Buying property can be nerve-wracking, especially for first-timers. This is because on top of the fact you’re taking on one of the biggest financial commitments of your life, there’s the actual mechanics of buying the property.
Most of the time, when we want to buy something, we just buy it. We don’t need to negotiate the price with the seller (well, except in places like Bali) or be the highest or most attractive offer. Instead, if we want some jeans or a new car, we simply hand over our cash and contently walk or drive away.
But this is obviously not the case when it comes to property. The biggest perceived hurdle most buyers face is understanding how to get your offer accepted by a seller. So, to help you be the property winner and not the second-place getter, here are four handy tips to ensure you get your offer accepted.
1. The right price
Let me be clear, there is an art to negotiation that most people must learn — sometimes the hard way!
One of the first rules of negotiation is to prepare by undertaking the right amount of research. Do you know what the property’s ‘market price’ is? Do you know what similar properties in the same location are selling for?
A common mistake for new players is to offer a low-ball price, thinking it will set a floor under the price and show they’re serious negotiators. The thing is though, this tactic rarely works. In fact, what’s likely to happen is you’ll offend the seller so much that they may refuse to negotiate with you — and no one wants that, do they?
‘A grade’ homes or ‘investment grade’ properties rarely sell for a ‘bargain’ price, but that doesn’t mean you shouldn’t negotiate. Instead of offering 20% under listed price, perhaps consider what price is a reasonable reflection of the market — then offer a sum below that figure. This way, you will be in the ballpark from the beginning.
2. What’s their motivation?
Another strategy to help you get your offer accepted it to understand what the seller’s motivation is. But how do you find that out?
The key is to be friendly with the sales agent and ask them plenty of questions. Why is the vendor selling? Have they bought elsewhere already? Are they interested in a short or long settlement period?
By knowing the answers to these questions you can tailor your offer to suit the seller.
Consider a seller who has bought another home and wants everything wrapped up quickly. In this scenario, you may consider a fair but unconditional offer that gives them certainty matched with a settlement date that suits their timeframe.
3. Prepare to negotiate
It should come as no surprise that the vast majority of private treaty sales require some level of negotiation. The seller may want $500,000 for their property but you have offered $475,000. Of course, unless the seller or the buyer is prepared to negotiate you’ll be stuck in a stalemate.
A professional agent — both for sellers and buyers — can help remedy this impasse so that both parties can meet somewhere in the middle. If you’re not prepared to negotiate because you have a number in your head that you won’t budge from, however, then don’t expect the seller to come down to your level either.
Of course, if your research shows that the property is only worth $475,000 then you should stand your ground. If the seller doesn’t budge, then you should walk away. It’s never wise to pay over the odds for property.
4. Do you need to cool off?
Here’s the thing: ‘clean’ offers are the most attractive to sellers.
What do I mean by a clean offer? I mean an offer that doesn’t include too many (or any) special conditions — unless they’re agreeable to the seller’s situation.
A key strategy to getting your offer accepted is to consider removing some of the standard conditions, such as the cooling-off period. If you’re confident that you want to buy the property and you’ve got a pre-approved loan, then why would you need the mandatory cooling-off period? By removing it, the seller will know that you’re serious about moving forward with the transaction, which might just result in your offer being the winner — even if there is another offer on the table with the same price as yours.
The main overarching point is that your offer should be reasonable. Offending the seller will usually do you no favours whatsoever. You must also be prepared to negotiate on price as well as conditions to give yourself the very best shot.
The reality is, once you’ve got your first few successful property purchases under your belt, your confidence will grow. You’ll then find buying and negotiating on property something to look forward to rather than something that turns you into a nervous wreck.
As opposed to buying a home for yourself, where emotions are bound to come into play, investing in property is all about making sound, strategic decisions and knowing which cards to show and which cards to hold. And, of course, knowing when to walk away when the numbers no longer add up.
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