Most people will only ever buy one or two homes over the course of their lives, which means you don’t always get much practice at the skills of negotiation. When you are buying a home, you will often find yourself dealing with a sales agent who is a professional negotiator.
Here are some ways you can improve your position when the time comes to negotiate.
Most sales agents and valuers will price a property based on the method known as comparable sales. What this means is that they will use similar types of properties that have sold recently as a gauge to value your property or the one you’re interested in buying. The good thing is that you can do this same research ahead of time to get a clear understanding of what a property is worth, and you can take this evidence to the sales agent when the time comes to make an offer or negotiate. Look at similar properties, in terms of age and land component in the same suburb, that have sold in the past six months. This will give you a good understanding of what the property is realistically worth and will help dramatically with your negotiation.
One of the most important aspects of buying a property is knowing not just what you can spend but how much you can borrow. Getting a pre-approval with the help of a mortgage broker will not only give you clarity around what that number is but can also be used as a negotiating tool. If you really want a property, but you have reached your ceiling, tell that to the sales agent. If they have no competing offers, they will likely communicate this to the vendor to broker a deal.
Arguably, the most important part of a negotiation is knowing why the vendor is selling. You should do everything you can to find out why they are selling, including questioning the sales agent. The more information you have, the stronger your position will be. If a vendor is unwilling to negotiate on price, perhaps you can get more favourable terms or vice versa. If a seller needs to sell quickly for personal reasons, a low offer with short settlement terms can be very appealing.
It’s important to understand that the offer you submit to a vendor is not finalised until the terms are also met. If you make an offer subject to a building and pest inspection and it comes back less than satisfactorily, that doesn’t mean you have to walk away. In fact, you’re well within your rights to go back and negotiate a lower purchase price, factoring in any repairs that are required and the inconvenience.