When buying a property, deciding how much to offer can seem tricky. There are many factors to consider, not to mention there’s often disconnect between what the seller expects, what you’re willing to pay and the actual market value of the property.
To reduce the confusion here’s five strategic tips to assist with your negotiations when buying your next property.
- Firstly, avoid low ball offers. In most cases a property owner won’t sell for less than their property is worth. A low ball offer may make your offer seem opportunistic and inauthentic, inhibiting your prospects of buying the property even if you adjust your price upwards later.
- Popular or highly sought-after properties benefit from strong buyer interest but research shows the first genuine offers are usually the most successful. Making a genuine offer early in the selling campaign can help you avoid competition and bidding wars with other parties. Set up alerts to advise you when a suitable property enters the market to get a jump on the competition.
- Make a fair offer upfront. Ensure your price is justified and based upon recent comparable sales. Also, ask the agent to provide comparable sales to justify the asking price. Use this as the basis for comparison during negotiation if you don’t believe the price is fair. Above all else, don’t take the listing price as gospel. Ensure you undertake independent research to verify the market value.
- Emotional attachment and pricey renovations often drive sellers to push the price up. While it’s important to take some of this investment into consideration, don’t overpay for a previous owner’s overcapitalisation. If you’re hesitant about paying the amount the seller is asking, it’s likely the next seller will too when it comes time to sell again, leaving you in a difficult situation.
- Negotiation isn’t just about price. Be sure to enquire about the seller’s reason for listing and whether adjusted selling terms, such as a longer or shorter settlement or a larger deposit, can provide greater weight to your offer when you’re reaching the limit of your budget.
While it’s perfectly normal to feel excited about a property, avoid emotion mixing with logic when negotiating. Instead, assume a clinical approach based on verifiable facts.
Research the property market in your chosen area over several months, including attending both inspections and auctions to gain an understanding of current market values and buyer sentiment. If you need to confirm market value immediately or just don’t have the time, seek expert advice and engage an independent professional such as a valuer or buyer’s advocate. This can be a useful negotiating tool when the property is overpriced.
Being a realistic and educated buyer makes the process much more efficient for both you and the seller, ensuring you achieve a superior result.
Like investors, homebuyers should invest in professional, independent and customised advice, if required, to assist with their home purchase.