Right now, there are fewer properties on the market than we’ve seen in a long time. That means that buyers are faced with stiff competition.
If you’ve found a place that’s perfect for you, you want to make sure your offer is compelling enough to seal the deal.
The price you’re willing to offer is the main factor. But it’s not the only one. If you’re on a budget, there are several strategies you can use to make sure yours is the offer they can’t refuse.
1. Be firm on your budget
Always go into a negotiation knowing what you’re prepared to pay. Not only do you avoid the risk that you’ll end up blowing your budget, it can also work the other way.
It can be easy to fall into the trap of wanting to pay as little as possible, and sometimes it sabotages the deal. If you get caught up in the desire to drive a hard bargain, try stepping back. Look at the original number you were prepared to pay and ask yourself if that’s changed. If it hasn’t, consider increasing your offer. At the end of the day, the best offer is one that gets you what you want.
To work out your budget, you need to know what you can afford. Speak to a financial advisor or mortgage broker before you start hitting open homes. They’ll be able to help you understand how much you’ll need for a deposit and closing costs, and how much mortgage repayments will be. Remember, there’s no rule that says you have to borrow the maximum amount a lender will give you. Settle on a budget that’s comfortable for you and your family.
2. Know what the place is worth
How do you know if a seller is asking for a fair price? Research.
As soon as you decide you want to buy a new home, start looking around. You may not find anything you love just yet, but you’ll get a good idea of what your budget will buy. Make sure you’re comparing like with like, so if you’re in the market for a two-bedroom character home that’s what you should be looking at.
Take an average of the sale prices you’ve seen. Once you find something you’re really interested in, you should have a good sense of what it’s worth.
Your research shouldn’t stop at the front door. Ideally, you should do a building and pest inspection before putting in an offer. If you find that there are things that need work, you can use this information to reduce your bid.
While it’s standard practice to put in a bid that’s lower than the asking price, don’t undercut the seller too much. If they’re selling for $800,000 and you think the place is worth $750,000, offer close to that amount. Trying to low-ball them by starting at $600,000 is likely to offend them and get negotiations off to a bad start.
3. Be flexible on settlement conditions
Price isn’t everything. As any agent will tell you, some sellers will choose a lower offer if there’s something else they want. This might be a longer or shorter settlement period, the chance to rent back the property for a few weeks or even just reassurance that you’ll love the house like they did. Have a word to the real estate agent and see if you can find out more about their motivations. Sometimes sweetening the deal can cost you nothing at all.
Many sellers also prefer a reliable, but slightly lower, offer over one that’s higher but less certain. An unconditional offer can be more attractive than one that’s subject to multiple conditions (like the sale of your current house, or finance approval). Another way to signal your commitment is to put down a larger deposit than the minimum. This can provide the seller with a sense of security.
4. Be ready to settle
You’ll be in a stronger position to negotiate if you have all your ducks in a row first.
Finance pre-approval allows you to make an offer with some confidence that you’ll be able to settle in time. If the vendor is looking for certainty, a buyer with their paperwork in order will win out over one who hasn’t started the process.
Consider engaging a conveyancer or solicitor ahead of time as well, so that you can get their input on the contract of sale quickly. If you intend to get building and pest inspections done, schedule them as early as possible. If you indicate that you can move fast, you’ll motivate the seller to do so as well.
With preparation and a cool head, you can get the house you want even in a crowded market. Happy hunting!