How to Negotiate the Best Property Price


Negotiating the best property price isn’t a matter of swindling a seller. It’s about doing your homework, knowing what you want, knowing the market and making sensible offers.


When you are buying property, getting the best price can mean the difference between being able to afford it and having to settle for second best. And a purchaser is often negotiating with a seasoned professional, so any time spent brushing up on negotiating skills is well spent.


For a first-class property price negotiation, the homework starts well before you even let the agent know you are interested.


The first thing to do is get a good understanding of your requirements and circumstances. Aside from the location and type of house you are looking for, this understanding involves finance. You should have a good understanding of how much you are looking to borrow (and how much you can afford to repay) in order to finance the property. Stanley Finance recommends obtaining preapproval as this can put you in a strong position against the rest of your competition. When you have preapproval your offer will be taken more seriously by the seller or their agent. Having finance sorted out means that you can be sure of what your stamp duty and associated costs are, and exactly what price range you can consider.


The next step is to work out what an offer range might be, and then it’s just a matter of ascertaining the market. This means doing lots of research – seeing the prices other similar properties are listed on the market, checking recent sell prices for other properties that fit the criteria, comparing as much as we can 'apples for apples', so you can be confident you’re not paying too much. Websites such as realestate.com.au or Domain are good places to start.


Above all, the best thing a buyer can do is get out and look at properties and speak to the agents.


Once you have your finance sorted and you’ve found that special property, get the building and pest inspections done as soon as you can so that if you do make an offer, you are prepared to move quickly. This can give you the edge on your competitors.


Finally, it’s time to talk dollars, and you are well armed by the time you reach this point. Most agents will make buying guides available at inspections, so you will have a good idea of the vendor’s expectations; you will have a certain budget in mind because your finance is locked in; and you will have a good idea of the value of the property from all the preparation you have done (if you are still unsure here, you can have a professional run a valuation).


So what should you offer? There are mixed opinions about this. It's important not to start too low because the agent may not take you seriously, but also not too high as then you may end up paing too much. You have to get that balance right. You might want to start five per cent below a realistic opinion of the value of the property, and go from there. It also depends on your budget. Certainly start below your maximum, and work up to that. Every dollar you get the property under your budget is a bonus for you.


One exception to this is when a property has been on the market for a long time and there is not much interest in it. That might be the case where you can get something at a heavily discounted price because the property is stale. The key to knowing whether this is the case, of course, is all that thorough research you’ve done.


Speak to Stanley Finance who can help you get your finance sorted out so you are ready to make a deal.



Source: MFAA Essentials of Borrowing

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