Buying at the best price

Know your limits

Being as informed as you can will always be the best way to approach a purchase. This starts with knowing your capacity to borrow, along with what repayments look like at the highest limit you can manage.

Securing the sale is one thing, but you don’t want to lose the property down the track because you can’t manage the repayments.

Know the area

It may seem obvious, but the goal is to work out the value of the property you have your eye on so you can manoeuvre accordingly. To do that, you need to know the market. In particular, the specific area in and around your target property. Look at recent sales of similar properties so you can get a sense of the range they’re going for.

This will be the foundation for your negotiation, so take the time to get to know what value the area holds.

Arm yourself

Once you’ve understood your capacity and investigated external factors which might influence the price, its time to examine the property itself.

Lots of prospective buyers will look at the obvious elements and make a call on value, but real negotiating power comes from going deeper. Whether it’s hiring inspectors for a building and pest report, or obtaining quotes from tradespeople casting a trained eye over the property, obtaining facts and figures will give you much more ammunition in assessing true value – and bringing the asking price down.

Knowing is one thing, using it effectively is another. Make sure you comprehend what an inspection report truly states and how you can leverage it to influence the buying price. Improper stormwater drainage, for instance, can easily be remedied by installing or changing downpipes. A property may appear degraded due to a lack of care in its exterior finishes. Painting may be all that is necessary to bring the exterior back to life.

Significant termite, water, or vandalism damages, on the other hand, might necessitate extensive restorations. When negotiating a price decrease in these situations, it is critical to assess the extent of the flaws and their costs to remedy. A damaged building might not be worth the time, effort, or resources required to carry out the repairs for a homeowner.

Separate your emotions

The hardest part of the process is the one which won’t show up in any report or spreadsheet.

No matter how much you have your heart set on a property, it’s important to approach the transaction in as neutral an emotional state as possible. Try to separate yourself from the outcome and present your side logically. The owner is under no obligation to accept what you offer, no matter how much research you’ve done or how well you present your points.

So, if things don’t go your way, being negative won’t help the negotiation.

Stick to your guns. If you’ve done the groundwork and listened to the right guidance throughout the process, you should feel confident that your offer is sound.

Understand compromise

You can’t control how the seller will interpret things on their side. They’re trying to maximise their price, just like you would. Understanding what you’re willing to give up, be it location requirements, property features or the price, will help you get a result you are happy with.

Negotiations are a two-way street. To find common ground for an agreement, concessions will likely have to be made on both sides. Try to understand what is important to the owner. Think about what you can offer to counteract the price reduction you’re after.

There are a few mechanisms you can work with here. For example, a longer settlement period will give them more time to find a new home. It’s little enticements like this that can often be much more valuable than a couple of extra dollars.

Put it in writing

The sad fact of the matter is, buying a home involves a lot of legal paperwork and where there’s legal paperwork, there’s room for interpretation. You should always put your offer in writing to make it more effective. But keep it brief.

The last thing you want to do is give the owners leverage by spilling on all the things you love about the property, how you see your family growing up there and growing old. In most of these cases, if the vendor or agent knows you have fallen in love with the property, they will use this against you and make you pay an additional premium for the property – so you can forget making an offer below the asking price.

Always ask

Be mindful of your leverage but at the end of the day, you won’t know what the owners are willing to give if you don’t ask for what you want. Whether it’s certain fixtures included in the sale price, to extra inspection requests, be clear about what you want.

A house that requires a bit of repair work, for example, is a great bargaining tool and generally an opportunity to secure a good price. However, before you go wild with requests, think about what is most important to you, as realistically the owners aren’t likely to budge on everything.

For example, in theory, you can inspect a property as many times as you like. In practice though, it will depend on your agent’s availability and whether the owner is currently living in the property – you might put off the owner if you are constantly disrupting their day.

An alternative might be visiting the street at different times during the week. You don’t have to enter the actual home to get a vibe of what the neighbourhood is like, what conditions are like at various times of the day and how your new life might look if you were living here full time.

Negotiations can sometimes be stressful, sometimes exhilarating but the more prepared you are, the better your chances of getting the result you’re looking for. Your broker is often an underutilised resource in understanding good value. Lean on an experienced mortgage expert regularly buying and selling to help define what a good price is and what might be accepted.

If you’re ready to buy and want the guidance to help navigate buying your dream property for the right price, get in touch with one of our experienced team for the right advice to get you there.