Six tips to help weather the negotiation storm when bidding for your dream Warrnambool home
With auction clearance rates slipping below 50% in some markets right now, vendors in the Warrnambool region are much more open to a pre-auction offer.
You’ll also find more vendors choosing a private sale over an auction because it allows them to hold out for their price and save on auction costs.
That means, if you’re ready to buy a Warrnambool property during Spring, you’ll also want to be ready to drive a hard bargain. Here’s some tips on how to make a successful pre-auction offer and negotiate your price like a pro
1. Offer the right price
Research is always the key to paying the right price for a property. Whether you’re buying at an auction or negotiating directly with the vendor, it pays to know the property’s correct market value before you go in, all-guns-blazing.
Researching the market is the best way to identify an offer that is too good for the vendor to refuse, without paying more than you should. Being realistic is the other important thing here – you’ll have a better chance of beating out any other keen buyers if you’re pragmatic.
2. Find out why the vendor is selling.
Knowledge is power. Ask the real estate agent why the vendor is selling and use the information to your advantage. For example, if they have already put down their deposit on their next property, the vendor may have time constraints that you could make the most of, by offering a short settlement. If they are in a divorce situation, you could offer a larger deposit so that both parties will have more money for their next property deposit. This could help the vendor choose your offer over another. It’s about finding something that makes your offer different – and more appealing.
3. Have your finance in place
If you haven’t already, ask me to organise pre-approval on your home loan before you put in an offer. That way, you’ll be confident of how much money you have, and also head into the auction or negotiations with a clear understanding of your upper spending limit. Having pre-approval already sorted also gives you an edge over the competition, because the vendor knows the deal will go smoothly – less chance of last minute back-outs.
4. Play your cards close to your chest
When it comes to liaising with the vendor’s real estate agent, less is usually more in the information department. Hold back on telling them your budget – because a cunning agent could use the information against you (although the agents we deal with wouldn’t). Always indicate that you’re interested in several properties and have other options – if they think you’re too keen on the property they’re selling, there’s less incentive to be flexible in how they negotiate.
5. Time your offer well
Timing is crucial when you do make an offer. Some experts suggest that you go in hard and early, well before the auction – the convenience of having an offer without the drama of an auction could appeal to some vendors. This could also be a good tactic in a softening market.
Then again, other experts are all for waiting until right before the deadline to make the offer, to eliminate the possibility that the real estate agent will shop your offer around to other prospective buyers.
Another tactic is to stipulate a time limit – for example, tell them it’s only on the table for 48 hours. Whatever your strategy, be prepared to stay firm on your offer – don’t be too quick to budge from your original offer price, as it could make you look easy. And if you caved once, who is to say you won’t cave again?
6. Keep your emotions in-check
Easier said than done, but it’s important you don’t let emotions distract you during property negotiations. If the price is being pushed up, you may have to walk away if it goes beyond the correct market value you have researched, even if you could imagine you, your family and friends having a wonderful time in this extraordinary property. A common mistake is to be manipulated into paying more than a property is worth because you love the property or don’t want to be the loser in the negotiation process. Remove the emotion and you’ll have better perspective.
Making a winning pre-auction offer comes down to being informed and employing some strategic negotiation tactics. I can help you prepare by organising a pre-approval on your home loan. Give me a call to find out more.
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend you consider if it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.