We’ve all heard the common joke in real estate- the vendor thinks their home is a castle and the buyer thinks it is a shack.
Of course, that’s where a professional real estate agent earns their money, because through the art of negotiation they are able to get these two opposing points of view to agree on a price that they’re both happy with.
However, buyers can short-cut this scenario by having a few tricks of the trade under their belt from the outset.
A great starting point is area research – understanding the local property market.
You should know what similar properties sold for recently, which can tell you whether the seller is being realistic or they have their heads in the property clouds.
Don’t look at asking prices.
Remember that most properties are listed for a price about five to 10 per cent above what the vendor will accept, especially in today’s less buoyant markets.
Armed with your background research, here are three tactics buyers can employ when submitting offers on a property to increase their chance of the offer being accpeted.
1. Ensure you have your finance lined up
Now this doesn’t mean that you should go in all gung-ho and sign a contract that has the finance clause removed.
That’s because, unless you have oodles of cash sitting in the bank to finance it yourself, most people will still need a mortgage to buy property.
What you can do, though, is to understand your borrowing capacity, and have loan pre-approval beforehand, so that you know that you’re buying well within your means.
Unless, there is something drastically wrong with the property, it is highly likely that your loan will be approved, which is information you should disclose to the agent, so they know that you are a qualified buyer rather than a dreamer who has done nothing to financially be ready.
2. Get in early
As they say, the early bird gets the worm!
Sometimes, the secret to getting a “yes” is as simple as being the first to make an offer on a property.
Have your alerts set up with the property portals so you’ll instantly be notified about new properties as they hit the market.
Then, don’t hesitate! if you’ve done your homework and know your numbers you should be in a good position to make that offer!
3. It’s not all about the price
Too many property buyers get fixated on the price when there are a large number of other factors that you can negotiate.
One is the cooling off period, which generally is a period of time that buyers have to change their mind after signing a contract.
If you’ve done your research and know that the property is something that you are keen to have in your portfolio then you can easily remove the cooling off period, which gives the seller more certainty that the deal will go through.
Likewise, it pays to be nice to the agent, because they will be the one that you’re negotiating with at the end of the day.
And that means not submitting a ridiculous low-ball offer and getting annoyed when the agent immediately dismisses it without taking it the vendor.
By developing a rapport with the agent, while still being firm and fair, you are more likely to have your offer considered favourably compared to someone who is rude and unpleasant to deal with.
4. Understand the seller
Always try to determine what the seller’s true motivation is.
Smart investors learn everything they can about the seller and especially their motivation to sell.
Are they looking for the absolute highest price? Are they in need of a fast settlement because they have bought elsewhere.
Or perhaps the seller needs a long settlement, or even would like to rent it back for a period of time until they buy elsewhere, which is something you can include in the terms and conditions of the contract.
Another reason they are selling could be because of financial issues or a relationship breakdown, which often means the seller just wants an easy sale with minimum fuss.
In that situation, you could offer a fair price and a short settlement, so that they can more quickly move on with their lives.
Whatever the seller’s motivation is it always pays to understand it, so you can better structure your offer to suit their needs.
The bottom line…
There is no doubt that markets are moving from a seller’s to buyer’s market, but that doesn’t mean all vendors are desperate to sell.
In fact, regardless of market conditions, buyers should always spend time crafting their offers so that are more likely to be considered by sellers.
That way, they are in the best position to secure the best properties at the best prices every time.