Follow our 5 steps to negotiate a better deal on your property purchase.
No matter whether you are a first home buyer or a seasoned investor your negotiating skills will be valuable when it comes to getting a good deal on your next property purchase. Take a look at our top 5 steps to beef up your bargaining power.
Have loan pre-approval in place
Before you start looking at homes or investment properties, it's worth having loan pre-approval in place. With conditional approval sewn up you send a clear signal to selling agents and vendors that you are in a position to move quickly and this can strengthen your price negotiations. Your Mortgage Choice broker can help you arrange loan pre-approval.
Review the Contract of Sale
Once you've identified a property you'd like to make an offer on, ask for a copy of the Contract of Sale and have it reviewed by your solicitor or conveyancer. This is critical because the contract may contain clauses you can use in your price negotiations. The vendor may want an extended settlement period for instance, and this may not appeal to all buyers giving you more room to push the sale price down.
Arrange a pest/ building inspection
Industry figures show as many as one in three homes can have faults in areas including illegal building, footings, roof structure, wiring, plumbing and dampness. However if a pre-purchase inspection dishes up some minor flaws, these can be used as a negotiating tool – just be sure you have the funds available to pay for any repair work.
Know the market
Conduct your own research into recent sales of similar types of property in the area to know what is a realistic asking price. You can have a shot at starting the negotiations with a low-ball offer but the longer you allow negotiations to continue, the greater the risk you will lose the property to a buyer making a better offer.
Quiz the agent
Don't be shy when it comes to drilling the agent for information. Before making an offer, ask if the vendor would prefer a longer or shorter settlement period. The answer may give you an indication of the vendor's eagerness to sell. Ask why the property is on the market – there is a variety of circumstances when vendors may need to sell in a hurry, and you may be able to use this information to negotiate a lower price.
Finally, no matter how good your negotiating skills are, don't be tempted to pay more than you can afford. Check out our fact sheet on Negotiating to buy a Property for more hints and tips on the negotiating process or speak with your local Mortgage Choice home loan expert.