The process of negotiating the purchase of your dream property is one of the unique challenges. It can be daunting, whether you’re a first-time homebuyer or even as a seasoned investor.
How do you ensure that you’re getting the best deal? What strategies can you use to sway the terms and conditions in your favor?
In this article, we’ll take you through some essential tactics and strategies to employ during the property negotiation process. These tips will help you navigate this process with confidence.
Top 8 Tips when negotiating as a property buyer
Here are some tips to equip you with the right skills and get you into your dream property sooner:
- Less is more: You do not need to answer the questions the agents ask you
- Do not disclose any information to the agent without speaking to your solicitor first
- Exchange contracts at your own pace - don’t rush
- Private Treaty Sales: Using the 0.25% deposit to your advantage
- Auction Sales: Buy as much time as you can
- Making a pre-auction offer
- Anything can be negotiated - stand your ground
- Don’t be emotionally attached to the property
1. Less is more: You do not need to answer the questions the agents ask you
The seller’s agent is often the first person you contact when inquiring about the property. They will often pry and ask questions to evaluate your readiness to buy the property. But giving up too much information and answering questions blindly could do more harm than good to the negotiations.
Less is more. Give little information and stand your ground to avoid feeling pressured by the agent.
There’s one unwritten rule to keep in mind when speaking to the agent - you should be asking the questions, not the other way around.
For instance, if the agent asks, “Where are you at with the financing?” don’t tell them that you’ve recently spoken to the lender or that the approval is just around the corner. This type of information can give the agent leverage to pressure you into the sale.
2. Do not disclose any information to the agent without speaking to your solicitor first
Keep your cards close to your chest. Don’t disclose information to the agent without speaking to your solicitor first.
Your solicitor is in your corner to help you. They will equip you with what to say and things to do.
If you’ve already negotiated something with the seller’s agent, make sure you inform your solicitor before proceeding to sign the contract. They might want to know what you spoke about since they weren’t on that call. The more your property solicitor knows, the better they can advise you.
For instance, if the agent has agreed to include something as part of the sale, then your lawyer will make sure it’s included in the contract of sale.
Case study: revealing too much to the agent
We had one particular older client who was in her 50s and worked for the council. She had a separate discussion with the agent despite my instructions.
She revealed to the agent that her daughter also lived in the same apartment she was purchasing. Now the agent had the upper hand to ask for a higher price. All the negotiations we had been doing for a couple of weeks now went to waste.
When negotiating a deal for a client, we have one rule - don’t speak to the agent and don’t disclose anything without speaking to your solicitor first.
3. Exchange contracts at your own pace - don’t rush
Many vendors’ agents and/or vendors will try to compel you to sign the contract within 7 or 14 days of the contract being submitted to the purchases lawyer. This is one of the most commonly used tactics by agents.
But there’s no legal obligation requiring you to sign the contract within 14 days. You sign it when you want to. However that said, the longer the property is on the market, there may be risk of you being “gazumped.”
The law says there’s no legal relationship between the vendor and buyer until contracts are exchanged, meaning deposits are paid and the vendor and purchaser signs the contract and the contract is dated.
Before you enter into a contract, your lawyer should conduct all the checks and contract reviews as soon as possible. You should also take the time to thoroughly do your due diligence on the property, which can help further in negotiations.
4. Private Treaty Sales: Using the 0.25% deposit to your advantage
You can use the 0.25% holding deposit to your advantage to keep the agent “at bay.” The deposit demonstrates that you’re committed to purchasing the property. This reduces the possibility of the agent finding another buyer.
If you have an offer ready, you can go ahead and pay the 0.25% once it’s accepted even before exchanging contracts.
If you’ve performed your due diligence and found that the property is unsatisfactory, you can always get the holding deposit back if you haven’t signed the contract yet.
Remember though, that the vendor is still able to sell the property to another purchaser until you sign the contract and contracts are exchanged. For this reason, it is imperative that you do not delay the exchange of contracts to avoid getting “gazumped.”
Some purchasers may want to exchange contracts with a 5-day cooling-off period to avoid being “gazumped.” At the same time, you’ll be doing your due diligence in the background while getting the financing approved, or the contract reviewed by your property lawyer. If you are not satisfied with your due diligence and wish to cool off, then in this case, you will forfeit the 0.25% deposit.
5. Auction Sales: Buy as much time as you can
If you’re purchasing the property via auction, buy as much time as you can to gather as much information as possible.
You can buy time by keeping the conversation going. Ask the vendor or vendor’s agent questions like:
- Why are you selling the property?
- How many people have seen the property so far?
- Do you have some wiggle room on the price?
By asking these questions you can easily vet and see whether the vendor is open to selling the property via pre-auction offer through these conversations.
6. Making a pre-auction offer
If you’re in a competitive market and your research shows that the property ticks all your boxes, it might make sense to make a pre-auction offer. As the name suggests, it involves making an offer to the vendor before the auction.
If you make an enticing offer, you might convince the vendor to sell the property to you before the day of the auction.
If the vendor is open to pre-auction offers, know that you’re still tied to auction sales terms and conditions. For instance, there’s still no cooling-off period.
A pre-auction offer is like a double-edged sword. On one hand, it helps you beat your competition and take the property off the market without having to go through the hassle of a public auction.
On the other hand, if your offer isn’t enticing enough then it could backfire and the agent may let it go to open market. This strategy should be used sparingly, always consult with your property lawyer when making pre-auction offers.
7. Anything can be negotiated - stand your ground
Confidence is key when it comes to property negotiations. You can negotiate anything you desire with the agent or vendor.
A confident negotiation is founded on knowledge. Seek to understand whether the local area is a sellers’ or a buyers’ market. You’re likelier to get more favourable conditions in a buyers’ market since they favour buyers’ needs.
After that, seek to determine why the seller is selling the property and how soon they want it gone. A seller who’s motivated to sell fast may look for a shorter settlement period and accept a lower offer. On the other hand, a seller who’s not in a rush may choose to wait until they get the right offer.
Understanding these factors will help you determine how you’ll present your offer and whether you’ll be able to negotiate for a lower price, longer settlement period, or more inclusions.
8. Don’t be emotionally attached to the property
The property might be your dream home, but don’t be afraid to walk away from the deal if you can’t get favourable terms. Take the emotions away from the property.
Don’t show them how much you love the property. If you do, they’ll assume that you’re willing to pay any price for it. The key is to find balance. Show interest but play it cool. Remember, you want the ball to stay in your court. Taking away the emotions is how things stay in your control.
On that note, we advise you to take an interest in a 3 to 5 properties. Keeping your options open prepares you to jump ship if the deal goes stale. The vendor can also become open to further negotiations when they know you have options and are prepared to walk away.
Determining your priorities when it comes to a property will also help you keep your emotions at bay. Is it the price? Is it the neighborhood and location? Or it’s the inclusions, style, and features?
This way you understand your non-negotiables and what you can do without.
Need help negotiating your property purchase?
Being a good negotiator doesn’t guarantee that things will always go your way. It’s a give-and-take situation. You also have to be willing to compromise on some of your conditions and expectations.
It’s about reaching the best outcome possible for all parties involved.
Property negotiation is an art with high stakes and stress levels. This is where Arver Law comes in. We are well-experienced property lawyers who’ll help you with all the processes involved during the property buying process.
Book a free consultation with us or call us today at (02) 7806 0623 to get the best out of that deal.
