How to get the best price for property in a buyers market

How to get the best price for property in a buyers market

There is plenty of negative commentary about our housing market at the moment which has been magnified by the position of our economy and furthermore the world economy.  In every market there are winners and losers, at the moment buyers can put themselves in winning position.

Here are a few tips that might help you when purchasing a property.

Initial Research

One of the first things you can ask is why the property is being sold; sometimes this can give you an insight into how desperate the vendor is to sell the property.  For example, if you get the picture that the vendor is looking to sell quickly then you may be able to bargain by offering a reduced price and a fast settlement period (this is the period of time it takes for the sale to go through).  Another important question is what the asking price is; even if you have seen it on the ad they may have already reduced the asking price if the property has been on the market for a while.

The more information you can gather in this period the better because it will help you in getting the lowest price.

How much is a property worth?

If a car salesperson told you that a bomb they are trying to get rid of is worth $20,000 is it worth $20,000? Only if that’s the price you pay.  What I’m trying to say is that you define how much a property is worth and the reason you didn’t pay $20,000 for the bomb was you knew you could buy another for cheaper.  Knowing a property’s value is something that a lot of buyers do not know, if this is the case then you need to do more research on properties within the area you are looking to buy. The buyer decides the price not the seller.

 
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Don’t look so desperate!

This is a common mistake home buyer’s make mainly because they get emotionally attached to one property; if you appear to need the house then you lose leverage in any negotiation and more likely to pay the full asking price.  One way of working around this is letting the agent know that you are interested in several properties in the area, this way the seller has no leverage and makes them more likely to negotiate.

Put an offer in writing. 

This makes the offer more genuine and allows you to explain why you have made a lower offer, you can go as far as to use trends supporting reduced prices in the area or show similar houses that have been sold or are currently on the market to indicate that the asking price is too high.  Keep in mind that when they market a property for sale they generally expect to discount the price in order to sell, the challenge is getting the right price.

In the letter you can also reinforce that the property is one of several you are looking at in the area showing you are not desperate to purchase that particular property.  You can even make this point stronger by putting an expiry date to the offer (e.g. 3 days); this can make the seller more desperate and more likely to negotiate.

Ask for a counter offer. 

If you have heard nothing back from the agent a week after sending the letter of offer then a strategy to use could be to call them back and let them know you are still looking for the right property and casually ask them how they went with the property.  If the property is still on the market you can ask if the vendor is willing to make a counter offer, if you can get this then you have already entered into a negotiation and you know how low they are willing to go. 

For example; if you write a letter of offer for $300,000 on a property advertised at $330,000 and the vendor gives you a counter offer of $315,000.  At this point you know that the vendor is willing to go to $315,000 and discount the property by $15,000.
 

Be clear on your highest offer.

If you are making your offer and it is the highest you are willing to go on that property then make this clear in your letter of offer.  This way the offer will be taken seriously and if the vendor wants to sell then they will sell the property.
 

Understand the agent’s role

The Real Estate Agent works for the person selling the property and they work to get the best deal.  Agents also work on commission and will only get paid if the property sells, it’s important to remember that sometimes the agent can be more desperate to sell than the vendor.  For example, if a property has been on the market for a while and you come along with a low offer then the agent may indicate to the vendor that the offer might be the best in a stagnant market; this may influence the vendor to sell.  At this point the vendor is relieved to sell, the purchaser is happy with the price, the agent gets paid for their efforts and everyone is happy.

I hope this gives you some information which you can use when purchasing property and please if you have any views please express them by leaving a comment.