Most people will only ever buy one or two homes over the course of their lives, which means you don’t always get much practice in the skills of negotiation. When buying a home, you will often find yourself dealing with a sales agent who is a professional negotiator.
Here are some ways you can improve your position when the time comes to negotiate.
Substantiate your Offer
Most sales agents and valuers will price a property based on the method known as comparable sales. What this means is that they will use similar types of properties that have sold recently as a gauge to value your property or the one you’re interested in buying.
The good thing is that you can do this same research ahead of time to get a clear understanding of what a property is worth, and you can take this evidence to the sales agent when the time comes to make an offer or negotiate.
Look at similar properties, in terms of age and land component in the same suburb, that have sold in the past six months. This will give you a good understanding of what the property is realistically worth and will help dramatically with your negotiation.
Get Pre-Approved
One of the most important aspects of buying a property is knowing what you can spend and how much you can borrow.
Getting a pre-approval with the help of a mortgage broker will give you clarity around what that number is and can also be used as a negotiating tool.
Tell the sales agent if you want a property but have reached your ceiling. They will likely communicate this to the vendor to broker a deal if they have no competing offers.
Understand the Seller’s Motivations
The most important negotiation part is knowing why the vendor is selling. It would be best if you did everything possible to discover why they are selling, including questioning the sales agent. The more information you have, the stronger your position will be.
If a vendor is unwilling to negotiate a price, perhaps you can get more favourable terms or vice versa. If a seller needs to sell quickly for personal reasons, a low offer with short settlement terms can be very appealing.
Use your Building and Pest Inspection Report
It’s important to understand that the offer you submit to a vendor is not finalised until the terms are met.
If you make an offer subject to a building and pest inspection and it comes back less than satisfactory, that doesn’t mean you have to walk away. You’re well within your rights to go back and negotiate a lower purchase price, factoring in any required repairs and the inconvenience.