Purchasing a property may well be the biggest financial commitment you will make in your entire life. It is therefore vital for buyers to strengthen their position in the buying process via the important skill of negotiation. Strong negotiating skills may help in securing a property at a lower price, which will not only save you money upfront but future interest payments as well.
To successfully negotiate the purchase of your new property, consider the following tips:
1. Set your limit
Pre-plan your finances and budget to determine your upper limit. Take care not to go above what you can afford and be prepared to walk away if negotiations go beyond your personal limit.
2. Research the market
Research and inspect as many houses as you can before you make an offer or begin negotiating. This will allow you to get a feel for the quality of houses available on the market and the average sales prices. This knowledge will put you a level playing field with the other party you are negotiating with, which will enable you to feel more confident during the negotiating process.
3. Put your game face on
Do not give anything away and ensure you remain calm and neutral. Make sure the vendor and / or agent does not know your personal limit, borrowing capacity or how much you like the property.
4. Find out about the property / vendor’s reason for selling
Gather as much information about the vendor as possible. Discovering certain facts will make you more knowledgeable about the property and the vendor’s circumstances, which may provide an opportunity to negotiate a lower price. Some questions you should consider asking in order to gather information are: • How long has the property been on the market? In almost all cases, there is more activity around a house which has just been listed in comparison to one which has been on the market for a while.
- What price is the vendor looking for?
- Why are they selling? What are their circumstances and how soon do they need to move out?
- Who set the price (vendor / agent)? This may indicate the difference between the asking price and the genuine market price.
- Is the price negotiable? Establish if they are flexible.
- Are there any problems with the property? Knowing this will avoid any future problems and / or financial costs as well as aid you during the negotiation process.
5. Start low
When making your first offer, always start by offering less than the asking price and working your way up if needed. It is very common for houses to be sold for a value which is below the asking price, hence the importance of pacing yourself. This may result in securing a property which is below your personal limit and the asking price.
6. Create a win / win situation
A good negotiator always leaves the other party believing they have won the negotiation. This can be achieved by providing the vendor with more favourable settlement terms. If there are multiple items to negotiate over, there is always room for both parties to walk away believing they have won, thus looking at how these negotiable items can be used to your advantage.
7. Offer compensation
In order to walk away with a lower price, you may need to offer something to the vendor in return. One of the best methods to become a favourable prospective buyer is to offer a quick settlement. In order for this to be most effective, ensure all your finances are ready and in place before you start the negotiations.