If you really have your heart set upon a new place, how far should you push for a better price?
When buying property through private negotiation, prospective owners sometimes think, “if only I held out longer with my offer”, “if only I didn’t cave when the agent told me there were other potential buyers looking at it”, “if I had stuck to my guns I could’ve saved X dollars off the mortgage or spent the money on new air-con or a coat of paint”.
Buying a place to live is a hugely emotional milestone. Common sense and logic often go out the window when we imagine how perfect our lives will be once we get the keys to the door of our dream home.
We asked experts who negotiate for homebuyers for a living what advice they would give a purchaser who decides to negotiate the purchase for him or herself.
“No-one wants to miss out on a property,” says buyers’ advocate Jarrod McCabe, a director at Wakelin Property Advisory.
“You do have to think of an amount above your maximum that you can say to yourself, ‘I’m comfortable missing out on it at price’.”
Working backwards this way can help you eliminate the emotion that inevitably goes with buying your home.
The next step in the negotiation is to set the “rules of engagement” with the agent.
“You need to get the clear asking price. If, for example, the agent gives you a range, from say, $500,000 to $550,000, ask if the asking price is at the bottom or top end of that range. Ask them if the asking price is $550,000 or $530,000. You want a clear figure,” McCabe says.
Although negotiating can sound intimidating, especially if you’ve never done it before, there are some simple steps that help you get the property closer to the price you‘d prefer.
Do your homework; look at similar houses in the area and know their sale prices. If a similar property was in better condition or had an extra bedroom, you can use this knowledge to your advantage to negotiate the price down.
“You can use also the terms of the sale to your advantage,” McCabe says. “The settlement period or the deposit payable, which is usually 10 per cent, can be varied to get a better result.
“You can ask if there has been a building inspection on the property and what it showed. If negatives were revealed, you can use that to negotiate a lower price.”
McCabe tells clients to try and take the emotion of the process, but he knows it’s not easy.
When he bought his house, he let one of his colleagues do the buying for him.
“I would’ve been too emotional,” he says.
Advocate Jude McClean, the director of Whiteline Buyers Agents, always tells buyers who miss out on a must-have property to “put things into perspective”.
“People die, go into debt and divorce. This won’t be the only house you fall in love with,” says McClean.