Buyers: Here's how to negotiate a great deal

OK, so you’ve found the one.

Heart thumping and palms sweaty, your poker face is barely holding up as you fight the temptation to cartwheel across her polished timber floors.

How do you make her yours? Let Jackson Jones play matchmaker with our negotiation do’s and don’ts.

Do:

1) Study the comparables

In order to negotiate like a seasoned pro, you need a solid understanding of the value of your desired new home.

Recent sales of similar homes in the area will help determine how much you think the property is worth, whether it’s been priced fairly, and how much you’re willing to offer.

Overvaluing or undervaluing sets you up with unrealistic expectations, so do your homework.

2) Be aware of market conditions

Understanding whether you’re working with a buyer’s or seller’s market is vital to your negotiations.

Go to a few open homes in the area to establish how quickly homes are selling and what the general level of interest is.

If properties are selling fast and at strong prices, it’s advisable to put in your best offer first up or risk losing out. Be thoughtful, but also be bold and don’t delay.

If you have a little breathing space and the market leans in favour of the buyer, consider putting in an offer lower than you’re willing to pay to give yourself some negotiating room.

3) Understand the vendor’s situation

It really helps to know what makes your vendor tick. We’re all motivated by more than money, so make sure you ask the agent plenty of questions about a seller’s situation.

Early or delayed settlement dates, cash offers, and even the possibility of the vendors leasing the property back for a limited time, can all be powerful persuaders for vendors.

Having some flexibility over individual circumstances can really help seal the deal.

4) Make your offer hassle-free

Good agents will require you to submit an offer in writing to show the vendor you are a serious contender.

When there’s plenty of interest in a home, the offers with the least conditions attached will be in the box seat.

Your chances of success are enormously enhanced by having finances sorted - either with lender pre-approval locked in, or as a cash buyer not needing to borrow.

Offers ‘subject to sale’ means an offer relies on the buyer selling their existing home. It's a common inclusion and can be worked around, but sellers love - and often prioritise - offers which aren’t dependent on provisos with an element of risk. 

In a competitive field, there can be multiple written offers and the agent should make this known to all parties. It’s not something to be afraid of: You just sign an extra form saying you’re aware there are other offers on the table.

When it comes to naming your price, Jackson Jones principal Nigel Jackson advises submitting an “interesting” number rather than one rounded to the nearest $10,000. He says:

“We recently took six signed offers on a home, all with favourable conditions.

“The successful buyer stretched another couple of thousand dollars and won the race - the second-placed bidder was left kicking themselves for not being bold enough on price .”

Don’t:

1) Play games

It’s OK to play your financial cards close to your chest and not reveal your top budget right away. But human nature dictates that an agent will be more motivated to help if you work with them, rather than being too cagey.

Honesty and authenticity about your situation will serve you better than minimal communication and a ‘poker face’ mentality.  

2) Make a super-low offer

This is a tactic which rarely pays off.

Yes, occasionally circumstances conspire to make a vendor desperate for a result. But generally, a ‘silly’ offer risks marking you as a joke contender and can put a vendor offside - to the point where they’d prefer to play hardball than show any flexibility.

3) Go in under-prepared financially

We can’t stress enough the value of having your financial ducks in a row.

Having approved finance in place or being in a position to buy right away means you will always be in a strong negotiating position. 

In a field of multiple bidders, someone offering great financial terms, flexibility on settlement and a lack of restrictive conditions will stand out from the crowd.

On the flip side, multiple conditions may spook a vendor into refusing even the most enticing offer -   particularly if time is a factor for them.

4) Be emotional

Once you’ve done your research, be confident of your price and - this is hard - be prepared to walk away.

Yes you’re in love, but lose perspective and you may end up committing to a price which is above what the home is worth - and could be hard to service if interest rates rise.

Remember: There are plenty more fish in the sea. Don’t say “I do” if it’s going to mean financial heartbreak down the track.