serious the level of interest is. Often we see these types of approaches lead to nothing.
That’s not to say there isn’t genuine interest there, but often it’s quickly shut down when market values and price expectations are discussed.
More often than not, these types of buyers are looking to pick up a property at a bargain and perhaps take advantage of what they perceive as a need to sell.
The approach
How you are approached by the interested party will help determine how you respond to the potential buyer.
Why do they want your property? What’s the level of interest? Perhaps it’s a long time tenant, who has grown to love the place, and they’re now considering purchasing a home.
Or perhaps it’s a neighbour, who is looking for an investment property and likes the idea of having it close by. A neighbour may also be wanting to buy a nearby property for a family member, be it elderly parents or children.
Another reason a neighbour could be interested is that they’re concerned about future construction and developments on the site. That’s particularly the case if your property has strong land value, and the improvements are of limited value – making it an attractive proposition for developers. Purchasing the property enables them to control the land next door and ensure it doesn’t negatively impact the value of their home.
Another common motivation is neighbours looking to expand their own home, be it an extension, tennis court, pool or even just more garden space.
The response
How you are approached, should inform how you respond.
Did the approach come as you’re already preparing for sale? The buyer’s curiosity may have been sparked after seeing works being conducted on the property, photographs being taken or real estate agent visits.
Or did they approach you out of the blue? You may have received a surprise knock on the door or a letter in the mail.
If you’ve spent money on a sales campaign and are committed to going to market, then you can use that as leverage. Make it clear to the buyer that they will need to make a competitive offer. Let them know your price expectations and that you’ll need a good reason not to continue to market.
On the other hand, if you have been approached when you have no intention of selling, the dynamics change considerably.
In this case, the best initial tactic is to refrain from giving the interested party a price. Tell them, as you were not intending to sell the property, you haven’t been following the market. And as such, they’ll need to give you an indication of what they’d be prepared to pay. More often than not, they will push back and insist on a price guide. But it’s they who approached you, so you can quite rightly insist on a figure.
At a minimum, the figure needs to be at the top end of the property’s value range, and ideally a premium above that. For that reason, it’s important to familiarise yourself with the local market, and the strong results that have occurred in recent times. That way you’ll be in a good position to recognise an offer that truly is too good to refuse.
Take home message
While you should judge every offer on its merit, unsolicited buyers need to be treated with caution. While it may indeed turn out to be an offer too good to refuse, more often than not, it’s from an opportunistic buyer looking for a bargain.
In most cases our advice to clients, who are committed to selling the property, is to continue with the go-to market process.
In reality, if someone’s made an unsolicited approach and they are genuinely interested, they’ll remain so come auction day or at private sale negotiation.
Ultimately you want them to compete for the property like everyone else, which will lead to greater demand and a stronger end sale price.