How to negotiate when buying a house: Five property experts share their best tips

Home buyers purchasing outside the auction environment may find themselves having to conduct their negotiations with the vendor’s agent.

It’s a challenge that can be tricky and enormously stressful, so Domain spoke to five of the best negotiators in the business for their secrets on how to clinch a ripping result.

Gather information

Start right from the beginning, advises former real estate agent Scott Aggett and founder of contract negotiation agency Hello Haus.

“Don’t submit a verbal offer and then attempt to bargain backwards after inspections have been conducted,” he says. “Instead, try to seek out as much information from the agent as you can without giving anything away.

“Make a quick phone call to the agent – not to make an offer, but to request a copy of the contract of sale. Let the agent know that you may be interested in the property but leave it at that. It is critical that you aren’t drawn into conversations about price as good agents will take note and refer back during negotiations.”

Have your ducks in a row

Then, be prepared, Aggett urges. Before embarking on any negotiations, organise the pest and building reports, a strata report and potentially have a property valuation carried out.

Make sure finance is pre-approved, the property is suitable for your needs, you’ve viewed it three times at varying times of day, you’ve inspected alternative properties and you have a solicitor or conveyancer and a contract of sale.

Inquire about the vendor

Approach the agent to find out whether the vendor is a “willing” seller or a “ready” seller, says Stuart Jones of buyers’ agents Rose & Jones. It’s a critical difference – a willing seller feels no compulsion to sell if they don’t get the price they want; a ready seller might have already have bought elsewhere, so really needs to sell.

“To discern which the seller is, ask the agent whether his client is prepared to negotiate,” Jones instructs. “Do that before you give any kind of offer. If the answer is no, then the vendor is not a ready seller, and the chance of paying a lower price than advertised is much less.

“Then the next thing to ask is whether that vendor might consider exchanging over a longer cooling-off period to give you a chance to organise your finances if you haven’t already sewn that up. That would be a conditional contract, which is becoming more and more important these days with banks tightening up on offering money, and means you’ll lose only 0.25 per cent of the asking price, rather than your 10 per cent deposit.”

Set your price

The critical next move is deciding what offer to make on a property. You never want to offer too much, and pay more than you need to. Equally, if your offer is too low, you might not be taken seriously at all.

Director and president of the Real Estate Institute of Australia Malcolm Gunning says you need to be extremely well informed about the value of a property. That means doing plenty of research beforehand about previous sales, prices of similar homes in equivalent locations and market trends.

“You need to know, as near as possible, what a property is worth that day,” he says. “Then make a reasonable offer. That doesn’t mean 20 per cent less than you know it’s worth.

“For instance if the asking price, that you believe is reasonable, is $1 million, don’t offer $800,000. That won’t get you very far at all.

“Instead, knowing how much the market has come off recently, maybe look at that kind of percentage. And if you can be cash-ready, that can be a compelling argument.”

Show that you’re serious

A good offer, a cheque for the 10 per cent deposit, a deadline, and if in NSW, possibly a 66W certificate waiving the cooling-off period, are all useful tactics, says investment property advisor Cain Kennedy of CK Realty.

“Give everything to the vendor’s agent and say it’s an offer valid for the next 48 hours,” he says. “Owners who’ve been on the market for longer than a month or who’ve had their property passed in at auction will find that difficult to refuse. The deadline concentrates the mind.”

McGrath Edgecliff sales agent Simon Exleton says you also need to be prepared to walk away if the vendor won’t play ball.

“With a lack of competition between buyers, vendors and agents are very open to realistic offers,” he says. “You’re within your rights to put an offer forward at the low end of the price guide. But make a strong offer at a figure you feel comfortable with. Put your best foot forward.

“The market may have come off five to 10 per cent to where it was last year, but your offer needs to be genuine and realistic. And if your best offer isn’t accepted, then be ready to move on.”