Follow this expert property advice from Location Location Location Host, Bryce Holdaway.
1. Have other options – whenever you are thinking of putting an offer on a property be sure to have an “best alternative” plan in place if you do not reach an agreement. This is an essential piece to negotiation success. By tactfully letting the agent know that you have other options (i.e. the “other property”) then it is effectively a strong defence to the agents favourite negotiating tool – the introduction of the “other buyer”!
2. Keep your cards close to your chest – the basics of negotiation teach us to never reveal our position. Very straight forward in theory but in the heat of the action and once your feelings about a property have kicked in, the adrenaline is racing and letting the agent know what you’re thinking is very easy to do. Remember, the more you pay for the property the bigger the agents commission. One way to protect your position is through the use of an experienced buyers agent who will act in your best interests and your emotions about the property will be unknown.
3. Find out as much as you can about the seller’s circumstances - The more you know about their hot buttons, their needs, their desires… the easier it is for you to negotiate a contract in your favour. Here are a number of questions I like to ask during the negotiating process:
a. Why are the vendors selling? - divorce or bought elsewhere for example.
b. Who set the list price – the owner or the agent? - too see if the agent believes in the price?
c. Are there any recent sales that are comparable to this property? – ask the agent to justify the price with proven sales in the area
d. How long has the property been on the market – the longer the days on market the more stale the property and the more discouraged the owners are likely to be.
e. Have they had any other offers? - to assess your competition.
f. Has their been any price reductions? - gives an idea of the vendors expectations
4. Check comparable Properties – Do your market research to reflect your offer based on what has sold in the last three to six months in the neighbourhood, not what is currently listed on the market. Once you know what prices are being paid then you can identify value when you see it and strengthen your negotiating position by making sure you don’t pay too much
5. Leave your ego at the door - Ultimately you want to buy the house and the sellers want to sell it to you. If you find a house you like, you are satisfied that the market value is appropriate, and it is within your budget, don’t let the negotiation over a couple thousand dollars get in your way. I’ve seen some buyers get so caught up in the negotiation game that they may miss out on the opportunity of owning their dream house because they want to “beat” the seller. If you find your pride swelling during negotiations, take the time to look at the big picture. Would you really want to lose the house just to win the game?