Buying a property is one of the most important financial commitments an individual will ever make. It can be also an emotional activity. Many see the process of negotiating property prices when buying a home seeming difficult. there are some tips to prepare you for the negotiations and get the correct price.
1. Prepared, enthusiastic and ready
Before you walk to the property which is for sale, you need to ensure you are prepared, enthusiastic and ready to proceed with a purchase. Having pre-approved finance plays a major role in this. The pre-approval is valid for 3 to 6 months and it provides you with the faith to start the property search process, the price range you need to stay within and the ability to seize the opportunity and act quickly when you find the right property.
The pre-approval is free of cost and no obligation to move forward if you don’t find a property. A pre-approval will strengthen you as a serious buyer with the real estate agent and confidence to start negotiations right away. Use the pre-approval to your advantage and confirm the agent if you can settle within a shorter time frame.
2. Do your research
The first step towards getting the right price is understanding the housing market and the value of the property you are looking to purchase. Rands Financial Services Broker can provide you with free desktop property valuation reports that calculate the approximate value of the property based on recent comparable sales in the area. Your Broker can also let you know how long the property has been listed for sale if a property has been on the market for longer than the average time for that suburb, the seller may be more keen to reduce the price. equipped with an understanding of the local market, you can pitch an offer confidently, safe in the knowledge that you have evidence to support your argument for making such an offer. Equipped with an understanding of the local market, you can pitch an offer confidently, safe in the knowledge that you have evidence to support your argument for making such an offer. It’s also important to understand if your purchasing in sellers or a buyer’s market. A seller’s market will require you to offer a higher price upfront, as the seller will have plenty of alternatives to consider. However, a buyer’s market provides a lot more adaptability and bargaining power for you as competition from other buyers may be limited or non-existent. If this is the case, you could put in a relatively lower than what you are prepared to pay, to test the waters and work out the vendor’s willingness to negotiate.
3. Keep your emotions check
Purchasing a property can be a very sensitive process and when you find the one you like, it’s very important to keep your emotions in check in front of the real estate agent. When you show too much excitement for a particular property or desperation in securing it immediately, it could be your downfall. Sellers and agents will be watching your interest in the property and will not hold back from playing on your emotions. They will try to urge you with talk of other interested buyers, time running out, or seller resistance and they will try to get you to instantly commit to the highest price. Hide your emotions and point out factors to the real estate agent that you consider might reduce the appeal or value of the property, such as work required to be done, structural defects, location, etc. You can also talk about interest in another property you have looked at, telling the agent, we really like this one but we are also considering another property in the area which either has an asking price lower than this one or has assets that this particular property doesn’t have.
4. Negotiating with Real Estate Agents
Remember that a real estate agent is working for the seller, not for you. It’s the agent’s job to get the best deal for the seller. If you reveal your maximum purchase price to the real estate agent, they will attempt to get as close as possible to that price, limiting how much room you have to negotiate. Keep your cards to yourself, advise that you have adequate finance approval but are looking to buy a property at market value. If needed, you could provide a market estimate based on your research and instead discuss the value of the property.
Communicate clearly with the agent, but all offers in writing, and make yourself as easy to deal with as possible – this can help your chances if the seller is considering your offer alongside other interested buyers. Advise any advantage you have such as finance pre-approval in place or if you are able to have a faster settlement time frame.
Don’t rush your negotiations or you may seem too keen and make a rash decision that can cost you money. Don’t make an offer on the spot, take a day before presenting an offer to the real estate agent and if they come back with a counteroffer, don’t respond immediately, tell them you will have to think about it and reassess your finances and you’ll get back to them.