How to pay less for your next home without negotiating

Negotiating over the price is one of the most dreaded parts of the home buying process.

As if searching, inspection, sorting out finances, raising a bank loan and ordering reports isn’t tough enough, the negotiation with the vendor’s agent looms over your life at the end like a giant dark stress cloud.

“It can be hard for everyone, even for me if I’m negotiating for a house of my own, and I’ve been an agent for 20 years,” says Scott Aggett. “It’s impossible not to get emotional when you’re wrangling over price.

“If you’re planning to live there, you’re already imagining yourself moving in, and if it’s for an investment, you’re probably sick of searching, just want it all over and start feeling so overwhelmed, you can easily overlook something.”

“That’s the point at which you should really hand over the negotiation to someone who’s stone-faced, uninvolved, rational, completely non-emotional and can look at the situation with absolute clarity.”

That’s the theory behind Aggett’s new business venture, Hello Haus, which offers a negotiation service, as well as some support and information for the buyers, in return for a 10 per cent slice of any saving he’s made on the price they were prepared to pay.

It’s a novel take on the business model of buyers’ agents, who are usually contracted at the start of the process to find properties that might appeal to the buyers, show them homes, advise on advantages and shortcomings, counsel on price and finally negotiate the purchase, either before or after auction or by bidding at the event.

Many buyers’ agents today, however, also offer a similarly pared-back service as an alternative to buyers. “We can offer a full service where we find a property and buy it for clients, another where we evaluate and negotiate – you find, we buy – and a third where we purely represent someone at auction,” says Byron Rose of agents Rose & Jones.

“There’s a number of reasons buyers come to you. There might be different facets of the process they can’t get their head around, or they might not know how to establish a price in a marketplace that today has so much negative sentiment around it. They might reach out to access the data and information you can collate for them.”

The difference tends to centre on the fee. Rose, for instance, will charge a retainer for the full service of about $2500 plus a success fee of approximately 0.75 per cent of the sale price, with a cap on fees. Hello Haus will charge 10 per cent plus GST of the difference between the amount the potential purchaser nominates he or she is prepared to pay, and the final price negotiated.

First-home-buyer Alena Kolbabek was one of the first to try the Hello Haus service when she was bought her apartment.

The first place the HR manager decided to buy, Aggett advised her against, so she ended up abandoning the plan. Then she found a unit in Naremburn.

“I think I’m generally a fairly good negotiator, but when it comes to property, that’s very, very different,” says Kolbabek, 42. “There’s a lot of emotions involved. It’s such a big purchase too; you don’t want to make a mistake. It felt good to have someone else by my side to negotiate for me.”

Based on past sales and comparable apartments, Kolbabek said she’d be prepared to pay $810,000 for the property. Aggett knocked the actual price down to $760,000 – $50,000 less. So far, his clients have spent an average of $1.12 million, and he’s cut the price by an average of $64,725, or 5.78 per cent.

Buyers’ agent Patrick Bright of EPS Property Search, author of The Insider’s Guide to Buying Real Estate, says price negotiation is an important part of his work.

“I tell clients that I’ll assess and handle the negotiations,” he says. “My focus and goal is to work out the lowest amount they will accept and, if it’s below our independent assessment, and the figure below what the client is prepared to pay, then we’re all happy.

“I think the thing they dread most is that they’ll pay too much for the property and that they could have got a better deal later.”

EPS charges between one and three per cent of the purchase price depending on the range of services it’s providing to the client, and the price of the property.

Aggett, however, says that while buyers’ agents are motivated to make the sale, they aren’t particularly driven to get the price down. But his fee depends on the amount by which he has slashed the price.

“Clients get the benefit of my knowledge and all my experience in deciding which property to buy for free, and when the time comes for the negotiation, they don’t pay anything if I’m not successful in cutting the price,” says Aggett, a former Belle Property director. “They have nothing to lose in that regard.”

Sales agent Frederico Fraga-Matos, of Stone Real Estate in the inner west, says it can often be a simpler, faster process haggling with another agent. “If you’re talking to the buyer, then you have to tell them what to do to make sure the funds are there, and the reports are done, but you don’t have to have that conversation with another agent,” he says.

“Neither of you mucks around. You work out where you’re at, and it’s much more direct. But buyers can think agents are trying to play games, and then won’t tell you what their budget is, and then are surprised when a property is sold to someone else. But if a property is very popular, and you have a good relationship with their agent, that might get them across the line.”