There are few experiences in your life that are more stressful than buying a home. To save you time and money, here are three tips from an experienced real estate agent on how you can make a substantial saving off your next home purchase.
Tip 1. Do Your Research!
Agents can tell when a buyer is unfamiliar with the market. Developing a thorough understanding of real estate and asking well-informed questions can help you win their respect and encourage them to share information with you. Taking the time to research your local market also means you’ll be able to identify value when you see it, giving you a stronger, more confident position to negotiate from.
We recommend starting with an online search for recent sale prices; realestate.com.au and domain.com.au both have ‘Sold’ sections you can browse for information. If you can, also find someone with access to RP Data to provide access to past sales information. Most importantly, attend open homes in the area you are looking to buy. Studying property conditions and prices will provide you with a more comprehensive understanding of property values.
Tip 2. Find Motivated Sellers
A motivated seller is someone who needs to sell. Usually this seller has a specific reason for the sale and a restricted time frame.
Property investors often look out for the Three D’s – death, divorce and de-bank. They know that sellers that have already purchased a property elsewhere, or whose circumstances have forced them to sell, are more willing to negotiate on price.
If you want to know if a property has a motivated seller, just ask. Here are some appropriate questions you can direct towards the real estate agent:
- Why are the owners selling?
- How long has the property been on the market?
- Did the owner choose the asking price?
- Have there been any other offers?
- Have there been any price reductions?
- Do you know what price they will accept?
- What settlement time are the sellers looking for?
Real estate agents are usually happy to share whether the owners are driven to sell or if they are just testing the market. However, understand that for privacy reasons, they won’t disclose confidential or personal information regarding the seller’s situation.
Keep in mind that agents work on commission on behalf on the seller and may discourage lower offers. Above all, rely on your own knowledge of the local market and don’t let that stop you from offering a price that you think is fair.
Tip 3. Negotiate Well
An effective way to secure a property below market value is to make a cash offer. This means your offer is not dependent on the sale of another property. Sellers love a cash offer because it means you already have finance approval and the sale contract is less likely to fall through.
A little politeness can go a long way; the perceptions of the agent and seller can significantly influence the negotiation process. Be nice to the real estate agent and don’t be afraid to let them know that you like a property; negative comments about a house are likely to upset sellers and demotivate agents. Sellers and agents are far more likely to respond positively to a friendly buyer, with a lovely family who adores their house, than a rude, standoffish buyer who is putting in a low-ball offer.
Try not to get too emotional about your purchase. This can be challenging, especially when you are buying a family home rather than an investment property. When negotiating, it can help to have alternative options; this will curb any anxiety you may feel and help you manage your fear of missing out.
Finally, don’t forget to frame your offer positively. Rather than saying, “our offer takes into consideration all the money we would have to spend to fix it up”, try something more affirmative like, “we really love the property and compared to other houses we have viewed, we feel it is worth this amount”.
If you have more questions about buying or selling a property please reach out to one of our friendly, professional agents. We’d love to hear from you!