BUYING a home shouldn’t be a gamble, yet negotiating to buy property shares many strategies used in card games.
Buyers have to perfect their poker face. They have to know what cards to play, when to hold their offer, know when to fold. And if the price is still too high, they have to know when to run.
But with the right preparation, buyers can successfully negotiate to a buy a house on their terms.
Outside of the inner suburbs, negotiated sale by private treaty is the main method of selling property in Melbourne.
And even in auction campaigns, about 30 per cent of sales are negotiated after the hammer has fallen.
The poker face is an important weapon in a buyer’s armoury. But it has to be used correctly.
It was especially important when inspecting a property, Wakelin Property Advisory director Richard Wakelin said.
‘You do not want to be having a whole tribe of family members or a friend talking about the ins and outs of the property and how you’re going to place your furniture in the living room,’ Mr Wakelin said.
‘Walking into a property as a private homebuyer, you do not want to show any emotional attachment. You’re giving yourself away.’
But it was possible to be too cool for your own good.
‘The agent may think you’re mildly interested or not interested,’ Mr Wakelin said.
‘There’s a balance between unemotional and emotional. But it’s important not to show a level of excitement or strong level of interest.’
A respectful, businesslike approach was best, he said. He urged buyers to indicate to the agent they had an interest and would at some point make an offer. Exchange contact details but leave it at that. It was also OK to ask for documentation, like Section 32 statements and contracts. This would be a sign you were ready to talk.
Levelling the playing field between buyer and seller was the first strategy, Mr Wakelin said. The seller started in command because they set the asking price.
Mr Wakelin said rather than making your first offer, which could back you into a corner, challenge the asking price.
Careful research will show you what similar properties have sold for recently. Buyers can subscribe to data services for their research or search the sold sections of websites like realestate.com.au.
Asking the agent for their best price might work when you’re buying whitegoods, but the agent will end up asking what you are prepared to pay.
But like whitegoods, most real estate prices are padded to allow for negotiation.
‘In a private sale, I’d be saying ‘I have an interest in this property. At $500,000, you and I know this is far too much’,’ Mr Wakelin said.
‘There’ll be silence and the agent will get the message.
‘I’ll say, ‘go to the owner and tell them we are interested in this property, but when the asking price changes, we will make an offer’.
‘Push the ball into the vendor’s court. Show you have done your research, carry your comparative sales and use them as evidence to talk down the asking price.’
Hocking Stuart, Melton and Werribee, director Julian Conte said buyers who had done their price research were in a far stronger bargaining position.
‘The biggest thing is to really look at enough homes to get savvy on pricing,’ he said.
Other tools in a negotiation include an inspection report on the condition of a property and other similar homes in the area.
Mr Wakelin said the report could be used to highlight you would need to spend a lot of money improving the condition of the property.
Also, be aware of other properties on the market.
‘Making the agent aware that we have options in the marketplace is often an extremely useful tool when it comes to negotiating,’ he said.
STRAIGHT TO THE POINT
CHERYL Dall didn’t waste time quibbling over a few thousand dollars when she bought her home in Melton West recently.
A self-described ‘straight-shooter’, Ms Dall (pictured left) gave clear instructions to the selling agent that her offer was the first and final one – accept it or she would walk away.
‘I try and keep the emotion out of it. I don’t like wasting everybody’s time and I don’t like people coming back offering $5000 and $2000 and $3000,’ she said. ‘I do my research, I know what the market values are. I’ve got all my ducks in a row and I’ve been to the bank and know what I can offer.’
But when Ms Dall subsequently sold her
Attwood home, she was prepared to meet the buyer on price, although she did knock back two low-ball offers.
‘Accepting a little bit less than what I was after was the best decision because if I had to pay one, two or three months more off the mortgage, I would have been worse off anyway,’ she said.
TIPS FOR BUYERS
STAY on neutral territory. Don’t go inside a property to negotiate, especially if you’re the highest bidder after
UNDERSTAND rules for negotiating. Are you the only buyer in the picture or is it highest and best offer wins?
CHALLENGE the price guide on a private sale or the reserve at an auction using comparable sales.
ASK what evidence was used to set the reserve at an auction if it’s higher than the quoted price range.
INDICATE you will make an offer after the vendor has changed their asking price.
OFFER non-cash sweeteners, like a larger deposit or shortened settlement terms without giving ground on price.
BE prepared to walk away when negotiations are stuck. An agent will often chase you up.