How to negotiate more effectively in the current market when buying property

This year has seen a surprisingly turn around for the housing market. Hundreds of thousands of home owners had to defer their mortgage repayments, therefore you’d think the economic hardship and job losses would have led to desperate property owner trying to sell.

However, that hasn’t been the case. Low mortgage rates, low inventory supply and robust rebound in housing prices have led to buyers rushing back, looking to acquire residential properties before affordability disappears.

With auction clearance rates peaking, the signs are there for a sellers’ market in the making. Here are tips for buying a home in the current market for buyers wanting to secure a home for a reasonable price;

Negotiate with confidence

So, what does a seller’s market mean for people looking to put their property on the market? It means they’re looking to take advantage of a robust market by liquidating now and attracting multiple bidders who would pay a premium for their property.  

For buyers, negotiating well requires doing homework. It’s important to stay cooperative (instead of being antagonistic) and avoid taking discussions too personal.

If you sense urgency from a seller, especially one who is looking to upgrade themselves, this could work to your advantage.

This is where buyers who have researched their borrowing capacity and have conditional finance approved and in place are likely to win against other interested buyers. A seller committed else where is likely to chose a buyer with a shorter finance clause over one offering a long one.

Even if the seller doesn’t need their place sold promptly, a buyer offering a short contract means the seller gets the cash in their bank quicker than anticipated.

Talk to local realtors

Contacting real estate agents active in your target suburbs should also be part of your negotiation strategy. As these realtors will know local conditions, housing inventory levels, availability, recent sale price. They may even know of a property that meets your requirements.

Agents frequently have access to housing inventory that haven’t gone to market yet. And these off-market sellers like offers that are the least complicated, require least amount of open home and results in a quick sale.

In a seller’s market, demand exceeds supply and that gives sellers a negotiating edge so, if a buyer can make an offer on a property before it’s listed, they’ll have the advantage of negotiating without the added pressure of other buyers making counter offers. 

Be willing to walk away

A property purchase represents the biggest transaction most people will make in their lifetime. Be willing to walk away by recognizing there are other properties for sale.

Remember, in property, money is usually made when buying. If you agree to pay above market value for a property, by the time you sell, the market may have turned and the your potentially buyers may not be as willing as you were in paying a premium.

Tell us: Enjoyed this article? Don’t forget to like and share.

And while you’re here, take our mortgage shredder challenge and discover how much you can save on your home and investment loans by using loansHub technology as your personal mortgage manager. To discover why loansHub and what we do, click here.

This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.