So, you’ve found the right property. It has everything you’re after and it’s in your price range. The timing is perfect – you’re ready to buy. But, perhaps you’re a little uncertain of how to negotiate your way to the best deal.
Here are 7 insider negotiating strategies to give you the best chance of success and ensure you don’t pay too much.
- If you have built some rapport with the agent, try to find out what you can about the other offers expected or already made. If there are many other offers, make sure to put your best offer forward first as often the agent is unlikely to come back to you but will recommend the highest offer of many.
- If there aren’t other offers you may have leeway to negotiate a better price, but remember to not dawdle as another buyer could turn up at any time and take it out from under your feet. We recently had a client interested in a commercial property that had been on the market for months with no buyer interest. Our client read this as freedom to take their time getting finance organised and whilst they were slowly getting geared up another offer came in. Luckily we were able to get their offer submitted in the middle of negotiations with the other potential buyer and secure it for our client, but the other offer could just as easily have been accepted.
- If you are in a position to make a cash offer, this can often sway things your way when you are up against other offers. Your price needs to be right, though and not substantially below other offers. You also need to read the situation as if the sellers are not in a hurry, they may be less swayed by cash offers.
- Take note of others making offers at the home open, and size them up as to what you think they will be offering. Do they look like developers or mums and dads? Your offer will need to be more attractive to win so if you can estimate where the other buyers are likely to place their bids you stand a better chance of arriving at the right number.
- Once you’re a bidder at auction, the selling agent’s team will often target you to urge you to go up, but you need to not pay attention to that. Before the auction, discuss as much as you like with the agent and consider their advice and information, but during the auction, all you have to do is beat the other bidders, so that’s where you need to focus, not on the agent.
- Negotiation doesn’t always have to be about dollars and cents; the right purchase conditions could provide the opportunity to negotiate a better price or have the seller rectify any problems at their cost prior to settlement. Careful wording of these conditions could also provide the opportunity to abandon the purchase if the conditions expose issues that would detract from the investment potential of the property.
- Be prepared to walk away so you don’t overpay. Pre-approved finance and a clear sense of the value of the property ensures you are able to negotiate within your budget with confidence and walk away from hysterical overbidding situations, especially in an auction environment.
Above all, make sure it’s the right property for your goals. A killer deal is no good to you if you choose the wrong property.
And ensure you have factored in all extra purchase costs, such as settlement costs, mortgage insurance and stamp duty when planning your budget and preparing to make an offer. A clear idea of the extra costs that come with the purchase will ensure you know how much you can afford to negotiate, without getting yourself into trouble with cash.
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Property Wizards believes everyone has the right to the knowledge to help you accumulate wealth, no matter your background, education or income.
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