So you’ve just finalised a great deal on a home loan and a great deal on a house is your next goal.

If you’re in the market for a new home, then like it or not, negotiating is a fact of life.

Although different forms of negotiating routinely occur in our daily lives, for many people it’s intimidating.

Does the perfect house mean the perfect price?  How do you get a complete stranger to agree on a price that’s fair?  Will the process happen quickly or slowly?

Before you make an offer, it pays to be clear on what the negotiation process will be.

Here are some simple rules to help you negotiate for success.

Take a deep breath

Patience is a virtue.  It’s also important to understand that negotiating is a two-way process. 

Giving consideration to the people involved and putting yourself in their shoes can help develop your approach, build your case and present it fairly and amicably.

Considering other peoples’ points-of-view and what they are trying to achieve by selling, can actually help make the negotiation process less daunting.

Adopt a win-win attitude and expect some give-and-take along the way.

The best goal is that everyone walks-away happy.

First impressions count

It’s likely you will be negotiating with a real estate agent who is contracted to represent the seller.

Remember, they are human to and an integral part of the process.  An agent can be your best friend or worst enemy.  If you have found a house you like, it’s always good to have an engaged seller.  A happy agent will ensure this happens.

That means being taken seriously.  Let the agent know you are keen and keep their focus with you.

Meet with the agent as early as possible, ask questions and clearly explain your situation.  Be upfront about your interest in particular properties and ask to be kept in the loop.

Although contracted to represent the best interests of their client, agents also want to complete a sale – especially if their contract is close to finishing.

However, if you get on the wrong side of an agent you’ll quickly stop hearing from them.  As always, be polite, respectful and professional.  Use open and clear communication and don’t play any silly games during the negotiating process.

Related Reading: 'Are property cycles real and what drives them?'

Presentation is the key

You’ve found a home your keen on and want to make an offer.  It’s time to cut a deal, but no one wants to jump-in and pay too much.  So how do you start negotiating?  Who make’s the first move?

Firstly, it’s safe to assume that most sellers are expecting some room to negotiate.

In today’s competitive property market, a buyer typically makes the first mover with a written offer that shows you are genuinely interested and will help avoid any confusion about the conditions of your offer.

The real estate agent will present a signed offer to the seller.  If pitched correctly i.e. close to expectations, your offer will get the buyers attention.

What is the best way to present your offer?  Here are some considerations:

  • For any published asking price, confirm the seller’s true position with the real estate agent.
    • That is, can it be taken as the top price accepted by the seller?
  • Will my first offer be my best and final (highest) offer?
    • A high number as a first offer could lift the seller’s expectations.
  • Should I start low to allow some room for negotiating?
    • Silly offers may damage your relationship.
    • If your offer is ridiculously low it may not be taken seriously by agent and seller alike and they will focus on someone else.
  • My offer is legitimately low.
    • Explain why to the real estate agent.
    • Do you have a pre-approval from your home loan provider?
  • Will I include a time limit on my offer?
    • You can withdraw any offer before it is accepted.
  • What are the conditions of my offer?
    • Consider ‘finance approval’ being one.
    • Building inspection being another.
    • A pest inspection.
  • What action will I take if my offer is rejected?
    • Make a new offer or walk away?
  • Don’t reveal your walk-away price.
    • Agents will push towards this and you could end-up paying more than necessary.
  • Act interested but hide your love.
    • Don’t act desperate as real estate agents will play on this.
  • Don’t use negative spin.
    • Talking down a property may indicate you aren’t genuinely interested.

The negotiation process can be exciting and stressful with no shortage of opinions from other people.  Keep your cool, be patient and don’t rush.  Don’t exceed your limits and know when to walk away.

Ideally, you will be advised as soon as an offer has been accepted by the seller and then be required to sign a contract agreeing to the purchase.

Do your homework

One of the biggest limiting factors to successfully negotiating for a house is not being totally prepared for the process.

As we have reminded people a number of times, this means having your finances organised and having a good understanding of the market.

To negotiate effectively, having the facts and figures helps avoid getting emotional and caught-up in what others around you are saying.

When it comes to spending such a large amount of money, it pays to know your financial limit and stick to it.  However, what you can afford or are willing to pay is only one part of the equation.

An informed offer means knowing exactly what you are prepared to pay for any given property and knowing when to walk away from it.  It will also help develop a sense for the competition i.e. what others are also willing to pay.

Conduct a full research of the sales history of similar homes in similar areas and find out peoples’ reasons for selling.  A lot of this information is available online for free and can be discussed with the real estate agent.

Related Reading: 'A better life is just one conversation away'

Don’t worry, be happy

Today’s property market is not for the faint-hearted.  It’s likely the desired result will not come quickly and this will become tiring and frustrating.

Set aside any fears and keep a positive, confident attitude.  At times this will simply mean being systematic and methodical.

No one wants to pay more than market value for their dream home, or miss out altogether.

Doing some basic groundwork will make the process easier, more enjoyable and increase the likelihood of a great result.

We hope this article will help you through your next property negotiation.

If you still find the negotiation process confronting, consider using a ‘buyer’s agent’.  These are skilled and experienced negotiators you can trust to act in your best interests.

Are you ready to talk about a home loan?

When it comes to home loans, there’s no such thing as one size fits all.

It pays to talk to someone that wants to hear your story and run through some different borrowing examples with you. 

Why not incorporate a discussion about a home loan as part of our free, no obligation financial review with one of our experienced and accredited professionals by organising an appointment today.

That’s right.  In a refreshing twist you’ll actually talk to a real person.

It’s just one of the many features and benefits included in a tailored home loan solution from Loan Avenue – affordable home loan solutions for everyday Australians like you.

Let us show you.  To take advantage and make an appointment call 1300 56 26 28 or leave a message here.