When you are making the biggest financial commitment of your life, ensuring you get a good deal is a major priority. And with property prices back on the rise, it’s time to start honing your negotiating skills if you are in the market for a new home or an investment property.
“Negotiating is an art and for most people, it’s not something we do everyday,” says buyers’ agent Rich Harvey, CEO of propertybuyer.com.au. “I’ve seen high-level executives who negotiate big corporate deals with great skill just fall apart when it comes to their own house.”
Do your homework
To be in a strong negotiating position, you must research and understand the property market in the area you are looking to buy. Only then will you know how much you should be paying, which will help you avoid paying more than a property is worth.
“Know your market. Do a comparative sales analysis of similar properties in the area, and look at like for like,” Harvey advises.
It’s not enough to compare a three-bedroom two-bathroom house with another similarly sized property, adds Harvey – you must also compare zoning, aspect and view, proximity to amenities and other location benefits.
Beware of FOMO
Buyers who fall in love with a property are more likely to spend more than the property is worth because they can’t bear to miss out on it – and real estate agents will take advantage of that emotional connection to extract a higher price. “Don’t catch FOMO disease – fear of missing out,” Harvey says.
Whether you are buying a home to live in or an investment property, be realistic about what you can afford and stick to it. “Emotional attachment is very hard for people to overcome,” Harvey adds. “They may be looking at an area they really want to buy in, but may not be able to afford it. Our advice is to look at surrounding suburbs that may be more affordable.”
You will be in a much better position to negotiate if your finance is approved and your deposit is ready to go – particularly if the vendor is seeking a quick sale.
Real estate agent Mark Dawes, director of Richardson & Wrench South Sydney, says being prepared ensures your place in the game. “If you don’t have pre-approval, we don’t take you seriously,” he says.
There are thousands of home loans to choose from, so this is another area that requires a lot of research. On RateCity.com.au, you can search and compare more than 2,000 home loans.
Don’t make a ridiculous offer
If you think a property is overpriced, it’s perfectly acceptable to make a lower offer. However, Harvey advises against going to the other extreme and making an unrealistically low offer.
“You have to be fair. It can actually backfire and show the agent and the vendor that you are not interested in the property at the right level.”