So you’ve finally identified the house of your dreams but there’s just one small speedbump… the asking price.
If the asking price is just out of your range don’t despair, all might not be lost if you are able to master the art of negotiation to drive the price down.
Before you put in an offer for a house, you should take the time to investigate whether the asking price falls within the fair market value for the suburb.
RE/MAX CEO Adrian Goslett says that a good place to start in determining whether you’re being ripped off or not, is by getting a comparative market analysis – a report that is compiled by a real estate agent that details and compares information about similar houses recently sold in the area – how long they were on the market and the prices these properties eventually sold for.
Once you have an idea of the price range, you might have some useful ammunition you can use to negotiate a better price.
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All of the information that you collect should be compiled into a formal written proposal which details the data you’ve dug up. You can even include a letter of motivation in your proposal to support your argument for submitting an offer lower than the asking price.
Seeing the figures in black and white could sway the seller into conceding to your lower offer.
Rawson Property Group MD Tony Clarke advises that, where possible, you should try to find out why the owners are selling their property.
“This information can greatly strengthen the buyers’ negotiating power. If, for example, he knows that the seller has to move soon to another town to take on a new job or if he knows the seller needs cash urgently, the buyer’s bargaining position can be greatly strengthened,” says Clarke.
“Similarly, if the house is tenanted and the seller knows when the lease will expire, this information may enable him to negotiate a better price.”
As much as you want the seller to be flexible, you as the buyer need to be just as flexible and open to compromising if your negotiations stand any chance of succeeding.
One way of making your reduced offer more appealing is to secure pre-approved financing as this will let the buyer know that you are serious and ready to purchase on the spot.
In the event that the comparative market analysis shows that the seller’s asking price is well within the fair market value and the asking price is still within your affordability range, Goslett says you can ask for additional concessions from the seller for household items like custom-made curtains, wall units, appliances or furniture that you can keep in exchange for paying the full asking price.
If none of these strategies work, Goslett says you should be prepared to walk away.
“Not all negotiations will end in the buyer’s favour. This doesn’t mean that they’ve made any mistakes, it could just be that the buyer and seller were too far apart regarding the price. There is more leverage in negotiation if you’re willing to walk away,” he says.