Hi All,
To all those who have bought property, could you please provide any tips and things to avoid during negotiations for a first home buyer? I'd like to know about your experiences and what to look out for.
I've heard of sneaky tricks that agents use so I want to go in prepared.
Thank you in advance!
You always have excellent advice mskeggs, always well thought out and considered. Hats off to you my good ozbargainer!
All these things make very little difference in Sydney/Melbourne when there's someone else willing to gazump with another 100k or 200k and not even bat an eyelid.
You should assess the macro factors first such as the state of the market - if it's bullish, and easy to sell, playing hardball could lose you the property, and the level of interest in the property.
Do you have any options? Are you just negotiating on the one property or do you have an alternative or two up your sleeve? The fewer the options you have, and the more you need the property, the less room you have to move.
Make sure you have a good idea of the value of the property based on comparable sales and market trends and set a walk away price. Start below it, to what extent depends on the other factors, and move up as needed, and be prepared to walk away when the price exceeds it.
You have to be in a position to negotiate so depends how much interest in the property from others
Price - offer a reasonable offer vendors don't waste time with low ball offers and make sure you always say only valid for 24-hours it put the pressure on the Vendors to make a decision for a 'acceptable' offer it ensures you wont ever pay to much dont ever expect to get a bargain though they do exist but the market it too hot right now to hope for a cheap property (Melbourne & Sydney).
Settlement - always get at least 45-60 days and try put in a subject to building inspection (especially if the structure is less then 5 or older then 25 years old) on top of subject to finance.
LAST THING DONT TRUST REAL ESTATE AGENTS THEY ARE GREEDY CROOKS never met one that was 100% honest about a property weather it be lying about rental returns, past sales, age of the property etc dont believe anything unless it is in writing. The amount of times Real estate agents have tried to pass a bedroom that is actually studies or over quoting 'possible rental return' negotiating with them is easy make a offer limit it to 24-hours subject to the standard finance make sure you read the section 32.
As said, it really depends on the interest in the property.
I purchased an apartment as a first home buyer - I offered them 10% less than what they were asking on a 30 day settlement because I knew that they wanted the money. They accepted and there was no negotiation. My offer wasn't too low to require negotiation but it wasn't too high.
In addition - I knew that there weren't many people interested in it as I was the only one to attend the opening. Also, the demand for apartments fluctuates a lot in my area and at this point it was at a low.
In Perth - if the area in which you are looking conducts auctions in it then you'll probably end up paying close to the asking price because even in a private sale you may find other people have put in offers - if there aren't any auctions in the area then i'd be offering 10% less and negotiating from there - i'd also offer a 30 day settlement if you can as a lot of other people rely on long settlements in order to secure another home in the meantime.
Get a clear figure in your head of what you're willing to pay and stick to it.
One recommendation that I also have is.. never act interested in the property.. at any point in time.. always act like you literally don't give a flying fiddlesticks and that there are plenty of other properties on the market. If you show any sign of interest prior to having an offer accepted then you are in for a bad time and you may end up paying a crap load more.
In Melbourne almost all houses go to auction, so you 'negotiation' is in public and almost never in your favour.
Same with Sydney
If you're looking in Sydney, be prepared to offer your first born. Heck, even your second born. Human trafficking is pretty much the only way you're going to afford something in Sydney as a first home buyer.
OPs from Perth so market has been down in Perth the last couple of years (mining boom over) so tactics will differ to those in Melbourne/Sydney.
Do your research and come up with the value/offer yourself based on. Everyone know the price but not value. I have purchased and have aided purchases for my family in Melbourne over the last 4 years and people have commented that I paid too much. You need to do your research to buy well
In answering your question the best way to negotiate with agent is NOT to tell them you are a first home buyer but let them know you are in the fortunate position to BUY first then looking to SELL your current property after.
You will find after you say this they become a lot nicer and more honest to you. If you actually do own another property (I know you don't as you said it is your first home) then I would also invite that agent to do an appraisal of your property just to get them a little more excited.
Consider all the factors in the negotiation, not just price.
For example, can you support a short settlement, or a long one? Can you allow the sale to complete then let the seller stay on as a tenant for a period while they organise their next move. These are all powerful levers as they have costs that are borne immediately by the other party, not rolled up into a loan over 30 years. Are you willing to waive cooling off periods or other rights that can delay settlement.
Can you pay cash (probably not as first buyer!)