Negotiating on your next property purchase can absolutely help you. Especially in the case of a private sale. You can always offer a value below the asking price. While this may not be the most comfortable thing to do, doing so could help you save a lot of money.
1. Research the market
Understand if there is an oversupply of demand or supply. If there is an oversupply of property, you are in a position to negotiate down the price. We call this a “buyer’s market”. The flip side is when there are fewer properties for sale, but plenty of buyers around. This is called the “Seller’s market”.
2. Talk to the realtor, the property manager, neighbours and current tenants
Talk to the selling agent/realtor to understand the story behind the sale. Sometimes there is a good reason to sell other than the usual generic reasons. For an example one of my friends was set at buying this unit in Brisbane. She placed a deposit and on her second inspection found the property manager escorting her to the unit (since the realtor wasn’t available). During this discussion, she discovered that the garbage pickup point was situated right in front of this unit every Thursday. She quickly promptly pulled out of the sale and moved on.
3. Get to know the suburb
If you know the suburb well enough, you would also know a fair asking price for the property. There are plenty of places where you can do your research these days. Domain and real-estate websites generally have good data for free.
4. Use a buyer’s agent
Buyers agents are great at doing all the legwork on your behalf. They do all the homework and negotiating for you. One buyer’s agent Peter Esho from www.esho.com.au states that “research is the most important part of the investment process. If you get the research right, your path towards investment becomes clearer. Without the right research, you’re driving along in the dark like a driver with no lights and no navigation. You’ll probably get lost and even worse, crash at some point. Investors research the smallest purchases like consumer goods and apparel. So they need to also put the same logic into places when purchasing an investment”
5. Make an offer
If you feel like making an offer considerably lower than the asking price you can certainly do so. There are no costs involved in making an offer as long as you can afford the loan (if the seller accepts it). This way you can read through the lines to determine the seller’s reaction and urgency.
This blog post has not taken into account your objectives, financial situation or needs. Due to this, before acting on any general advice/information in this communication, you should consider whether it is appropriate to your objectives, financial situation or needs.