I’m frequently asked about Property – for investment, owner occupied properties and in more recent times, by first home buyers.
There are certain pain points when it comes to buying a property and a common question that has significant financial bearing is:
“What price should I start at when negotiating on a property?”
This is an exceptionally important question because this ‘negotiation’ game usually goes one way and that’s UP. The first offer really can determine how much you ultimately end up paying for the property.
As a Buyer, you need to fully understand your buying position in this current property market.
I can best describe this by a recent property negotiation. I have a very good friend, Ben, who was wanting to negotiate on a property that would be his own home.
The property was on the market for offers over $1.1m or the vendor would take the property to auction.
I offered to ‘coach’ Ben through the negotiation process so that he didn’t overpay.
We knew that the identical property one floor above sold 12 months ago for $1.22m but was in better condition than the one Ben wanted to purchase.
There are certain facts that can be leveraged when negotiating and this was Ben’s circumstance:
- He was a cash buyer
- He could settle the property in 21 days
- He was prepared to sign a contract that day on his offered price
In my opinion this position puts Ben in the “Rolls Royce” class of Buyer!
I asked him to suggest a starting price for his first offer. He felt that because the apartment above this one had sold for $1.22m that his first offer should be close to the $1.1m so suggested $1.085m.
Rather than ‘guess’ a price we then worked out roughly what a renovated bathroom would cost as well as some cosmetic work in the kitchen and some more storage solutions.
These costs were then used as part of the negotiation and the first offer made was $1.034m.
I was confident that there were no other buyers and no other offers after doing my due diligence as a Buyers Agent.
The offer of $1.034m was accepted and Ben saved $66k off the bottom of the price range.
It is a buyer’s market right now and buyers everywhere can save if they know how to negotiate and understand their strong buying position.
Getting some expert assistance can save you a fortune!