“Do you have any tips on how we can negotiate with a seller/real estate agent?”
This question is in the top 5 asked by buyers, particularly first home buyers. It’s a little different than negotiating on a car purchase or a TV you’ve found on Gumtree.
It’s the single biggest purchase the majority of us make in our entire lives. A few simple tips can make tens of thousands of dollars difference. But more importantly, it can help you land your forever home over the competition.
1. Get Pre-Approval
Pre-approval doesn’t just give you - the buyer - the confidence to bid on a property and know that you can afford it. It also lets the real estate agent know you are serious and prepared. The real estate agent is incentivised to sell the property fast. By letting them know you have your ducks in a row, you’ll jump up in the pecking order immediately. Agents would be more willing to accept a lower offer if they know the transaction will be a seamless one. Be very clear about having the deposit ready to go, and finance already approved.
“We have finance approval already, and are looking to purchase in this area within the next few months”
2. Do your homework
Know house prices in the area. Properties that have sold, and properties that are available. If there is a newer house, around the same size in the same area, be sure to mention it to the agent. This shows that:
You have been seriously looking and are more likely to buy than others
The agent has competition, and you have other options
3. Be sure to point out imperfections
It is important to show the agent that you like the property and that you could see yourself living here. BUT. You’ll also need to point out imperfections, otherwise they will have the upper hand when negotiating a price. Do not act overly excited! Be cool. Be ice cold.
“I love the backyard, however, 123 Smith st across town has a double garage which is quite important to us”
4. Don’t mention ‘What you would do' to the property
Any ideas or visions you tell the real estate agent, be sure they are going to use that as a selling point to others. Don’t say things like:
“This is great, we can convert the garage into an Airbnb to supplement income”
“It would only cost a few hundred dollars to plant hedges and create much better privacy from neighbours”
“If we paint the interior white, it would seem much more light-filled and spacious - almost like a new home”
The agent will share this with others - so keep the vision to yourself!
5. Don’t offer asking price first
Offering the asking price could make the agent/seller think that it’s been put on too cheap, and will likely use this as leverage against other potential buyers. Don't feel bad about offering under purchase price. But when you do, be sure to mention why? For example:
“We’d like to make on offer of $680,000. We know the asking price is $720,000, but 5 Random st is on the market for $680,000 and it is in a much better location/is a much newer build”
There is no way to know what the seller is thinking, so it is impossible to template the perfect negotiation, it is different for each seller. The above tips should help in most situations though.
Please feel free to talk to us about this further, and more importantly to get your pre-approval before you make an offer.