Getting ready to make a move on the property of your dreams? When you can’t bear to miss the chance, but your budget lacks flexibility, you need to be able to negotiate with skill.
That takes confidence and know how. With some background knowledge and a bit of groundwork, you’ll be better positioned to stand your ground and get the price you want.
Get pre approval
If you require finance to purchase a property, get your approval locked in before you put in an offer. Especially if you’re buying at auction, which means your offer is unconditional, you need to know that you can come up with the funds before settlement day.
Even if you’re putting in a private offer, knowing what the bank is willing to lend you can give you some confidence. That confidence translates to your body language and can only help you on the negotiating field.
Remember, too, that sometimes the bank will be willing to lend you more than you really want to spend. Knowing your self-imposed limit is just as important as knowing your borrowing power.
Due diligence
Whether it’s auction or best offer, ensure that you’ve done some research. Knowing what the property is really worth will do more to give you confidence than any other trick. Look at similar properties that have recently sold in the area, including the discount from the asking price.
Take some time before leaping in with an offer and look at as many comparable properties as you can. Include properties of a similar size and age but which have been completely renovated, and those which need some love, to isolate the potential of your property.
Honesty
The selling agent works primarily for the vendor, but they also act as the conduit between the two parties. If you’re a trustworthy buyer and you’re approaching negotiations in good faith, the agent will recognise and relay that. That’s to your advantage, because the other party is more likely to make concessions if they don’t feel as if you’re playing games.
This doesn’t mean giving an overwhelming amount of information on yourself or your motivations.
You just need to be willing to give honest answers, be keen to keep the process moving efficiently and continue to make it clear that you seek a positive outcome – the same as the vendor. Being easier to deal with makes for better dealings on the whole.
Go large
It’s a common instinct to lead with a low ball offer, inching up in increments to see how little you can get away with paying. However, it can sometimes work against your interests. Sellers will usually reject a low offer, and even if you’re happy to come up a long way you risk insulting them in the process.
If you are in a position to do so and are well-researched, don’t be afraid to pull out that one big offer early on. Make it clear that that’s what you’re doing, so that the vendor understands that you don’t have room to move further. This combination of surprise and urgency may incline them to accept, saving both of you a lot of time.
Use conditions as a bargaining point
While the purchase price is everybody’s central concern, it’s not the only one. A vendor may be willing to accept a slightly lower price if the contract is unconditional, for example, so that they can trade certainty for profit.
Some vendors want a short settlement period. Others would be willing to bargain for the right to rent back the property while they look for somewhere new. Speaking to the selling agent can be very useful here, as they can help you understand the vendor’s motivations. If you can meet those extra desires, it can pay off for you in terms of price.
At the end of the day, negotiating to buy a property isn’t about trickery. Swagger and bluff won’t get you what you want. If you approach it in a straightforward fashion, with the weight of research behind you, you’ll be most of the way there.