Negotiating isn’t something that comes naturally to everyone, but is a crucial part of the purchase process to secure property.
As buying heats up over the summer months (no pun intended) it’s vital to know what to do when it comes down to the nitty gritty of negotiating to securing your purchase.
1. Assess the Property First
No matter what type of sale, no matter what the selling agent is quoting and saying, make sure you first assess the property you are interested in purchasing.
This sounds simple but it’s a common mistake many people make when buying property. You really won’t know if you are getting a good deal if you don’t do some homework. You need to do some research and find comparable sales that are similar in age, size, condition and position; compare ‘apples with apples’. You will need to find at least three or four comparable sales and they need to be as recent as possible to give you an understanding of the ceiling price of the property.
Buyer Advocates/Agents have access to the latest sales information and can provide a thorough price analysis.
2. Plenty of discussions with the agent
In order to achieve the best possible result, have lots of communication with the selling agent. You need to let them know you are interested while still keeping your cards close to your chest, otherwise you risk the property being sold to another party.
Your discussions with the agent need to fish for as much information as possible about the vendors and your competition. At a bare minimum, you should be able to determine how much competition is expected, or if the property is likely to pass in and approximately what the vendors’ reserve is. This information is paramount to increase your chance of success as it will determine how and when you bid/offer.
Knowing what to do when negotiating can make a huge difference to successfully purchasing.
3. Have a good reason for submitting an offer
When submitting an offer for a property (usually prior to the auction or tender period), it’s vital to establish some ‘fear of loss’ in the mind of the selling agent.
For example, a good strategy is to find an alternative property to leverage against. Search for another property on the internet, one that is cheaper than the one you are about to make an offer for, although not too much cheaper, and use this property as leverage to significantly improve your negotiating power. It would be a good idea to even inspect the property to familiarise yourself with it – it will help a great deal when having your discussions with the agent.
4. Don’t get angry with selling agents
In most cases, getting aggressive with selling agents will be counterproductive. You need to understand that they are required by law to act in the best interests of the vendor and achieve the best possible result for them.
While there are times when getting a little aggressive can work in your favour, you need to know when the time is right to do so and how far you go (not easy when you are emotionally involved). In the end, the selling agent is the one person standing between you and the vendor, and the majority of the time a successful result is more likely without any aggression required.
5. Have a ceiling price and stick to it
If you have done your research, you will have a clear indication of what price point the property sits at, and subsequently you will be able to set a ‘ceiling price’ for the property.
Do not go over your ceiling price. If you are bidding at auction, you shouldn’t end your bidding on a round number if possible. Go for an uneven number. For example, if you have a budget of $750,000, you will have a much better chance of securing the property if you were able to increase your budget to $755,000, providing the amount is not above your ceiling price. Having a little more than the ‘round’ number, even as little as $500, will assist you in beating other buyers with an identical budget.
Bonus Tip: Engage a Buyer Agent
Of course, a Buyer Agent can help you do all of this. Buyer Agents negotiate the purchase of properties every day; they know the negotiation process intimately and how it can be used to get you the best result. They can even be engaged on an ‘Assess and Negotiate’ service, which will involve carefully assessing the quality of a property, and then negotiating to purchase it.
Get in touch to find out how National Property Buyers can assist you secure your dream property.