27 Jul How to Better Negotiate Your Next Property Purchase
Over the course of their lives, most people only ever buy one or two properties. The vast majority of property buyers are owner-occupiers, who simply want a home for their family.
As a result, most people never really get to fine-tune their negotiating skills when the time comes to actually buy a property.
The other issue is that sales agents are actually professional negotiators, which means that you are often on the back foot when trying to buy.
Fortunately, there are a few things you can do to help you better negotiate your property purchase.
Understand the Property’s Value
The best thing you can do before buying a property, or even attending a home open, is to do your own research.
These days, buyers are very quick to seek out a price guide from an agent and by doing so they are effectively asking the agent, what they think the property is worth.
Fortunately, as a buyer, you can quickly get an accurate idea of what a property is actually worth. Most sales agents and valuers, use comparable sales to come up with a price for a property.
You can do this too, by looking at recent sales history for the suburb of interest. Try and take the last six months of sales data for properties of similar age, size and land component.
When the time comes to make an offer or negotiate, take this data with you and talk to the agent. Similarly, you can even use this if you want to put in a pre-auction offer.
Arguably, the most valuable thing you can do prior to starting the search for a property is to speak to a mortgage broker in Melbourne and get a pre-approval.
A pre-approval is free and the good thing is that it will give you a very clear understanding as to what you can spend.
The added advantage is that you can use it as a negotiating tool.
If you’re interested in a property, but it’s priced a little bit above what you can afford, take your pre-approval to the sales agent and make it clear that you are interested but this is your maximum price.
If there are no other interested parties, the agent will often look to make a deal.
Know the Sellers Motivation
On the spectrum of sellers, there are those that need a very quick sale and those that are just testing the market in search of the best possible price.
As a buyer, it’s important to ascertain just how motivated the vendor is and why they are wanting to sell. In many instances, the sales agent will let you know why they are selling. This is even indicated on the listing as well in some cases.
However, when the market is hot and the property is in demand an agent might not be all that forthcoming with additional information, simply because they don’t have to be and it weakens their position in a negotiation.
As a general rule, a vendor who needs a quick sale for personal reasons will be far more likely to accept a lower offer, if you can settle quickly. Whereas a seller who wants the best possible price will likely not sell for a dollar less than what they think the property is worth.
Negotiate on the Building and Pest Inspection
If you’ve found a property that you like and have submitted an offer that has been accepted the negotiation is still far from over.
At that stage, the terms of the sale need to be met before the contract can be finalised. One of the most common terms is surrounding a satisfactory building and pest inspection. If you find issues with the property, it doesn’t mean that you have to walk away. This can be an opportunity to go back and ask for a lower price or to ask the vendor to make the repairs as required.
It’s also possible to negotiate around other terms you have in the contract and this can be especially important if you are dealing with a vendor who is unwilling to budge on price.
Before starting your property search, get your pre-approval in place from your mortgage broker in Melbourne, then start doing your research on recent sales. Then when attending home opens, get as much information as you can about the seller’s motivations. It will put you in a very strong position to both understand the true value of the property and negotiate.
Are you currently in the market for a new property? Get a clear understanding of how much that property might be worth with our free property report.