How to negotiate with real estate agents when buying a property

You know what you want when it comes to your next home but how do you get it? These are the best strategies to use when negotiating on a property purchase.

Creating a win-win scenario is the key to an offer the seller will consider.

When it comes to negotiating with real estate agents, it’s not always about the price.

There are a range of other factors at play that could influence whether your offer gets accepted or not.

TERMS OF THE DEAL

Let’s start with the terms of the offer, says Propell Property founder and managing director Michael Pell. Whether or not these match the seller’s circumstances can make or break the deal.

“Being able to accommodate the seller’s needs does give the buyer more leverage in other parts of the negotiation,” Pell says.

He says having a clear understanding of whether the seller needs a longer or a shorter settlement as well as having flexibility around those terms can help buyers to create a “win-win” situation where both parties can benefit.

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Being able to accommodate the seller’s needs is important.

TALK THE TALK

In fact, knowing the seller’s motivation for selling is so important when negotiating, says Bianca Field from Bought Agency, that you will be “prodding around in the dark” unless you take the time to find out.

When it comes to using the right language in negotiations, she says it’s not so much a case of talking the talk as it is of asking the right questions – but make sure you do it in a friendly, personable way.

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Michael Pell from Propell Property. Picture: supplied

“The best way to get through to the agent is to start by creating rapport,” she says.

“Ask the agent what they consider a good price would be for the property. A good follow up question would be, ‘what is the vendor’s motivation for offloading this home? Would a longer settlement be preferable?’

“You can normally start to fill in the gaps from there.”

SWEETENERS

A shorter settlement period is often very appealing to sellers wanting quicker access to their funds for another purchase, Pell says.

“If you’re ready to settle quickly, often you’ll get a price discount – that’s a very common one,” he says.

On the other side of the coin, as the buyer, you may require a longer settlement period. In that case, offering a more attractive price to the seller in exchange for terms more favourable to you could help get the deal over the line – if they are willing to play ball.

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Buyers agent Bianca Field from Bought Agency. Picture: supplied

Another sweetener for sellers still looking for their next home is to offer to lease the property back to them after purchase, says Field.

Last year she purchased a property in the Sydney suburb of Balmain East for $10m for a client.

“The vendor was hoping for $13-$14m,” she says. “As part of the deal we did a really short settlement and we offered to buy all the furniture in the property as well.

“The owner had another property to go to and they had all this furniture customised for it. It made it easier for them to get it done and easier for them to say, ‘yes’.”

Make sure you have your finances lined up before you make an offer.

BE READY TO MOVE

It’s important to be finance-ready when negotiating on a property, Pell says.

“You’ve got to be pre-approved or at least have the OK from your bank or broker that you can go out with a loaded gun and fire,” he says. “If you don’t and you’re asking for a really long time for a finance approval, that’s not very attractive from a seller’s point of view.”

If you are still trying to organise your finances, other competing buyers may beat you to it. The agent also may not take your offer as seriously as those put forth by others.

Completing due diligence and ensuring all pest and building reports and strata reports have been examined first is also important, he says.

MAKING AN OFFER

When it does come time to make an offer, it’s important to be strategic, Field says.

“Your best offer should never be first,” she says, adding it’s always good to have another one up your sleeve.

Do your research and due diligence before you start the negotiation process.

NEGOTIATING MISTAKES

Michael Pell says it’s important to do your research first before negotiating on a property. Here are some common mistakes buyers make when trying to strike a deal with a real estate agent.

* They pay what the agent is asking – rather than researching what they think the property is worth and finding out why the vendor is selling

* They don’t line up finance first – and lose out to other buyers who are ready to pounce

* They don’t do due diligence – and find out there are major problems with the property after they have committed to the purchase

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Originally published as How to negotiate with real estate agents when buying a property