How to negotiate when buying a property
Whether it’s an investment property that ticks all the boxes or the ideal house that you envisage as your forever home, negotiation is often part of the property purchasing process.
That negotiation might revolve around the terms and conditions of the sale or the price you hope to pay, but here’s an insight into what’s involved.
The art of negotiation
When it comes to negotiating, it’s all about achieving a win-win outcome for all parties involved. It’s about indicating you’re serious about purchasing, but to do so you are proposing there are conditions attached.
These conditions might involve a price reduction, additional time to settle, or the stipulation that something is remedied prior to settlement.
Truth be told, negotiation is an everyday part of buying a property, but to do it successfully you must appreciate it’s a give and take process where it pays to line up your ducks in advance.
Have your finances lined up
If you’re planning on putting forward an offer for a property or are hoping to negotiate on price, it’s imperative you have your finance lined up in advance.
Pre-approved finance indicates you’re serious and allows you to know exactly what your budget is for the purchase of the property. In other words, it sets the benchmark of what you can afford.
Do you research
To negotiate effectively, you should know the property market like the back of your hand, including recent sales of similar properties in the specific area where you intend to purchase.
This helps you identify if your offer is realistic and fair. You should also do your research on the specific property that you’re interested in, including how long it’s been on the market and the reason for sale.
This research also extends to undertaking all necessary inspections such as pest and building checks.
Be clear it’s a serious offer
Once you’ve determined what you’re willing to pay and the conditions involved, put that offer in writing and provide it to the agent.
This indicates it’s a serious offer and ensures it is one that will be forwarded to the seller for their consideration.
It’s about give and take
It’s important to remember, negotiation is not a one-way street. It’s about achieving the best outcome for all parties involved.
For example, if you are putting forward a lower price than the property is on the market for, or you’re putting forward an offer prior to auction, give the seller a good reason to accept, such as a short settlement time, a large deposit, or a longer settlement if that’s what they need.
There’s also a good chance the seller may come back with a counter-offer, so be ready to consider their terms for the sale as well.
Know your limit
Negotiation often occurs in stages, with you putting forward one offer, and then the seller indicating their terms and conditions.
Throughout the ‘to and fro’ process, be very clear on your limit and resist the urge to go beyond it.
Remove the emotion
As much as purchasing a property can be driven by emotion, the negotiation process is the time to put this aside.
Negotiating is all about business. It’s about coming to a mutual agreement that suits all parties involved. It’s not personal, so set your feelings aside and consider the best ways to achieve an outcome that’s likely to work for you and the seller.
It’s also important to note, whether you are in a position to negotiate will be driven by the market and the seller’s circumstances.
When property is in demand there may be very little room for negotiation due to competition for the property. At other points in the property cycle, there might be greater room for movement.
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