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Five tips for house-price negotiations

7 March 2018

Five tips for house-price negotiations

As the latest figures show rents on the rise and property prices coming off the boil, could now be the time more people are looking to get a leg on the property ladder? Canstar looks at ways to make sure you get the deal that’s right for you.

“Latest QV figures suggest that Auckland rent for 2 bedroom homes now exceed $500 per week. With the rate deals currently being offered by lenders, this weekly commitment could cover the servicing of a $450,000 home loan.” says Canstar general manager Jose George. “If people are in a position to buy a property, this latest research could prompt them to want to move quickly. But buying a home is a big deal and a huge commitment and buyers shouldn’t be tempted to cut corners.”

Whether through auction, or increasingly, through negotiation or sealed bid, buying a home is a seriously big deal and negotiating transactions of such high value is not something we are often exposed to. With that in mind, Canstar has compiled a ‘go-to list’ to help people get the deal that’s right for them.

1. Do your research beforehand

A good knowledge of the housing market in and around the areas you are interested in is essential before you even start looking for a home. You can’t negotiate or decide your bidding limit if you don’t have a ballpark figure of how much it should be worth. Check out Trademe property or ask your local agents for a list of recent sales in the area (this will usually include details of how long properties are taking to sell), to get clued up.

2. Don’t sweat it

One of the best tips for negotiating house prices is to leave emotion at the door. This can be especially difficult if you’ve found your dream home and are desperate to buy it, but it’s important to keep your emotions in check and negotiate using your head, not your heart.

3. Don’t play games

If it’s obvious that you’re really attached to the house you’re buying, then a smart real estate agent and owner can use that against you to make you pay extra. Conversely, however, make sure the agent knows you are interested! Acting aloof and disinterested could mean that you may not be seen as a serious buyer.

Clear communication is essential so that everyone knows where they stand, but don’t give away your best offer (or your walk-away price). It is the job of the seller’s agent to get you to pay as close to the expected price as possible and if they know what your top offer is, they’ll push you far as they can – and even beyond, if they think they need to. Feel free to simply let the agent know that you want to buy a property at market value and what you consider the property’s market value to be.

4. Know your upper and lower limits

You wouldn’t go and buy a fancy new laptop without knowing whether you could afford it, and that’s especially true when purchasing something as expensive as a house.

If you’ve already got a pre-approval on your home loan, then you know exactly what price range you can afford and it’s important not to go over your limits. This is especially important in what can be a heated environment of an auction where bidding can get frenetic. Again, this comes back to checking your emotions at the door so that you can get yourself the best possible price and not end up in a financial nightmare.

5. Explain when making low offers

If you think major repairs or renovations are required to make a property liveable, it may be reasonable to make a lower offer than you otherwise would. However, it is vital to explain why your offer is where it is as you don’t want to come across as a chancer, damaging your credibility as a genuine buyer.

As the number of houses sold at auction continues remains muted, how to negotiate house prices is ultimately about the back-and-forth between buyer and seller. Like with most major purchases, preparation, good communication, and knowing your limits are keys to getting a good price for your new home. So, do plenty of research, think all your offers and decisions through, and ensure you’re prepared with the right home loan for when things do fall into place.

ends

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