Buying property is a business transaction like any other. Just as the price of a car can be negotiated with a dealer, so can the asking price of a property be negotiated with a Seller. Here are 5 tips you can use to negotiate the best deal.
1. Do Your Homework
Before making an offer to purchase the property, find out how realistic the asking price is. It is not unusual for Sellers for post inflated prices, especially for luxury properties or real estate in tourist destinations such as Cape Town.
One of the reasons why these properties are often over-priced, is because they attract foreign buyers. In fact, some Sellers still practice dual quoting – which is setting one price for South African buyers and another price for foreign buyers.
To avoid being overcharged, browse through newspapers and magazines or contact a trusted agency like Homefair.co.za to find out the price of similar properties. If other properties are cheaper, be sure to use this as a bargaining chip in your negotiations.
2. Start Low
If you are interested in the property on sale, it’s always wise to put in an Offer to Purchase that is lower than the asking price. Starting low gives you room to increase the offer if the Seller asks for more.
3. Spot Flaws
If you start with a low offer, you need to provide reasons for this reduced offer. This is why it is important to inspect the property or have it valued in advance by a professional. Knowing a property’s flaws and weaknesses gives you leverage because it justifies your reduction in price.
Be careful when using a property’s flaws as a negotiation tool. If you press too hard, the Seller may go on the defensive and refuse to do further business with you. The Offer to Purchase needs to be signed by both parties to be valid, so if you are too critical, the Seller may reject your OTP.
4. Time the Sale
You can also take advantage of timing to reduce the asking price. A Seller needing an urgent sale may be more likely to accept a reduced offer. In the event of this scenario, find out how long the property has been in the market. Sellers often accept lower offers if the property has been on sale for a long time.
When you do find a Seller desperate to sell, don’t be too eager to buy. If a Seller catches wind that you are also desperate, he or she may refuse to lower the asking price.
5. Buy Cash
Cash Buyers are very attractive to Sellers, especially to those who are desperate to sell. The allure of a quick sale can make a Seller accept an offer just to accelerate the process. Although it’s not always possible, buying a property with cash can give you considerable leverage over other buyers.
By taking heed of these tips and implementing them to your advantage we firmly believes that your negotiating skills as a prospective buyer will be enhanced.