How to Negotiate When Buying Property
What to do when your budget’s set, but your dream home seems just out of reach.
Buying a new home can be a daunting experience.
There’s so much advice floating around out there.
Do your research. Know your market. Pick a home in the right location. Get all your pre-purchase inspections done. Understand the hidden costs. And definitely don’t overcapitalise.
And while all those things are important, the biggest piece of advice most aspiring homeowners are given, is to speak to the bank, set your budget and stick to it.
So what happens if you find a home you love, only to see its price tag is a little more than you wanted (or are able) to spend?
Don’t despair. There’s still hope.
Because despite what you might believe, everything is negotiable (including the asking price)!
Here’s a few things you can always haggle on, to snag that home and walk away happy.
Offer a bigger deposit.
Got a decent nest egg saved up? Use it to your advantage!
While most buyers expect a deposit equal to 10% of the agreed price, to secure the deal, why not offer more in return for a slightly lower sale price?
Often vendors are selling so they can move on to bigger or better things (buying or building their own new home, or downsizing to enjoy life more) - so a little extra cash in their pocket upfront could be tempting.
Secure - or shorten - settlement.
The ‘settlement period’ is the amount of time between signing a contract and the final price being paid in full.
If you’ve got a solid, pre-approved bank loan, or have the ability to pay cash for the property upfront (which is true saving goals!), you have more negotiation power that you may think.
That’s because most buyers can only afford to buy a home ‘subject to sale’ of their existing property - which simply means the deal can fall over if their current home isn’t sold in time.
As a result, many vendors will happily take a slightly lower offer that is sure to go through, over a high offer that might flop.
Another attractive proposal is to shorten settlement. Why? Because vendors often want to get the deal done and dusted so they can move on quickly!
So if you’re able to offer an unconditional contract or shorter settlement, why not put a lower offer on the table and see what happens?
Modify the conditions of contract.
Similar to settlement, you can use attractive contract terms to boost your chances of securing a better deal.
First things first - knowledge is power. And the more you know about your vendor, the better.
Ask the agent why they’re selling. If you discover it’s due to building a new home, they may be after some quick cash.
If so, maybe try offering more favourable terms around the deposit - like direct vendor access, rather than the usual ‘held in trust’ - which can boost their upfront cash flow in return for a lower final price.
If they’re relocating or buying a new property ‘subject to sale’ of this one, they might be interested in a rent-back offer, where they are paid in full but able to stay on in the property a little longer until their new home is ready.
In a finicky market, you can also offer a shorter ‘cooling off period’ so they feel confident they’ll not lose out.
Vendors will often happily move a little on price if they can see a greater benefit.
Challenge the asking price.
A more assertive strategy is to challenge the sale price directly.
The most hard-hitting tactic of all, this one requires a little research (and some serious confidence) on your behalf, and usually works best in a slower ‘buyer’s market’ - where demand is low, and there are more properties available than buyers.
Spend some time learning about local conditions - look at recent sales of similar properties, check out what’s currently being sold (and for how much) and explore capital growth trends for the area.
If there’s evidence to suggest that the asking price is a bit ambitious, don’t be afraid to put this to the agent.
At the end of the day, if you’ve got the data to back you up, there’s no reason you can’t use this as leverage and put in a lower offer.
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While all these things can have an impact on the final sales price, if you’re still set on the property but the vendor won’t budge, flip the script and try and build in extra value instead.
Building value into a sale may not save much upfront, but it can certainly benefit you in the long run.
Get your negotiating hat on and look at things a little less obvious.
Ask to have other costs, that are usually borne by the buyer, covered in the deal. We’re talking things like building and pest inspections, valuations and larger repairs.
Talk to the agent about ‘chattels’ - fittings and inclusions that the home may have, like dishwashers, fridges, outdoor kitchen appliances, cubby houses, televisions and pizza ovens. Ask if some of them can be left behind to make life easier when you move in.
Sometimes even asking for a full professional clean or fresh paint job to be included can make all the difference.
These smaller, more fiddly things can really add up, so if you can have them incorporated it might just be enough to get you over the line budget-wise.
Although profit is obviously a motivating factor, when it comes to buying a home, a good deal for a vendor doesn’t always mean taking the highest offer.
So use that to your advantage, get negotiating and you could just find yourself in your dream home!
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And if you’d like some expert guidance and support? We’re ready and waiting to answer all your questions!
If you’re just getting started, or looking for more valuable property buying or selling tips, tricks and hints, check out these other handy articles on our blog:
× Is Investing In Property Still Worth It?
× The 7 Hidden Costs Of Buying A New Home
× Does the Perfect New Home Exist?
And for all the very best property buying, selling or investing advice, why not connect with us - We Connect Property are your local property market specialists with over 21 years’ experience in buying, selling and managing property in southern Adelaide.
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Give us a call on 0403 799 983 today, or drop a line to sales@weconnectproperty.com.au - we can’t wait to chat!
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DISCLAIMER: All recommendations made by We Connect Property are general in nature and not to be relied upon as legal or financial advice. To ensure accuracy, we always strongly recommend seeking independent, professional advice tailored to your specific situation before making any investment or financial decisions.