You have been waiting for a home for some time and have found one that you think is perfect. But the vendor may be asking too much for the property. Lets look at how you can negotiate a more affordable purchase price.
Understand the negotiation process
Negotiation occurs between two parties, the buyer and the seller, so its a two-way street. Both sides need to feel that the have benefited from the transaction for them to agree on an outcome. Therefore, you need to be able to have some give and take.
When negotiating, its important to put yourself in the sellers shoes. Applying this strategy to your negotiation process will allow you to play your best hand when making a deal. Also, ask the real estate agent selling the property why a vendor has put the property on the market, consider how you can present the case for your offer, and think about timing.
Often when you make an offer, the agent will ask you to submit this in writing with a signature. The agent will then present this to the vendor on your behalf.
The vendor will review your offer and they may either:
1. Accept your offer.
2. Reject your offer.
3. Send you a counter offer.
If you receive a counter offer, then you can either:
1. Accept the offer.
2. Reject the offer, and start looking for another property.
3. Continue to negotiate.
The seller should consider your offer as soon as possible, as you can withdraw your offer at any time before they accept. If you both agree to the offer, then you will be asked to sign a contract and agree to sale terms.
Research the market
You may have home loan pre-approval and have found a property that fits within your budget, but it is still important for you to know how much homes with similar features are fetching. Having this up-to-date market knowledge allows you to put in a fair and competitive offer for a property, and it gives you an opportunity to secure a better deal.
When you negotiate make sure you hide your enthusiasm and excitement about buying, especially if its your first home. While its important to let the vendors real estate agent know some information, don not divulge too much, especially about what you can and cannot afford. Keep your cards close to your chest. Also, put any fears and negativity aside. Instead, have a positive, upbeat attitude.
Talk to the agent
Most vendors will use a real estate agent to sell their property, if this is the case, then negotiate with this agent rather than the seller directly. Liaising with the agent allows for a smoother negotiation process as sometimes the vendor may be emotionally connected to their property and may take offence at you offering them a lower price than they are asking. If a vendor approaches you directly, then make sure you still use the agent as your point of contact.
When talking to the real estate agent always show them respect and be polite. Make sure you communicate clearly and concisely, and listen to everything they have to say.
Stay within your limits
Know what your budget is and stick to this. Never overextend yourself financially. Also, make sure your offer is lower than what the vendor is asking. Investors and professional home buyers typically suggest making an offer that is 10 to 20 percent less than an asking price. You can then negotiate from this point.
Make a realistic offer
If you genuinely want to purchase the property, and its in good condition, then make an offer that is close to the asking price. If, however, the property is in need of repair or has old, tired fencing that will need to be replaced, then find out how much these costs are, and then make an offer based on your expenses. Just make sure that you inform the agent as to why youre making this offer so that they can tell the vendor.
Are you seeking to buy a home? If you said YES, then contact eChoice. We can help you find a cost-effective home loan TODAY.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!