Buying a property is a bit like applying for a job – it can feel like the other party has all the power at the negotiation table. But if you follow a few common-sense rules, you can tip the odds in your favour.
Get a preapproval before you start house hunting
There are several advantages to getting your home loan preapproved before you start your property search.
Firstly, it gives you a more accurate idea of how much you can borrow so you can narrow down your search. That means you won’t then get your heart broken by a home that’s out of your budget.
Then, when you find ‘the one’, a mortgage preapproval can signal to agents and sellers that you’re a serious buyer. So when it comes to negotiations, they may favour you over other potential buyers as your preapproval means you can move faster.
Make it easy for agents to do business with you
The real estate agent may be working for the other side – but they also are the main link between you and the seller. Therefore, you shouldn’t underestimate the power of making it easy for them to deal with you.
By being polite, calm, trustworthy and approaching the negotiations in good faith, you’re treating them as you want to be treated. And this can reap you dividends.
Find at least one other property you’re genuinely interested in
While your heart might be set on a particular property, you need to be prepared to walk away from it if the deal goes south. So, find a ‘plan b’ property you’re genuinely prepared to pursue – and subtly mention it to the agent.
They’ll then know you won’t overpay if the negotiations don’t go your way.
Keep your cards close to your chest
If the agent knows how much your limit is or how much you like the property, they can use this information against you at the negotiating table. So put your game face on and be careful what you say to the agent.
Know what comparable properties have sold for
The best negotiators are confident. And confidence comes from knowledge. So you need to research what comparable properties have sold for in the last six to 12 months. This can give you a good indication of what the property is actually worth – rather than how much the vendor hopes to get for it.
Understand if it’s a buyer’s or seller’s market
In the same vein, knowing whether it’s a buyer’s or seller’s market can help you gauge how high, or low, your initial offer should be.
In a buyer’s market, there are more properties for sale than there are buyers. So prices often fall as a consequence, and you’ll have more negotiating power.
In a seller’s market, the opposite happens so property prices typically rise. You’ll also likely face more competition from other prospective buyers, so your position may be weakened.
Find out why the vendor is selling
Finally, it can pay to know why the seller has put their property on sale. If they need a quick sale, and you can move fast, they might be prepared to drop the price to sweeten the deal.
