4 Tips for Better Negotiating when Buying a Home
Let’s get on the front foot
1. Be Informed Ahead of Time
Knowledge is power, they say, and this is no less true in negotiations for buying a house. Simply put, you want to go into the negotiations armed with more information than the seller has, especially concerning the house’s true value (valuation report), Building inspections, suburb reports, and the myriad of details involved in buying a house.
For example, many people aren’t aware that they can have an independent appraisal of their own done before entering into a contract for sale and also get a building report done. If you do this, you can discover the true value of the house – and not have to work from just the seller’s asking price. An independent appraisal will also help you learn more about the prospective property in general, as well as something about the neighbourhood where it is located.
2. Don’t Be Early – Just Wait
The idea is to approach buying a house after it has been on the market for a while. Sellers can grow tired of the selling process especially over a number of days or months. So, eventually, they may reach a point where they are far more willing to make concessions.
In addition, houses that have been on the market for some time begin to lose their appeal. Basically, a house that has been on the market for at least 30 days have been what is called “market tested.” If you enter into negotiations after that point, you’ll have substantially more negotiating leverage.
3. Be Bold and Confident When Buying a House
A good negotiator isn’t a pushover. A good strategy is to take it a step further and be bold and confident in your negotiations when buying a house, which especially applies to your initial offer.
You could, for example, make your offer 10% below what you’re actually willing to pay. This means that negotiations will then have a starting point and will revolve around your offer and not the asking price. Some buyers have financial leverage, you could offer more than the standard 20% deposit, or negotiate a shorter settlement which brings attention to your offer, as does getting lender pre-approval that allows you to confidently apply financial leverage in negotiations.
4. Display Some Empathy
Now, this may seem to contradict the tip just above, but it really does not. Being confident and on the front foot doesn’t mean you have to be overly assertive; it just means being firm about getting what you’re after. And that still allows room for empathy – that is, coming across as so likable the Agent/seller simply can’t refuse you.
We all seem to have a soft spot for people like us, people we can relate to. So, a good negotiating strategy is to try to put yourself in the Sellers shoes via the Agent, striving for a personal connection. Writing a warm letter to the seller giving some information about you and your family and why the house would be perfect for you may make the Agent and seller far more amenable to your terms.