Purchasing a house at the right price is not an easy task. To reduce stress and get the best deal here are 8 proven tips for improving property negotiation skills.
Have you found the perfect property and are ready to put an offer on the table? If so, you’ll want to get the best price and make sure your offer stands out versus other bidders.
Here are 8 proven negotiation tips to help you beat the competition.
1 Know The Local Market
The best way to put a successful bid on a property is to research the local real estate market to understand the value of the home you intend to purchase. Remember, knowledge is power and having examples of similar property values will give you confidence and more leverage during negotiations and understanding the market value of the property. You’ll also want to learn what thought patterns and motivations the sellers and real estate agents have. Property sales often have an emotional element and if you can identify this you can use this knowledge to your advantage when putting an offer forward.
Along with understanding the local market, spend time getting to know the real estate agent. Having a regular conversation with them can often give you valuable insights into why the vendor is selling. For example, does the seller want to complete the transaction quickly and have another place already lined up?
2 Prepare Your Finances Ahead of Time
Getting pre-approval before you begin looking for properties is best. Your mortgage broker or bank will let you know your property purchasing power ahead of time so you know what’s your price range and it will give you confidence that you’re ready to make a purchase. When seeking pre-approval it can be wise to shop around with different lenders and why it is worth considering talking with a mortgage lender who has access and relationship with multiple lenders to help you secure a great home loan rate.
Make sure you have the deposit amount and a pre-approval letter ready to go before you start negotiations. This information will show the realtor and home seller that you have a serious offer. Even if the owner rejects an original offer, small price increases may persuade the seller to accept. Just don’t go above your budget. Discipline is key.
3 Learn About Real Estate Market Conditions
You can perform research and even speak with a real estate agent to learn about the local housing market conditions. Check local newspapers and property magazines. Also pay attention to important real estate statistics like auction clearance rates, days on the market and recent sales. Essentially, establish if the current housing sector is a buyer’s or a seller’s market. Arming yourself with as much knowledge will make you a more confident negotiator and you’ll know that you’re getting a good deal.
4 Have a Third-Party Verify the Value of the Property
Think about getting a third party to evaluate the cost of the property you’re interested in purchasing. Such valuation can make a significant impact during negotiations. An independent evaluator can provide you with a written report you can use when negotiating and bidding on the property. This evaluation usually includes:
- The estimated price of the home/property
- The reasoning behind the price
- The data behind the pricing
- Real estate market reviews
- Property location
- Amount of land and title for the place
- Town planning data and property description
You should also make sure the evaluator is well-qualified to conduct this assessment.
5 Assess Potential Problems with the Property
You should always do your due diligence and check on any issues with the property you’re looking to buy. Find an experienced handyman or building inspector to look at all the potential issues with the home, including electric issues, plumbing problems and heating/gas challenges.
In addition, find out if there is structural damage before you start negotiating on price. Consider whether you are willing to take on the potential issues of the property. Then use the information you’ve uncovered to reduce the price you offer on the home.
You may also want to get a pest inspection prior to purchase. These issues can help you negotiate a fair price for the house.
6 Put A Strong Offer Together
The best offers are direct and factor in more than just the price. You should have a good understanding of the market, the sellers motivations and be able to state why your offer is an acceptable price. At the end of the day, the seller will want to get the best price possible without spending too much time on the sale. Your ability to negotiate on price will ultimately come down to how quickly the seller wants to make a sale and how many other bidders are also wanting to buy. If you know you’re the only potential buyer then you can try a lower offer but if it’s a hot market then you may need to put your best offer right away.
Understanding the seller’s motivation will also help. Are they wanting to sell quickly because they’ve bought a new house or is the seller more emotional and are attached to their property making the negotiation process more complex. Some owners don’t want their beloved home to be updated or renovations to occur. It’s important to gauge the situation and make sure your offer considers the motivations of the seller as this can often put you ahead of other even more lucrative offers. Making a cash offer is another way to buy the property quickly and can influence the seller’s decision to accept.
7 Communicate Clearly and Keep your Emotions at Bay
The amount of bargaining power you hold depends on how confident you act around a real estate agent and/or home seller. Do not appear too eager to buy. Instead, communicate your intentions clearly. Don’t act too uninterested either, as you want to exhibit that you’re a serious buyer.
Even if you think a property is perfect and you desperately want to live there, try not to show that love and your emotions to the realtor and seller. This would negatively impact your position when negotiating. You don’t want to end up putting up an offer over the asking price for little reason.
You’ll want to play hard to get and keep yourself from being overly keen about a property. For example, consider any problems with the house, like dated kitchen cabinets, and point out these issues with the realtor.
8 Provide an Offer on Paper
When you’re serious about purchasing a home and are ready to put in a bid, make an offer in writing. Having an offer on paper documenting the price and the conditions around the sale will prevent any confusion later on as the home sale moves toward closing.
An offer in writing should include the terms of the sale, including:
- The deposit amount you’re putting in
- How quickly you can complete the sale
Providing your offer in writing will show that you’re a serious buyer.
Taking It Home
Negotiating property is an art, science and emotional rollercoaster all wrapped up into one. The stakes are high, and stress levels even higher. But by using these property negotiating tips you’ll be better prepared and reduce your chance of overpaying on a property.
Right now the Australian property market is hot with lots of competition so your negotiation skills can be the difference between success and disappointment.
Remember: Project yourself as a serious buyer. Keep your emotions at bay and be friendly.