Negotiate an Asking Price like a Professional
NEGOTIATE THE ASKING PRICE ON YOUR DREAM HOME LIKE A PRO
The asking price on a home gives potential buyers a fairly accurate guide as to what they can expect to pay at auction. However, if you have some pretty impressive negotiating skills that you aren’t afraid to put forward, the chance of wiping off some further dollars is pretty likely, depending on the vendor and circumstance.
The art of negotiating doesn’t stem far from playing a game – read your opponent, strategize and then strike. Realestate.com.au recently spoke with Frank Valentic, buyer’s advocate and Director of Advantage Property, in order to gain some insider knowledge on the best way to negotiate and score yourself a wicked price at auction.
“We have many examples of negotiating big sums off an asking price,” said Mr Valentic. “One recent purchase was a house in Merricks North for a client relocating from Melbourne for a lifestyle change. The house was originally listed at $3.5m and after five months on the market, the price was dropped to $3m. We then pounced, as we found out the vendor had purchased another property and the listing had dropped down on the website from a feature listing to a lower listing position. We gave them the settlement they wanted and an unconditional offer of $2,551,000 so that we could secure a great discount”.
UNDERSTANDING YOUR OPPONENT
“It often depends on the vendor’s personal situation and how motivated they are to sell. If it’s a distress sale (one of the five D’s) you have a much better chance of negotiating a better deal” said Valentic.
If you are wondering, the five D’s that Mr Valentic is referring to are as follows:
- Distance – If the owners are moving away and simply need to sell the home as quickly as possible, or are situated interstate or overseas.
- Death – If the occupant of the home has passed away, the seller may prefer that the sale of the home is conducted relatively quickly with little time devoted.
- Debt – Owners who need to sell their home as they are facing debt in either their business or personal life and need it repaid rather quickly.
- Deadline – The vendor is on a strict timeline and needs to sell by a certain date, or dovetail another settlement for a purchase.
- Divorce – In the instance that neither parties wish to stay in the home they shared together, they will sell the home and split the profit.
KNOWING YOUR GAME PLAN
Once you have learnt whether there might be room for negotiation in the asking price, you will need to bring some strategy into play.
Mr Valentic knows of a couple of different ways that may help in bringing the price down on your dream home.
- Give evidence to the vendor that shows you know what you are talking about and have done your research – “Attach some comparable lower sales to support your offer and use another property as leverage advising the agent/vendor that you will be making an offer on this other property,” said Frank.
- Show money to the vendor – “Show you are serious about the purchase by giving a 10% deposit cheque with the offer.”
- Go for properties that have been on the website for long – “Buy properties that have been on the market for 60+ days as they drop down on the priority list on real estate website.”
- Be as accommodating as you can be on the settlement – “Give the vendor the settlement they need (long or short) and any other terms that may be favourable for them, for example a 20% deposit, as they may need a deposit for their next property. It’s also worth making it an immediate deposit release.”
- Ensure the offer is unconditional – “This will make the offer as attractive as possible. It will mean it’s not subject to finance or building reports.”
- Keep it formal – “Don’t make any offers by email or verbally. Show you are serious by presenting your offer on a contract with a deadline for the offer to expire.”
- Inspect the structure of the home – “Get a building report done and provide this to the vendor to negotiate a discounted price for the works that will be required to fix the defects.”
- Hire someone professional – “Use a buyer’s advocate/buyer’s agent or another professional who is experienced in negotiation and bidding for the best deal.”
ENTIRETY OF ARTICLE: Realestate.com.au