1. Know what you can afford
Before you start your house search you should have a very clear idea of what financing is available to you for the transaction. “Rough estimates of what you think you can afford just aren’t good enough in these days of stricter lending policies from financial institutions.
A prudent starting would be to use a bond affordability tool. You could also avail yourself of the (free) services of an experienced bond originator such as Silent Partners. We assist potential buyers with a comprehensive pre-qualification in order to accurately assess your buying power. Another upside of doing this work upfront is that once you find the right home, a lot of the financial paperwork is already underway.
2. Understand the seller’s situation.
Insight into the homeowner’s motivation for selling can be invaluable when negotiating on the final price. Don’t be afraid of asking questions, both of the seller and the estate agent. If sellers are under pressure or in a hurry to move, it is more likely that they will accept a lower offer. It can also be useful to know what bond, if any, is still outstanding on the property as there are costs to the seller in servicing this debt the longer the property remains unsold.
3. Find out how long a property has been on the market.
The longer a house is on the market, the more likely it is overpriced for current market conditions. Over-pricing a property is arguably one of the worst things a seller can do. Conversely, it presents one of the greatest opportunities for astute buyers who can expect price cuts of up to 15% from buyers who are becoming desperate.
4. Research comparable homes.
A home’s value is governed by the current market in that specific suburb. Typically, the property market is localized, so it is important to have a good understanding of what similar homes (in terms of size, space and location) are selling for at a particular time. One of the easiest ways to do this comparative research is to use a property website that showcases houses for sale by neighborhood from all the leading estate agencies. A large inventory of homes for sale in an area, especially in a buyers’ market, typically gives the house hunter the leverage to negotiate aggressively on price.
5. Think beyond price.
Price is not the only negotiable. If a seller won’t budge on the price, he or she may be negotiable on other issues. Sellers can often be focused on the final offer, and the more attractive the price, the more flexible they may be on other points. Buyers should also consider asking for concessions on transaction costs or items of repair or improvement.
In the case of newly built homes or new developments, developers are often less willing to lower selling prices, especially when they are selling identical units in the same complex. In these instances, however, they may well be amenable to provide other incentives, such as upgrades or free landscaping, to sweeten a sale.
So, while buyers may not be able to negotiate the asking price, there are still significant gains to be on these types of transactions for those willing to drive a hard bargain.
Get pre-qualified, or apply for a home loan with Silent Partners today.