How to negotiate a house purchase like a pro

1. Do your homework

Before you start the negotiation process make sure you know where you sit and what your limits are financially. Having pre-approval for an amount of money can give you confidence to go into bat confidently and walk away when necessary. Ask your lender for a breakdown of repayment amounts for different price points. This will give you an idea on what you can afford to offer.

You might also like to compare prices for similar properties in the area. This will ensure you have the knowledge to negotiate based of key property attributes such as: 

• Location
• Land size
• Number of rooms
• Structure
• Age
• Condition
• Proximity to shops and public transport.

If the property needs work make sure you take this into consideration when making an offer. Check out our article on what to look out for at an open house from a tradies perspective for some tips!  

2. The only way is up

Make an offer based on the best outcome for you – offer the price you want to pay and ask for the conditions you are comfortable with. The only way from here (with regards to price) is up once negotiations begin so make sure you don’t start the process out of your own depth.

3. If you are competing with other buyers do not play around

While it’s important to start with an offer based on the best outcome for you – it’s also important you don’t miss out on a property you love altogether because you’ve over-complicated conditions or offered less than the property is worth. Make sure you let the agent know whether you are flexible with conditions so the offer is not rejected based on things you’re happy to change such as settlement dates. If you're going to an auction, make sure you are prepared and know how to bid at an auction. 

4. Don't get personal

Buying and selling property is a business. It’s easy to get caught up with the emotion of purchasing a property – it’s a place to call home for you and your family and it’s one of the biggest purchases you will ever make. However, it’s also important not to take rejection personally – be prepared to walk away from a property if the price isn’t right. There will always be another property.

5. Consider the economic environment 

A big factor contributing to the purchase price of a house, and your ability to negotiate, is the current economic environment. The market could be favouring buyers or it could be favouring sellers and this can differ across suburbs and cities. Some things to consider:

• Are prices trending down or up with recent sales nearby? If prices are trending down you might have more room to negotiate. 
• How long have properties in the area have been on the market for? If they aren't on the market long, there could be high demand and competition from other buyers.
• Are auction clearance rates high or low? These rates indicate how often sellers accepting the buyers offers at auction. If rates are higher, this means buyers are offering prices that meet the sellers reserve price or more.

You can keep track of the local trends in the area you wish to buy by looking at sales history of properties online. For information on current market trends you can also check out Canstars home buyers guides in Sydney, Melbourne or Brisbane. 

Got any more questions? Check our our Home Loan Calculator and Borrowing Power Calculator to crunch the numbers.

If you'd like to have a chat about a home loan, enquire online, call our Contact Centre on 13 14 22 or drop in to see your nearest branch today! Our lending specialists are ready and waiting to help you buy your dream property.