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Get tough: the art of property negotiation

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As anyone who has ever purchased a property will attest, finding a home you like is only half the battle.

But once you have mentally moved your furniture in and located your new nearby café, there is always the very real possibility that the home you have fallen in love with could slip through your fingers.

Sometimes this is because another buyer swoops in, but occasionally it is because we lack the skills to properly negotiate with real estate agents.

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“The agent is there to represent the vendor. That is what intimidates many buyers,” says seasoned buyer and former real estate agent Michael Yardney of Metropole Property Strategists.

“And agents are very good at reading people, this is what they are taught to do. As house prices continue to climb things can really be stacked against buyers, especially first-home buyers.”

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How can you get the best deal when buying a home?

Knowledge is power

According to Mr Yardney, buyers can level out the playing field by doing plenty of homework in the lead-up to the negotiation phase. And this starts with getting to know the local market intimately.

“You need to know how much the home is worth before negotiations commence and this has nothing to do with what the vendor wants for it,” Mr Yardney says.

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As house prices rise, don’t negotiate a bad deal for yourself. Photo: AAP

“The thing to remember is that often the home buyer has a better understanding of the market than the seller because they are the ones going to the auctions and seeing what similar properties are selling – not listing – for.”

Sydney property investor and host of Your Property Empire on Sky News, Chris Gray, orders a valuation on all the properties he buys before negotiations start.

“If you’re not in a position to do this you need to make sure you do your homework on what exactly the property is worth,” Mr Gray says.

“Then it won’t matter what other buyers are doing or what offers they are making because you know the value.”

Build relationships first

Mr Gray says all of his successful property purchases are based around solid relationships with local agents.

“Most buyers are tyre kickers so you have to show to the agent that you are serious about buying,” he says.

“You should let them know that you have all of your finance approved and if you are yet to sell your house you could intimate from your conversation that you would be open to considering using them as the listing agent, if that is the case.

“If you show that you are serious in this way you are more likely to get their serious attention, which makes a difference in a competitive market.”

Ask the right questions

Mr Yardney says when it comes to the finer points of negotiations, buyers need to ask a series of questions before they start offering any money.

“I would ask the agent how the vendor came up with the asking price as this can reveal whether they have over-capitalised and need to get a certain price or whether the agent has chosen the figure,” Mr Yardney says.

“The next questions to ask are whether there have been any other offers made on the property, whether the price has been reduced while it has been on the market and to ascertain how long it has been on the market as this will tell you a lot about how keen the vendors are to sell.”

When it comes to talking actual figures, Mr Yardney urges buyers to be polite and respectful at all times, but never to be afraid of negotiating.

“Australians are not natural negotiators,” he says.

“We are taught to be polite and not haggle over price, but agents love innocent, inexperienced, emotionally motivated buyers as they are much easier to sign up.”

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