How to make a winning offer when buying a property

It’s one of the toughest tasks when buying property – working out how to make the winning offer on a home, whether by private treaty or pre-auction.

How do you work out much is enough to secure the home? Are there any well-tried strategies you can adopt to place you at the front of the queue? And, perhaps most importantly, how can you avoid the risk of paying too much?

“It’s crucial to ask the agent a few key questions,” says Scott Aggett, the managing director of property negotiators Hello Haus.

“They might be things like, ‘What is the highest offer to date the sellers have rejected?’ and ‘What could buy the property?’

“You’ll be surprised how many agents will openly tell you those answers, but the trick is reading through the sales pitch to ascertain the truth.

“It’s good, too, to have a second property option up your sleeve and drop that into the conversation casually, rather than as a threat.”

How much should you offer?

Obviously, the size of an offer is key and a huge sum of money will always win the prize, but it’s critical to make sure you’re not paying way over the odds.

“It’s about hitting that sweet spot of price and timing and what the seller is looking to achieve,” says Mr Aggett.

“It’s about limiting road blocks to keep things moving quickly and smoothly, and speed in a deal can be crucial to ensure you outpace any buyer competition.”

To work out how much your offer should be, it’s important to do all the relevant research in terms of comparable recent sales for the same area and type of home, adjusting the price according to how your target matches up, and looking at current listings.

“Some properties are being underquoted at the moment with agents trying to put the price low to attract people,” says Rich Harvey, chief executive of Propertybuyer.

He suggests monitoring prices achieved by comparable properties to get a good idea of the property’s value.

Pre-auction offers

Buyers also have to come to terms with the fact that making a pre-auction offer at the same spot where most of the interest lies is unlikely to secure you the deal.

Mary Anne Cronin, director of PPD Real Estate, says, “That won’t be tempting for the vendor at all.

“If you want to buy something prior, it’s got to be in excess of other prices, maybe paying a premium to secure it.”

Be ready to act

It’s also vital to have your finance lined up and ready to go in order to demonstrate your capacity to pay the deposit and complete the sale.

“There are no words that sound sweeter to a vendor than, ‘I’m a cash-buyer’,” says Matt Lahood, chief executive of The Agency. “They could produce a cheque for the deposit but these days it’s more often done on money transfer, so they can bring a copy of their bank statement to show they have the funds.

“And if you’ve already done your pest and building inspection with a house, or strata inspection with an apartment, saying that you can sign a contract that day will put you ahead of 90 per cent of your competitors.”

Flexibility and professionalism

You should also have a clear idea of your settlement terms in advance, and what you’re prepared to offer a vendor.

“A lot of vendors want longer and more flexible settlements from maybe six to 10 weeks, so if you say you’ll give them that flexibility, that could make your offer more attractive too,” says Mr Harvey.

“Also, communicate with the agent and treat them with respect. So many people distrust them, so when you’re friendly and professional that’s like a breath of fresh air, and will endear you to the agent.”

Other areas for flexibility can include allowing the vendor access to the deposit and waiving any cooling-off period, although it’s wise to seek professional advice before making these concessions.

Make the case

Another tactic Mr Lahood favours is asking the buyer to write a letter explaining why they’ve made the offer they have. In that, they can mention the other properties they’ve inspected, the price points they sold for, how this property may vary, and justify the offer they’re making.

“Often buyers see far more properties than agents and can say why, having inspected so many, they’re now offering $1.4 million for this one rather than $1.5 million,” he says.

“It makes the buyer think about the issues, and it shows the vendor that their offer is genuine.

“Some people also like to put in how excited they are at the thought of moving there, and how much they appreciate the home, but I always suggest they keep it very straight. If they put a strong offer forward, the early bird catches the worm …”

Set a deadline

Finally, try to take control of the negotiation process, Mr Aggett says. “Put a time limit on your offer, say, ‘We can only wait until 12pm tomorrow’ for an answer as you wish to offer on the second property should they not accept.

“This puts the emphasis on the seller and drives their ‘fear of loss’. The fact you raised the second property in a much earlier conversation gives it more weight now.”