Negotiating a Better Deal
The art of negotiation is as much about preparation, knowldge and information, as it is about verbal skills and techniques. You could reduce thousands from the cost of buying a home if you are able to negotiate well. Bargains are not easy to come by and that’s why you need to know how to negotiate to achieve the best purchase price for you.
Try to imagine buying a home like courtship. Don’t appear too eager even though you really love the property and want to own it immediately. Try to play hard to get, control your emotions and let the other person do the wooing.
Negotiating is particularly important if you are buying via a private sale. One important rule of negotiating is not too appear too keen and give yourself away. You must set yourself a price limit, stick to it and reject the purchase if the price is too high or the terms are too onerous. Don’t let your emotions run wild and end up paying a premium just because you love the property very much. Remember, you might find another property that you love even more.
Do Your Homework
When you think you’ve found a good buy, it’s tempting to throw in an offer right away. However, gathering information before you jump in is the single most important step. If you have been following the market for 2 or 3 months and have looked at dozens of properties, you’ll be in a good position to make judgements about the relative value of the property you want to buy.
Track selling prices of properties you have already looked at. There’s nothing as valuable as having inspected a property and knowing what it has sold for. That knowledge will give you a good indication of where your judgement lies in regard to valuing a property.
Think about what other buyers with a similar budget might do. What are the other choices in the same area for someone with a similar budget? If there aren’t many alternatives, people might be willing to pay a premium for the property you have your eye on. Sometimes the “right” price is a premium price. If the property you want is truly special or unique and is attracting a lot of potential buyers, be prepared to pay a strong price for it, even in a weak market.
The vendor or selling agent has an obligation to answer relevant questions honestly. Don’t be afraid to ask questions that help you to make decisions about how much to offer and on what terms. Some questions that you might ask include:
- What offers have there been?
- Are negotiations currently underway?
- What will the vendor take?
- What’s the vendor’s motivation for selling?
- What terms might be most attractive to the vendor?
When dealing with a selling agent, remember that the agent is representing the vendor, not you and is legally obliged to act in the vendor’s interests in getting the highest possible price for the property.
How Much Should I Offer?
Majority of asking prices are priced approximately 10 to 20 per cent higher to accommodate for any negotiations. Begin the negotiation process by making a realistic offer. Starting off with a really low offer means you may run the risk of not being taken seriously and opening up negotiation in a negative manner. Starting with an offer too high and being accepted straight away may leave you with a cheated feeling, often referrd to as ‘buyer’s remorse’. You should also be flexible with your negotiations to match the property market. In a strong property market, be prepared to end up paying more than the asking price.
If the vendor is not flexible with price, try to get the agent to work for you. Highlight the flaws of the property while hinting that a deal is possible and indicate that you will walk away if the price isn’t right. Remember to keep the lines of communication open and maintain the momentum of negotiations.
Hold the Position of Strength
Lead the play. Ask questions about what the vendor wants. Try to force a counter offer when yours has been rejected. Be willing to risk losing the property.
Sometimes the best way to get the result you want is to drop out for a while. Be willing to walk away.
Know the maximum price you are prepared to pay and walk away from negotiations once that limit has been breached.
Figure out what you think is a bargain price, what is a fair price and what is your absolutely maximum price. There is no point in paying more than you want to, or realistically can, for a property, only to be left with feelings of resentment once you take possession.
There will always be another property that will suit you for a price you are comfortable with and happy to pay.