Top Tips: How to Negotiate a Property Purchase
You’ve found your “dream property”. But be sure to slow down, and take a good look at the following tips before committing to a purchase price, writes Funding Options managing director Dom Cassisi.
1. Do your research
Get familiar with what similar properties in the area are going for. That way, you’ll know how much to offer and what price range you’re looking at. If you over or undervalue the property you like, you might not be treated as a serious buyer.
Scavenge for information from the seller’s agent and the local community on why the house is on the market. Find out what the seller is looking for, and whether you could get away with offering a price far below the estimated market value. Whatever you do, don’t make an offer without the background facts.
Not market-savvy? Ask a buyer’s agent for help. It’s especially important to get an experienced and objective third-party assessment of the property as your own emotion can get in the way of closing a good deal.
2. Show you mean business
Demonstrate that you are a serious buyer. Show the seller’s agent paperwork indicating that you’re pre-approved for financing and even ready to transfer a deposit. When you first make an offer, show you’re serious about that, too. You might start low at 10 percent less than the property’s estimated market value. You could start lower if you know the property is outrageously over-priced, but bidding too low from the start will only hurt your chances.
3. Offer incentives
Offer more than simply the best price. Volunteer other incentives such as a shorter settlement period. Ask questions about the seller’s circumstances to get an idea of how you can meet their needs and make your offer one they can’t refuse.
4. Don't let your emotions show
As much as you are keen lock in the property purchase, don’t look too eager. Remember that the seller’s agent has something in this for them. They want to sell at the highest price and might act as though you’re nothing special. Perhaps they’ll even make it sound like you’re bidding against others in the private sale when you’re really just bidding against yourself.
Swallow your eagerness and treat them similarly. Don’t let them see how badly you want the house or they’ll be less willing to negotiate on the price. Make it clear that you’re shopping and could spend the money just as easily anywhere else. DO NOT REVEAL YOUR FINAL PRICE! If you let the seller know your budget range, you make it easier for them to shut you down entirely.
5. Always provide your offer in writing
Always make each offer in writing and include the terms. This is true even if you’re just sending an email.
6. Be prepared to counter-offer
Be firm and quick in response to the seller’s agent. Increase each offer to show that you’re serious and offer more incentives, but don’t bend over backwards to purchase the property at any cost.
7. Stick to your budget and don't be afraid to walk away
You’ll just waste your time if it’s clear the seller won’t budge. Don’t give up, however. Your dream home is still out there!
For advice about financing your next property purchase, talk to the team at Funding Options.
– Dom Cassisi, Managing Director