Purchase a house like a pro
Want to negotiate the purchase of your new home like a seasoned property investor? Today we’re looking at the skills and processes you’ll need to develop and follow.
Here are our top tips for getting the best possible bang for your buck – or at the very least not paying more than you should!
Before all else, research the market
This is hands-down the most important step to ensure you don’t get hoodwinked.
By all means look at advertised asking prices, but for the most accurate market understanding you’ll also need to find out sale prices. A good way to do this is to attend a few auctions conducted by different local agents.
You’ll not only hear what the property goes for on the day, but will also be able to ask the agents what prices other recently-sold properties have fetched.
Become a private investigator
We’re not talking Magnum, P.I. here (for those old enough to remember Tom Selleck!), just good solid information checks, so you’re not solely relying on what the agent or seller tells you.
The most critical of these are building inspections, strata reports and searches for unpaid land tax. The searches’ costs do add up, of course, but they can also save you a lot of money and stress. If you’re not sure how to go about them, ask you conveyancer or solicitor for guidance.
It’s also wise to do some homework on the seller and the history of the home. Has it been on the market for long? Try calling a number of competing agents in the area and asking what they’ve heard.
Know what you can really afford
It goes without saying that, before entering into any sale negotiations, you should find out exactly how much you can borrow and obtain conditional loan approval. And don’t forget to also factor in additional costs like mortgage insurance, stamp duty, building and pest inspections, and conveyancing fees.
Keep your cards close to your chest
In a private treaty sale, divulge as little as possible about your personal financial situation, and start with a low, but not too low, opening offer. The goal is to be taken seriously as a potential buyer and start negotiations, but leave yourself room to move.
Consider requesting a boardroom auction
Once negotiations start, there’s every chance the agent will tell you there’s another bidder and ask you to submit your best offer. This is referred to as a blind auction, because you have no way of knowing whether there really is another bidder, let alone what they’re bidding.
Blind auctions can easily result in you paying far more for the property than you really need to. So a good option at this point is to instead request a “boardroom” auction, with all potential buyers present and bidding done in the open.
Even if this is agreed to, though, you should still be prepared to walk away if you reach your financial limits.
Buying at a traditional auction
Just about everything mentioned above applies in traditional auctions, only moreso. Auctions are final – if you make the winning bid the property is yours. You’ll need to sign an unconditional contract of sale, immediately provide a 10% deposit, and there’s no cooling off period.
So you simply must do your homework. That includes inspecting the property – ideally more than once – and doing all appropriate searches, getting a formal valuation, and having your finance absolutely secure.
You should also obtain the seller’s contract of sale prior to the auction and ask your solicitor to review it. And if there’s anything you feel uncomfortable with, don’t be afraid to negotiate a change before the auction takes place.