Have you ever placed an offer on a property or bid at auction but missed out? Do you think back and wonder whether you could've done something different? Why did the other person secure the property and not you? I would like to share with you some of the negotiation tactics we use on a daily basis.
Be Quick
In the fast moving markets we're experiencing today, it's important to be in a position to place an offer quickly. Don't wait until the first Saturday open home - ask the selling agent if you can view the property sooner. This will allow you to complete your due diligence, review the contract etc well before others have even seen the property and put you in a stronger position.
Ask Questions
In order to submit an offer that is attractive to the vendor, it's important to learn more about them and the sale. You should understand the motivation behind the sale. Ask the selling agent why the vendors are selling the property - this can benefit you in a number of ways:
Are they buying a new home? (relocating, upsizing or downsizing)
In this case, the vendor may need to rent back the property for a short period after the sale, to give them some time to find their new home. If this is the case, you can put this option forward with your offer. I've secured property using this method for less than the highest offer on the table.
Is the sale urgent? (they may be in financial stress or need the funds urgently)
In this scenario, you could offer a shorter settlement period with your offer. This will ensure they get the funds much quicker and can put you in a favourable position. Confirm with your lender and conveyancer the shortest timeframe needed to settle and submit this with your order.
Are there any other offers on the table?
This is one of the big questions to ask. If there are other offers on the table, ask the selling agent if there are any specific terms attached to those offers., This can include like whether they're cash buyers or do they need a finance clause, will they be exchanging with a cooling-off period for B&P or are they exchanging with a 66W, what settlement terms are they offering and so on.
This will allow you to adjust your offer and make is as attractive as possible. Knowing everything about the vendor, sale and property will put you in the strongest position to secure the deal.
Remove The Emotions
Sometimes your emotions can get the better of you, especially when it comes time to buying our own home and this can be dangerous.
Buying Your Primary Residence
Whether this is a private treaty sale or auction, it's important to keep a 'cool head' during negotiations or bidding and not be pressured to paying over your comfortable budget. The goal of the selling agent is to maximise the sale price for the vendor, but it should be your goal to minimise the purchase price.
Just remember, there'll always be other properties that are coming to market. However, that doesn't mean if the vendor doesn't accept a really low offer, you should just walk away and wait for the next property. Always put your best foot forward - I always tell my clients to set a budget that they would be OK if they missed out and won't regret their decision, thinking 'maybe we should've offered a little more' after it's already sold.
Buying An Investment Property
To put it simple - treat it like a business. The most successful business people are not where they are today because they made decisions with their hearts but rather with their brains, looking at the numbers - revenue, profits and opportunities. Property investing should be treated in the same manner, as you should be looking to maximise the returns on your investment.
So again, remove the emotions and make a sound business decision. Forget about whether you like the wallpaper, or kitchen, or the layout. What's important is for it to be the right property that aligns with your budget, goals and strategy. If the price goes above what makes financial sense, then simply walk away and find another opportunity.
I hope all of this info has been helpful and wish you all the best on your property journey. Please don't hesitate to get in touch if you have any questions.
Disclosure: The information contained in this blog is my personal opinion only and is not to be taken as financial advice. Please speak with your accountant or any other licensed professional for specific advice based on your own personal circumstances.
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