Our top 9 property negotiation tips

The ability to negotiate effectively is quite a skill. And in the property market – staying informed is key.

Buying and selling real estate has its own legal and financial regulations, as well as its own etiquette.

We talked to Malcolm Gunning, President of the Real Estate Institute of New South Wales (REINSW), Richard Harvey, property law specialist and Law Society of New South Wales representative, and Christine Bagley-Jones, Principal Psychologist at the Counselling and Wellbeing Centre Qld, to advise you on the professional, legal and emotional ins and outs.

If you are in the market and need in-depth advice head to Domain’s Your Guide to Negotiating a Successful Property Deal.

Here are our top nine property negotiation tips from the professionals:

1. You can negotiate auction contract terms

For real estate stalwarts, this information may be old hat, but for many the idea of bidding at auction can be so daunting it can detract from what you can achieve prior to the big day.

After the auction, there is no cooling-off period, but contract terms that can be negotiated include: settlement length; deposit amount or payment method; conditions around existing tenants or vacant possession; and fixtures and other inclusions. The buyer can also negotiate any other terms they consider unfavourable.

“If the seller agrees to make certain changes to the contract for a buyer, the vendor’s solicitor will inform the real estate agent that – in the event that particular buyer is the successful bidder – the agreed changes need to be made to the contract before it is signed and exchanged at the auction,” says Harvey.

2. At a public auction, buyer negotiations should be available to all

Both Gunning and Harvey agree, at a public auction in NSW, if one bidder has negotiated changes to the contract in case they are successful (such as a 5 per cent deposit rather than 10 per cent) these negotiations should be made available to all bidders.

According to Harvey, it is common law, but check with your legal adviser to make sure it applies to your state or territory.

“A prudent vendor should be aware that they have a legal obligation to make the terms that are available to one buyer available to all buyers at a public auction – there needs to be transparency,” says Harvey.

3. If you think you’ve found the one don’t hold back

“If you are at auction, start your bid high – it blows the bargain-hunters away. If you think it is a good home and worth say $1 million, then go straight in at $900,000 or $950,000,” says Gunning. “You are better off going in with a strong bid and getting into the serious part of the negotiation.”

According to Gunning, you should also use this aggressive tactic in a private treaty sale.

“You need to be quick and go in with confidence and strength to be taken seriously. Say ‘I’m interested, I’m taking the contract for my solicitor to look at, my finance is approved and I have the ability to exchange’,” he says. 

4. Consider waiving the cooling-off period

If you are buying by private treaty, reducing the cooling-off period or waiving it altogether is becoming more common and can be a strong negotiating tactic for buyers, says Gunning. If you decide to go down this path, it is all the more important that you have done your due diligence on the property for sale beforehand.

5. Get your finance pre-approved

If you are waiving the cooling-off period or buying at auction it is imperative you have your finance pre-approved. You should have also conducted the relevant building and strata inspections and legal checks on the property before exchanging contracts.

You will be committing to buying the property, though there are instances when a buyer can back out of a sale after exchanging the contracts and during settlement – due to legal reasons such as the seller has not complied with the vendor disclosure statement requirements.

“A buyer’s solicitor can advise the buyer if the seller hasn’t complied with these obligations and whether the buyer might be able to pull out of the contract and have the deposit returned,” says Harvey.

In fact, Harvey encourages buyers to get financial approval before they even start looking at properties, no matter the method of sale, so that they can move swiftly.

 6. Be open-minded when it comes to counter offers

Sometimes sellers can become fixated on a price they ‘must’ achieve.

“Often sellers hang onto properties because they have a set figure in mind, when it might have been better to accept a slightly lower offer months before. The few thousand dollars might be absorbed in interest repayments. Just be realistic – people’s personal attachments can inflate their sense of value beyond fiscal calculations,” says Bagley-Jones.

And if you’re a buyer, you need to be able to walk away from a sale if it exceeds your means, whether it’s at auction or private treaty. “You’ve always got to have the attitude there are other properties like this, and there are other homes that will be right for you,” she says.

7. If you and your partner can’t agree – don’t do it

It’s important you and your partner both feel a sense of ownership of your property decisions.

“Don’t compromise your relationship no matter how beautiful the house or however important it may seem to sell – the best thing to do is to communicate or get some counselling. You may be able to proceed with your plans or modify them. Some people see needing a third party as a sign of weakness, but it is a sign of intelligence. It’s one of the biggest decisions you will make in your life, and you want it to be a very fulfilling experience rather than one that causes years of regret,” says Bagley-Jones.

8. Transparency goes a long way

Under quoting and over quoting does happen and can cause significant angst. The REINSW does not condone this practice. Gunning strongly recommends all buyers and sellers do their own market research when it comes to pricing, so they make informed decisions about their asking price and/or purchase offers or auction bids. He also recommends working with an agent who takes a transparent approach.

“While you should never forget the agent is paid by the vendor, the best outcome is that everyone is happy. Providing you have a transparent negotiation or auction, no one should be disappointed,” says Gunning. You want to go with an agent who takes a transparent approach and shows empathy for both parties and the negotiation.”

Transparency between vendor and buyer can also help with the negotiations, both when it comes to price and buyer/seller motivations.

“For example, if you’ve got someone who has a contract exchange on a property and they are wanting to buy another property at auction, then they will need a simultaneous settlement and the agent needs to work very hard to bring that together,” explains Gunning. “The agent assesses each of the party’s motivations and then uses that to hopefully get a seamless negotiation at the best possible price – that’s what you pay them for.”

Obviously, you don’t want to over disclose – keep quiet about details like your bottom line or emotional involvement in the sale, providing just enough information to help the sale progress.

9. Go easy on yourself

It can be tough out there!

“If you make a mistake, or have done all you can – forgive yourself, forgive your partner – move on, don’t foster it,” says Bagley-Jones.

Harvey had this to say. “Most buyers miss out on several properties before they are actually successful. Don’t be too disheartened and use it as a practice run for all the steps needed next time.”