19 Jan 5 Tips to Improve Your Property Negotiating Skills
Thanks to Australia’s largely burgeoning property market competition to secure properties is stronger than ever. Auction clearance rates remain very high, with few left-over bargains to be had. So how can you hone your skills to give yourself a better chance of securing the property you’re after? Here’s five great tips to give you an edge when negotiating your next property purchase.
1. Be sure of your position
You should always negotiate from a position of strength. So before you make an offer or even start talking to the real estate agent or vendor about purchasing a property, do your research to make sure it is not only the right property for your needs and objectives, but to find out what the right purchase price will be given current market conditions.
You can find out this info by researching the recent sale prices of comparable properties in the same suburb and work out growth projections for the suburb over the period of time you plan to hold the property. Google is your friend here, it is astounding how much information you can find out on a property! You might even want to go so far as to have the property professionally valued (and if this is the case, let us know as we can help).
In addition to finding out the right price for the property make sure that you are financially situated to take advantage of the deal quickly. To do this, talk to us about getting your finance pre-approved and line up your team of professionals before you begin. Be ready for pest and building inspections, do your valuation and make sure you can include the deposit cheque with your offer.
If you do your homework properly, it will give you a solid position from which to make an offer and negotiate the right price. Even if you’re forced to compete in an auction for the property you want, knowing your position and upper limit beforehand will help you bid decisively to come out on top at the end of the auction process – and remember, coming out on top means securing the property at the right price, not at all costs!
2. Assess the seller’s situation
Finding a vendor who is willing to negotiate on price isn’t always easy – in fact it’s getting harder in this market. Everyone wants to capitalise on the current surging market prices and as such are tending to set a price that satisfies their personal objectives (MAKE ALL THE MONEY!) instead of allowing the market to set the price. Discovering as much about the vendor as you can will help you decide if attempting to negotiate the price you want to pay for the property is worth your time and effort. If you can find a vendor who really needs to sell, then you will have more bargaining power and may get a better price. A good tip is to try and find out how many other offers have been made.
Here’s some questions to ask that will help you track down vendors that need to sell:
- Why is the vendor selling?
- Have they already purchased another property?
- How long has it been on the market?
- Has the property been passed in at auction previously?
3. Don’t be intimidated
Always have an upper price limit in mind before you begin negotiations. What’s your maximum? And make sure anyone else involved in the transaction such as partner or spouse knows it and has agreed to it too. Your objective is to negotiate a price as far below this limit as you can.
If you do your research properly, you should be able to determine the right price and enter into your negotiations with full confidence. It can be scary and nerve-wracking but if you have your finances in place, there is no reason you should be intimidated by real estate agents and vendors quoting higher prices than you are prepared to pay. Use the evidence you have gathered in your research to persuade them that your offer is likely to be the best they’ll receive, then sweeten the deal by meeting their settlement terms. Show them you are serious and they will react accordingly.
4. Control your emotions
Emotions play a big part in every transaction involving money, no matter how big or small. They are also the number one reason why people pay too much for a property. That’s because finding your dream home is never easy. The more desperate you are to secure a property, the higher the price you will pay.
If you only choose one property to pursue, it is more likely that you will fixate on acquiring that property at all costs – and risk paying too much. This is true for all types of property purchases, whether you are buying to become an owner occupier or an investor.
Have another property as a potential back up, so that you can negotiate objectively on the property you prefer. You can use this back-up property to give you more negotiating power – if the real estate agent seems unlikely to field offers before the auction, or the vendor seems set on an unrealistic price, you can simply say to them “I have a more viable option to pursue” – the thought of losing a potential purchaser will make them more open to negotiation.
5. Be prepared to walk away
If you can’t close the deal for the price you want to pay, leave your offer on the table then sit back and wait. I know this is much easier said than done! There is a good chance the vendor will come back to you to negotiate further, particularly if no other offers meet their expectations. Despite what the popular media would have us believe I know there is still room to negotiate on many properties and to have vendors/agents chasing you instead of the other way around!
Time can be a great negotiating tool, so be patient and wait for the agent to chase you. They may chase you to bring you back to the negotiating table, or to get you to attend the auction. Either way, you may get a second chance at securing the property – but make sure you hold firm on your price limit.
From an investor’s point of view, missing out on a property is better than paying too much. If you’re shopping for your dream home, however, it might not be so easy to take this attitude. You’ll need to be realistic about your budget and what you can really afford to pay.
But don’t worry. If you can’t secure your dream property for the right price, then it just wasn’t meant to be. The most important thing is that you don’t bankrupt yourself or get up to your eyeballs in unmanageable debt chasing emotions. Keep doing your homework and you’ll soon find the perfect property for the perfect price!
The key is always to do your homework. If you don’t have a reliable source of property information then let us know. We can help you get the right information so you’re fully armed and ready to cut the right deal on the property you want. We can also help you get pre-approval for your financing so you can move quickly and decisively, so get in touch with our Finance Adviser Haison Tran from Orion Finance on 1300 368 630 or by visiting our contact page and completing an enquiry.
Please note this information is general advice only. Please seek advice before acting on any information in this article.