A few smart strategies can give you extra bargaining power.
Seven key property price negotiating strategies could see you save thousands of dollars on the price of your home.
1. Arrange loan pre-approval
Nothing shows you are a serious buyer more clearly than having loan pre-approval in place. It gives you credibility with selling agents and vendors, while letting you focus on properties within your borrowing capacity.
Meeting with your local Mortgage Choice broker to arrange loan pre-approval is a smart first step to give you valuable negotiating clout.
2. Organise your team of experts
Make contact with a solicitor or conveyancer and a pest/building inspection team at an early stage. Don't wait until you have found a property you're interested in – any time delays could see you miss out to a more organised buyer.
3. Keep your enthusiasm in check
Even if you've found your dream property, try to give the impression you aren't as interested in the place as you really are. It may be a lot harder to negotiate on price if you've already declared you're hooked on the home.
4. Complete all vital checks
Once you have found a suitable property, have the sale contract reviewed by your legal representative and organise a pest/building inspection. Any issues that appear in the contract or flaws that show up in the pest/building report can be used to negotiate a better price. Any areas of concern in the sale contract should be referred to your broker to ensure they won't affect your loan approval.
5. Know the market
Research is critical to price negotiations. Knowing what sort of price similar properties in the area are selling for will let you know if the vendor is being unrealistic with their selling price.
6. Give yourself wiggle room
The asking price of the property is likely to be around 5-10% higher than the sum the vendor is prepared to take. If you believe the place is reasonably priced, try offering 15% less – you can always negotiate upwards if you start low.
7. Consider the terms and conditions of your offer
Price isn't the only aspect to consider in your property purchase negotiations. You may want to make the purchase subject to certain conditions, and typical phrases you might use to make an offer include:
- I want to make an offer of $X for the property.
- My preference for settlement is 90 days.
- I will need a finance approval clause. Although I've already seen my broker, I need to get formal approval for finance of $Y from ‘ABC Lender' and this may take up to 10 business days.
- My offer is subject to a satisfactory building report to be arranged by me
- My offer is also subject to removal of the rusted car body in the front yard prior to settlement.
Remember, the more conditions you impose, the greater the odds a vendor may reject your offer, or another buyer may come along who is happy to sign the contract without conditions.
Finally, bear in mind that at the end of your negotiations you will be signing a legally binding contract. That makes it critical to seek legal advice on the purchase no matter how good the deal appears to be.