If you’re buying a property for the first time, you’re probably going to need to negotiate the purchase price with the seller (or, more likely, their agent). In the case of a private sale, you might make an offer below the asking price and go from there. If the sale is by auction, you might make a pre-auction offer, or find yourself negotiating after an auction if the property gets passed in.
The thought of doing this may seem daunting if you haven’t negotiated before. A good negotiation could potentially save you a lot of money and ensure you move into your new home knowing you’ve got yourself the best deal possible.
Here are five tips to help make negotiating a price for your first home a little easier.
1. Understand the market
Knowing whether you’re in a buyer’s or a seller’s market can make a world of difference to negotiations. In a buyer’s market, competition is scarce and the buyer will likely have the upper hand in negotiations. In a seller’s market, with lots of competition for property, the seller may feel they don’t need to reduce their asking price in order to sell.
2. Quiz the agent
Ask the selling agent questions to get the full story behind the sale. Here are some to get you started:
- Why is the owner selling? You may have more bargaining power if they need to sell quickly.
- How long has the property been on the market? If it’s been a while the owner may be more flexible on price.
- Are there any problems with the property? If there are, the agent is obliged to tell you. This too can give you leverage in your negotiations.
3. Know the suburb
If you understand the suburb in which you’re buying, you’re more likely to know what a fair market price for a property would be and recognise when an asking price is too high.
For access to property listings, comparable sales, suburb profiles and rental insights in your area, you can use our complimentary Property & Suburb Reports.
4. Make an offer
It might be worth making an offer below the asking price, or making a pre-auction offer, and gauging the seller’s reaction.
If you’ve checked your conditional pre-approval you’ll have a better idea of what you could potentially borrow, and what properties are in your price range, before you even begin negotiations.
5. Consider a buyer’s agent
If you’re not confident negotiating a price, don’t have time to or can’t attend an auction, you could hire a buyer’s agent to do the work for you.
While people hire buyers’ agents to find properties for them and manage the whole buying process, you can hire a buyer’s agent just to bid for you at auction and/or negotiate on your behalf. Make sure you factor their fees into your home buying budget