When it comes to property changing hands, there will usually be some negotiating between buyers and sellers before they agree on a mutually acceptable price for a home.
For many people, buying a home will be the most signifcant financial decision they ever make. So, how should you go about ensuring the deal works for you?
Andrea Tucker, director of online bond aggregator MortgageMe says: “It’s important when entering into negotiations to be sure of your start and end point. You need to stick to a game plan which should be in place before you even start looking for your dream home.
“When shopping for a home to live in, emotion is involved. It’s easy to fall in love with a property and become side-tracked by the need to have it at all costs. However, nothing is ‘perfect’ if you can’t afford it.
“Securing a purchase at all costs can be a disastrous move when it comes to property.”
She offers some key pointers for prospective buyers.
Game plan
Before you start looking for a home, you need a clear game plan. This should include calculating your maximum purchase price, which you must not exceed under any circumstances. In addition, getting pre-approval for a mortgage loan will enable you to set your borrowing limit.
While doing that, also shop around for the best terms on a bond. A single percentage point in the interest rate can make a huge difference to your monthly repayments.
You should also consider the price bracket and area in which you want to look. The ongoing costs of owning a home include municipal rates and taxes, which may vary from one suburb to the next. In addition, there are costs associated with buying and living in an estate or a complex with a body corporate or a homeowners association.
Research
Once you have found a home on which you would like to make an offer, do some research to determine how flexible the sellers might be on the listed price.
The agent should be able to provide all the information you need. However, keep in mind the fact that the sellers appoint the agent to market their property at the best possible price. Therefore, if the agent prefers not to answer your questions, there are other sources, including companies that do valuations of properties and suburbs.
Consider the track record of the agent.
- Is the agent an area specialist?
- How long has the agency had the mandate for the property?
- Have they been struggling to sell it?
Also, consider talking to other agents selling properties in the suburbs you’re looking in. They may be a bit more forthcoming. The questions to ask agents include the following:
- How long has the property been for sale?
- What is the overall state of the market in the suburb?
- Are homes selling, and what kind of prices have they been achieving?
Remember to compare like with like. For example, if you are considering a home in a gated estate, don’t be discouraged by what freestanding homes are being sold for in the area.
Sellers
After establishing that the sellers are asking a fair - but presumably negotiable - price, find out some more information about them.
How long have they owned the property? If it has been a family home for many years, they may consider more than just price when accepting an offer. They may want to pass it on to buyers who will love the home as much as they have.
If they have only owned it for a short time, they may be trying to turn a profit on the sale and be less flexible. Or, they may be in financial difficulty with a likelihood of a divorce or a retrenchment that is forcing the sale.
It never feels comfortable to exploit someone else’s misfortune, but this information can be valuable when making such a big decision.
Inspection
Before making an offer, book a second viewing of the property. Take your time, and look critically at aspects of the property you may be able to use when negotiating a final offer.
Check for signs of a lack of maintenance, such as scuffed windows and door frames. Ask questions about roofs, gutters, flooring, fixtures and fittings so that you can use these to justify a slightly lower offer.
Consider having a professional home inspection carried out before you make an offer.
Be realistic
Most sellers expect offers below their listing price, but you must also be realistic. Offers that are too low will simply be disregarded, and you could lose out to another buyer. If you have done your research, you should be able to estimate what the sellers are likely to accept.
Insist that the agent write up your offer for submission to the sellers. Include a time frame in the offer document if there isn’t already one or if you prefer a different one than what the sellers have requested.
The sellers may not accept your offer but may present a counteroffer - either altering the price or the terms and conditions of the sale. These terms may include ‘subject to finance’, ‘subject to the sale of your current home’, for example, or a short or extended sale completion date.
This is where your game plan becomes vital, says Tucker.
“Do not deviate from what you can and cannot accept or afford. Remember to keep your emotions out of negotiations.
“And always keep in mind that if you lose this one, there’s another home out there waiting for you.”
Writer : Sarah-Jane Meyer