While the real estate market is a complex beast and can be confronting, property investment is a great wealth-building strategy – if you know what you’re doing, and what to look out for.
Finding and negotiating the right property deal comes down to a doing your homework and arming yourself with knowledge and first-class skills.
Property Wizards director Liz Sterzel says the old adage “you make your money when you buy” is paramount in real estate investing, especially in the current market, where there is a shortage of quality properties up for grabs.
One of the best ways to ensure you can compete with other buyers, without paying too much, is to improve your negotiation skills.
Here are our top 7 tips to negotiate your way to the best property investment opportunity:
- Learn the seller’s motivation
Why is the property for sale? Knowing the reason a property is for sale can be useful in knowing how hard to negotiate. Listen out for signs that reveal how motivated the seller is, especially if the sale is urgent. You can gauge a lot about the seller’s motivation from their counter offers during your negotiation.
- Manage your emotions
Buyers should neither appear too keen nor too reluctant. Showing how desperately you want a property could force the price up. On the other hand, if you are genuinely interested and intend to make an offer, let the agent know. And, if you’re considering other properties, tell them, as they will likely place more value on your offer.
If they ask how much you intend to offer, don’t give a figure. Let them know you’ll make a final decision shortly and will confirm in writing at an agreed time. Even giving a general figure of what you’re prepared to spend can work against you in the negotiation stages.
- Be clear about the selling agent’s role
Remember that real estate agents are trained professionals, who regularly negotiate property deals and have honed their skills over time. With their sole aim to sell the property for the highest possible price, they are working for the seller, not you – the buyer.
- Understand market prices
While negotiating a discount can provide real thrills, it is dangerous to chase the “buzz” at the risk of missing out on a great deal.
If your research shows you the property you want is being advertised under fair market value, snap it up. Attempting to haggle further or go in low will likely mean you will lose the property to informed buyers who recognise its worth, and the great buy it is. And, If you haven’t done enough research, you need to.
- Know what to offer
- Read the Ts and Cs
- Seek professional advice
Similarly, if you’ve done your homework, you should have a reasonable idea what to offer. While it what is not an exact science, there are key factors you should consider to avoid going in too high or too low.
How you read the owner’s and the agent’s motivation, how many offers are on the table and your assessment of the asking price versus value all come into play when deciding what to offer.
If you’re looking at other properties, place an expiry date on an offer, so it signals to the agent that they need to treat your offer with some urgency.
While it may seem surprising, many buyers often don’t place enough importance on the terms and conditions of sale. And, again, a seller’s agent’s obligation is to propose terms and conditions to suit the seller.
EXAMPLE: If it’s a purchase for an investment property, paying attention to the terms and conditions can mean crucial time is not lost between settlement and finding a tenant.
While taking all these tips into consideration, if the negotiation process still seems too daunting, or you want to ensure you get the best return on their investment, seeking advice from a professional buyer’s agent is a good option.
Property buyers have the experience and industry knowledge to help buyers get the upper hand by negotiating the lowest price and best terms and conditions.
“Afterall, if the seller has a professional on their side, you probably should too.”
If you want to learn more tips about property investment, call us on 08·9381·7450.
Or, if you’ve got any property investment questions, why not complete our Getting Started form to get the ball rolling.
Or, if you want to learn about different property investment strategies, or learn more about investing in property in Perth, why not read our free Get Ready to Invest in Property eBook.
It takes you through five simple steps to help you understand strategic property investment and how to make it work for you. Whether you’re a first-time investor or re-entering the market, it will help you navigate the sometimes complex world of property investment and associated issues you need to consider.
So if you’re ready to learn some great insights into getting started in property investment, download your free Get Ready to Invest in Property eBook here.