Negotiating a property purchase can be an intimidating experience. Many people will only buy a home once every seven years, whilst others only buy one home in their entire lives.
When it comes to negotiating, there are some things you can do to make the process more transparent and easier. For the most part, it comes down to being prepared.
Get your finances in order
The first step to effectively negotiate is to organise your finances in advance. Understand your budget, seek pre-approval from a lender with the help of your mortgage broker and be ready to demonstrate to vendors that you're a serious buyer.
Understand the vendor’s motivation to sell
Price isn't the only influencing factor in a property sale. Knowing the vendor’s motivation, such as the sale's timing or their sentiment towards the property, can give you the upper hand when putting together a deal. Building a strong rapport with the real estate agent can also help you find out as much information as you possibly can.
Research your offer
You can’t make an offer or even negotiate if you don’t know how much the property you want to buy is worth. Use comparable sales and study the local market so you have a clear picture of what is selling in the area and what the state of the market looks like. Put your offer on a solid footing with robust comparable sales analysis. Attend open homes and/or auctions and keep track of what's selling. That way you can back up any offer with real-life data.
Don’t low-ball
While you aim for the best possible price, an unrealistic offer might insult the seller and harm your chances. Your first offer should be competitive and reflective of your market research. If there is limited competition a lower offer might be entertained. If it’s competitive, you’ll need a fair offer.
Patience is key
Patience is a powerful tool in property negotiation. Rushing can often make you appear over-eager. After making your offer, allow time for the vendor’s response. A lack of response within a reasonable timeframe might signal the need to look elsewhere. The party that needs a transaction to happen the least is usually the one that’s in the strongest position.
Leave emotions at the door
Emotions can cost a sale. Stay objective and apply pressure only if you're confident your terms are reasonable. Being emotional or urgent can hurt your negotiations and potentially wreck a sale.
Be prepared to compromise
Finally, be open to compromise. The price might not be the only negotiable part of the deal. Other factors such as settlement length, deposit, existing tenancy and fixtures or inclusions can all be on the table. Understand your non-negotiables versus your nice-to-haves, and be ready to make concessions on the latter.
