Advice
Tips to negotiate asking price like a pro
30/07/2019 12:12 | Source: realestate.com.au
Negotiating isn’t that dissimilar from playing a game – it involves reading your opponent, strategizing, and then striking.

Frank Valentic, Director of Australian property firm Advantage Property, shares his tips on how to negotiate a healthy sum off an asking price.

Valentic says: “We have many examples of negotiating big sums off an asking price. One recent purchase was a house in Merricks North for a client relocating from Melbourne for a lifestyle change. The house was originally listed at $3.5m and after five months on the market, the price was dropped to $3m."

“We then pounced, as we found out the vendor had purchased another property and the listing had dropped down on the website from a feature listing to a lower listing position. We gave them the settlement they wanted and an unconditional offer of $2,551,000 so that we could secure a great discount.”

negotiate asking price

“It often depends on the vendor’s personal situation and how motivated they are to sell,” says Valentic.

“If it’s a distress sale (one of five Ds) you have a much better chance of negotiating a better deal.”

The following five Ds that Valentic refers to are:

Distance – If the owners of the property are located overseas or interstate, or they may be moving away and simply need to sell the home quickly.

Death – If the resident has passed away, the vendor may prefer that the sale is completed quickly without having to devote too much time to it.

Debt – Vendors who are facing debt in their personal lives or business and need to sell their home in order to repay their debt.

Divorce – If neither of the couple want to stay in the home they shared together, they will sell the home and split the profit.

Deadline – The vendor needs to sell by a certain date, or dovetail another settlement for a purchase.

So what’s the game plan?

Once you have determined if there’s wiggle room in the home’s price, it’s time to strategise. Valentic has several ways to bring the price down.

Show the vendor you’ve done your research – “Attach some comparable lower sales to support your offer and use another property as leverage advising the agent/vendor that you will be making an offer on this other property,” says Valentic.

Show the vendor the money – “Show you are serious about the purchase by giving a 10% deposit cheque with the offer.”

Go for properties that have been on the website for longer – “Buy properties that have been on the market for 60+ days as they drop down on the priority list on real estate websites.

Be accommodating on the settlement – “Give the vendor the settlement they need (long or short) and any other terms that may be favourable for them, for example a 20% deposit, as they may need a deposit for their next property. It’s also worth making it an immediate deposit release.”

Make the offer unconditional – “This will make the offer as attractive as possible. It will mean it’s not subject to finance or building reports.”

Keep it all formal – “Don’t make any offers by email or verbally. Show you are serious by presenting your offer on a contract with a deadline for the offer to expire.”

Look at the home’s structure – “Get a building report done and provide this to the vendor to negotiate a discounted price for the works that will be required to fix the defects.”

Hire a professional – “Use a buyer’s advocate/buyer’s agent or another professional who is experienced in negotiation and bidding for the best deal.”