But it had better be an offer you can afford because negotiating the purchase of your first property will probably be the most expensive and nailbiting deal of your life.
Despite the spotlight often focusing on the auction scene, there are actually more homes in Australia sold via private treaty each week. So for those wanting to grab a spot on the property ladder, you’re going to need to become a skilled negotiator.
Patrick Nolan, head of home loans at broker ME said while some of us are natural hagglers willing to play the game, others break into shivers at the thought of trying to get a discount.
“But buying your first home calls for smart tactics, and big rewards are up for grabs for those who can master the negotiation process,” he said.
As some overheated property markets, such as Sydney and Melbourne, begin to cool (even if only slightly) that means buyers are slowly clawing back some negotiating power.
Simon Cohen, managing director of Cohen Handler buyer’s agents in Sydney, Melbourne and Brisbane, said now has never been a better time to make an offer.
Sold: To be a great negotiator the gurus say you’ve got to do your homework.Source:Supplied
“There’s a bit more to choose from so the competition is not as hot,” he told news.com.au.
“I think it’s a great time to be buying; you have more choice, you have more control and there’s less competition right now,” he said.
“Don’t be fooled though, there are plenty of buyers and things are selling, but it is definitely a much better time to be getting into the market if you’re a first-home buyer. As we come to the end of the year, and the beginning of the new year, you’ll be able to have your pick from stock that’s been around a little longer than usual,” he said.
Nicole Jacobs, buyer’s advocate by day and a judge on The Block by night, said homes
that don’t sell soon are going to linger over the Christmas and holiday period.
“Traditionally that stock has been mopped up at the end of the year, but this year I just don’t think we’re going to see that kind of mopping up. So that will be really interesting to watch,” she said.
While that gives buyers more negotiating power, Ms Jacobs said buyers still need to know their market to get the right price.
“Buying well doesn’t just mean buying at the right price, it can also mean buying in the right position, with the right floorplan,” she said.
“Is it going to grow for an investor or be a place to grow your family so you don’t have to move and pay stamp duty again?
“And if you’re in no real hurry then it’s the perfect time to buy,” she said.
Home buying hacks you need to know right now:
Do your homework
NOLAN: Any offer you make needs to be realistic − no vendor will accept a ridiculously low offer, but it’s impossible to know what a fair price is unless you have done your homework. Check out what other properties are selling for in your area to get a feel for current values.
COHEN: Make sure you’ve done your own research, you’ve looked at all the comparable sales in the area and you know exactly what the property is worth. It might be worth more, it might be worth less than what you’ve been told so make sure you understand that.
JACOBS: If you know your market and you’ve done your due diligence, then you should feel very confident in the price you’re willing to pay and you’ll make your money when you buy. A lot of buyers might have read something in the paper or they’ve spoken to a neighbour or went to two auctions and they think that they know everything.
Keep your cool
NOLAN: It’s hard to drive a bargain if you’ve been gushing about how much you love the place to the selling agent. Try to give the impression that you aren’t as keen on the property as you really are. If the agent thinks you’re completely hooked your attempts to negotiate could fall on deaf ears.
COHEN: Some people think it’s smart to work against the selling agent, but the reality is you want to work with them so they’re more inclined to get the deal done with you. If they think you’re an awful person they’re going to want to sell it to someone else.
JACOBS: If you’ve done your homework you can keep cool. You have to remove yourself and say, OK at what moment does it become an emotional buy? If it does become an emotional buy, ask yourself ‘am I happy to buy into that?’ And don’t be pressured by the agent saying to you there are other people waiting because if there are other people waiting for it and it’s all too difficult then maybe it wasn’t meant to be, move on and go to the next one.
Be ready to pounce
NOLAN: Having conditional loan approval in place can be a game changer when it comes to price negotiations. It lets you know just how much you can really afford to pay and it adds credibility to any offer you make. Don’t be afraid to let the selling agent know you have conditional loan approval. It confirms your status as a serious buyer who can finalise the deal without delay.
COHEN: Definitely have all your ducks lined up and be able to move quickly. Have your contracts reviewed, have the cheque ready so that you can get the deal done ASAP and you’re not in a situation where you’re giving the agent time to call other buyers and you get outbid.
Knock some off, or round it up?
NOLAN: There is no such thing as a typical buying discount. Vendor discounts vary widely in line with the state of the local market, the nature of the property and the vendor’s individual circumstances.
COHEN: If the property is “for sale” say at $750,000 you can offer a little bit less, but if it’s “offers above” $750,000 obviously they’re expecting a bit more. So it’s really about knowing your market, and asking the questions. Ask the agent, what would do the deal?
JACOBS: You’ve got to know the motivating factors for the vendor. Have they already bought? Are they getting a divorce? Is it a relocation? And how long has it been on the market? You should also get a building report done because that might come back saying the place needs a new roof so you might be able to negotiate on that. Or it could be the settlement you negotiate on as well, there are a lot of different little things you can play with.
Don’t let it get personal
NOLAN: The longer price negotiations take, the greater the odds that another buyer will jump in and snatch the property from under you. So don’t let negotiations turn into a battle of wills. A quality property will rise in value over time and the long term capital gains can more than compensate for the difference between a 10 per cent versus 5 per cent price discount.
COHEN: Don’t get emotional, you know. Once you’ve bought it, you’ve bought it and if you over pay, you’re stuffed, aren’t you? So know what it’s worth and why it’s worth that — set your limit and stick to it.
JACOBS: It should be a win win. You’re not there to drill down to that final cent. Go in with something that’s not going to offend the agent (mind you, you don’t have to worry about offending an agent) but know what it’s worth, approach it with a friendly attitude and try not to be confrontational with the agent.
Source: www.news.com.au – November 7, 2015