Once you’ve entered the final stages of buying, it’s time to negotiate the final price. This is a difficult process for many people – in Australia and many other Western countries, haggling and negotiating for purchases doesn’t happen very often, meaning most Aussies have little experience in negotiating. We’ve found some great tips on how to negotiate buying a house, so that you can get to the best possible value for both parties involved.
1. Do your research beforehand
Having a good knowledge of the housing market is essential before you even start looking for a home, and doubly so once you’re deep in negotiations about price. You can’t negotiate a house price if you don’t have a ballpark figure of how much it should be worth. You can do this by researching other places in the area, as well as houses with similar features in other suburbs.
It’s often said that knowledge is power, and nowhere is that more true than in a negotiation. If you know what the property is worth, you can confidently refuse a price that is too high or be suspicious of one which is too low. Most importantly, you can make an offer that you think is fair and mutually beneficial.
For more detail on how to research the property market, read this article. We’ve also outlined the median prices you can expect when looking at the best suburbs to buy in Australia’s capital cities:
- Sydney buying guide
- Melbourne buying guide
- Brisbane buying guide
- Adelaide buying guide
- Perth buying guide
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’re interested! Acting aloof and disinterested can mean that you won’t be seen as a serious buyer.
Clear communication is essential so that everyone knows where they stand, but don’t let the seller’s agent know your walk-away price. If the seller’s agent knows what your upper limit is, it’s their job to try to make you pay as close to that price as possible. 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. You can use our Borrowing Power Calculator to work out what you could realistically afford in monthly mortgage repayments, based on your income and your other expenses:
If you’ve already got home loan pre-approval, or even full approval, then you know exactly what price range you can afford. We’ve explained how to apply for home loan pre-approval here.
It’s important not to go over your self-imposed limit, no matter how impassioned the negotiations might get. Again, this comes back to checking your emotions at the door so that you can get yourself the best possible price.
5. Explain when making low offers
When you think some part of a property will require major repairs or renovation in order to be liveable, it may be a reason to make a lower offer than the asking price. However, making a low offer is risky because a seller is likely to reject it immediately, damaging your relationship with both the seller and the real estate agents. So if you do make a low offer, it is vital to explain your why to the real estate agents.
How to negotiate house prices is ultimately about the back-and-forth between buyer and seller. Like 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.
Learn more about Home Loans
- Best time to buy a home
- Do different property types influence a lender’s decision?
- Pros and cons of apartment living