Mistake’s property buyers make when negotiating

When it comes to negotiating the purchase price of a property, there are no hard and fast guarantees. However, these are the top mistakes to avoid if you want a result that you’ll be happy with after a successful price negotiation with the sellers.

Mistake 1: Revealing top end of your budget

The danger of revealing your budget to the vendor or their agent, they will attempt to get as close as possible to the top end of your budget. Give a market-price range estimate if necessary, or indicate a price that is lower than what you are capable of spending.

You don’t want to end up negotiating prices that are a lot higher than you anticipated or what the property is in fact worth.

TIP: Keep your cards to yourself – if you’re pushed to reveal your budget, advise the seller or agent that you have adequate finance approval but are looking to buy a property at market value.

Mistake 2: Getting too emotional

When looking for property, you’re bound to come across one you fall in love with the moment you enter the doorway, but do not make the mistake of announcing this. Sellers and agents can smell buyer desperation a mile away and will not hold back from playing on your heartstrings.

They will use threats of other interested buyers, time running out, or vendor resistance, and they will try to get you to commit to the highest possible price.

TIP: Conceal your emotions and balance the playing field by pointing out factors that might realistically and adversely impact the value of the property, such as work required to be done, structural defects, troublesome easements, covenants and so on.

Mistake 3: Not doing pre-purchase research

While it’s true that the ultimate value of a property is what someone will pay for it, you need to have a fair bit of research and area knowledge in your head to be able to negotiate effectively.

Overvaluing or undervaluing a property can make you seem like a gullible or non-serious buyer.

Requesting draft copy of the contract of sale, can be wonderfully beneficial in this regard as you can take advantage of loansHub’s free pre-purchase valuation offer to find what’s the fair value for that property.

TIP: Take the time to do your research, go to inspections and get a good picture of the property market in your area and get yourself a free pre-purchase valuation from loansHub before making an offer.

Mistake 4: Not knowing your budget limits

When it comes to negotiating property price, you need to know what your financial limits are before making the first offer. This means having pre-approved finance in place and a deposit to secure the property if your offer is accepted.

Without the certainty of having finance approved, subject to property being located, you could be wasting the seller’s and agent’s time, as well as your own.

With conditional finance in place, you will have an advantage over other offers because you can settle within a shorter timeframe.  

TIP: Apply for your pre-approval online with loansHub, with over 40 lenders on the platform, you will get the best value loan which will leverage you as a serious buyer and prevent problems securing the property down the track. 

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Mistake 5: Making unreasonable offers

Sometimes making a low-ball offer can work wonders in a buyers’ market, but in a sellers’ market, it can be off-putting for a seller and can damage your relationship with the selling agent, who is your bridge to getting the seller to agree to your purchase price.

Regardless of it being a sellers or buyers’ market, there are usually a few indicators that will allow you to attempt low-ball offers at the start of the negotiating process.

Circumstances such as marital breakdowns, deceased vendors, foreclosures, business problems, or failed sales attempts are unfortunate, but can benefit you when negotiating purchase price.

TIP: Know the seller’s story and, if at all possible, use it to your best advantage within reasonable boundaries.

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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.