March 29, 2021
As far as life and financial decisions go, buying a new house is one of the biggest.
But you don’t want to fall in love with the house of your dreams - only to end up paying more than you needed to. Or lose it all together because you didn’t educate and prepare yourself properly beforehand.
To increase the odds of approval on your ideal offer, having good negotiation skills is a must. Here are three ways to prepare for property negotiations.
There are multiple variables to consider when negotiating a property, so we recommend arming yourself with information. That way, it’ll be easier to identify when a price is too high or seems too low.
While it’s an additional cost, hiring a skilled and reputable Certified Practicing Valuer (CPV) could be a good option to collect property prices. They’ll provide you with the approximate price of the property, along with a rationale and evidence for how they got that price.
Alternatively, you can get an estimate of the approximate market value of the property by looking at recent sales of similar properties in the area.
When researching, ensure you are comparing apples with apples. Look for properties within the same area with the same number of bedrooms, bathrooms, and garages, land size, and distance to amenities.
Get to know the local market by analysing the sales data of the neighbourhood. If you’re local, attend open homes when you can. Chat with the agent and find out the number of interested buyers and how quickly or slowly homes are selling in the area.
If it’s considered a ‘buyers’ market’, you’ll have more opportunity to negotiate than if it’s a ‘sellers’ market’.
Property inspections are ideal for uncovering any major repairs required or faults that might impact on the value - and increase you negotiating power.
However, ensure you’re still being respectful to the vendor and remove any emotion or accusation. Simply provide the professional report to validate your statements.
Vendors and agents are hoping you form an emotional connection to the property, as it puts the negotiations in their favour. So if you love the house, try to hold your cards close to your chest and emulate the Matrix’s Agent Smith’s cool demeanour.
You can sometimes be blinded to any faults or other factors. It’s worthwhile creating a checklist of your key criteria ahead of time and sticking to it. And bringing a neutral friend or family member along is a good idea.
If the price comes in far too high for your budget, you need to separate yourself from the emotions and be prepared to walk away.
If you reveal your maximum purchase price to the vendor or their agent upfront, it provides them with valuable information. They’re likely to use it to make an offer as close to that price as possible (assuming you’re in the ballpark).
Instead of revealing your budget, simply say you have adequate finance approval and want the market value for the property. Or provide a price lower than your actual ‘walk-away’ price.
Overall, before entering property price negotiations, ensure you’re emotionally and intellectually prepared. If you stick to your budget without disclosing it, arm yourself with information and leave your emotions at the door, you will be setting yourself up for a successful negotiation.
Ready to purchase a new house? Listing Loop is a platform giving serious buyers access to exclusive listings of off-market properties from leading real estate agencies. Before you know it, you’ll be able to put your negotiation skills into practice!
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