Five tips to help you negotiate when buying a property
Mon Nov 30 15:30:00 AEDT 2015
Buying a property is one of the biggest financial decisions many Australians will ever make. Building your negotiation skills can help you get the best possible price – and when you consider that you are potentially saving tens of thousands of dollars it becomes clear why this is so important! The five simple tips below are designed to help you maximise your negotiating power in the current market.
Tip One: Do your background research
It may sound obvious, but in order to get the best price you need to know what the best price is. Take time before you buy a home to investigate recent sales prices for comparative properties, and go to several open-houses in the same area. Being able to point to concrete examples and figures will help you position yourself as a knowledgeable buyer who should be taken seriously.
Tip Two: Prepare your final offer – but don’t reveal it!
Before you enter into negotiations, you should be aware of your upper price limit and never go over this amount. In the heat of the home-buying battle, it may be tempting to tell an agent your upper limit but this creates the risk that the agent will push you to this limit, as they know you can afford to spend this amount. Consider creating two “upper limits” –one for public disclosure during negotiations, and a secondary limit which is really, truly the maximum you would pay. This means you will still have some cards up your sleeve as negotiations progress.
Tip Three: Be ready to ‘seal the deal’
In a crowded market, where there may be many buyers interested in the same property, your negotiating power can be improved if you are ready to finalise the deal quickly. People may be in a rush to sell their property for a number of reasons – perhaps they are moving overseas, it could be a deceased estate, or they may need the money to settle on a new purchase. In circumstances like these, the owner may be willing to compromise on price for the sake of a quick-sale. To capitalise on such opportunities, you need to have your financial house in order. Consider speaking to your mortgage broker, and organising a home loan pre-approval.
Tip Four: Keep your emotions in check
Buying property is an emotional decision, but it’s important to appear calm and rational when negotiating price – even if you are internally desperate to make it happen! Revealing a strong, emotional connection to the property when negotiating price may encourage an agent to push you to, or beyond, your upper-price limit. Having this connection may also cloud your judgement, so where possible it’s best to try and remove emotions from your decision-making process.
Tip Five: There are plenty of fish in the sea
Even if the property you are currently bidding for appears like your dream home, it is important to remember that there are a myriad of other options out there. For most Australians, property is a long term commitment and as a result it is worth taking your time looking around and waiting for new options to come on the market. Don’t rush your decision because you just want the property-search process to be over. An open-minded attitude will help you in the negotiations field, as it will help you walk-away when you feel like a price is too high and wait for the one that is just right.
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This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the articles is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).