Making your first offer on a property is an exciting process and usually fraught with nerves. You’ll probably have a lot of questions and concerns, and there will be a lot of pressure to get it right…
Here are five tips to help you with a smooth transaction:
1. Do your research
One of your first things you’ll need to do is figure out how much you’re willing to offer. In fact, sometimes the asking price is too high and you’ll be squandering money if you don’t go lower. Ask the real estate agent for a list of comparable sales in the area to give you an indication of what’s reasonable.
Be aware that it’s okay to make multiple offers with different sets of terms for the same property. This can come in handy if either you or the seller want a longer or shorter settlement and you can use it to your advantage to perhaps achieve a better final price.
"Be aware that it's okay to make multiple offers with different set of terms for the same property."
To ensure you are as prepared as possible, you’ll want to ensure you’re also across all the costs you could be up for when buying property. This doesn’t just include real estate and buyers agent fees, but also other costs like building inspections, pest inspections, renovations and more.
2. Mentally prepare
Be prepared for the outcome - whatever it may be. It’s important that you don’t get too attached to the property before the contract is finalised because there is always a chance it won’t go your way. Try to come from a place of calm and acceptance. Be okay with getting either knocked back or accepted. Know your upper limit and stick within your budget, rather than make an emotional decision you cannot afford at this time.
3. Get help
Real estate agents tend to hike up the price of a property by 5-10%. It’s a silent understanding that there’s room for negotiations and quite likely that the vendor will accept a lower offer. However, without having a valuation first, it can be difficult to gauge what is a fair price - for you and the seller.
Remember that the real estate agent isn’t looking out for your best interests. They want the best sale price possible. So instead of asking them for advice, consider employing the help of buyer’s agent to assist you through negotiations.
4. Be open to negotiations
It’s not uncommon that the first offer you make will be rejected. It doesn’t mean it’s over though. Negotiations are par for the course and that’s why it’s a good idea to make your first offer a little less than your upper limit. That way, if the seller wants to negotiate your price up you have some room to move. Just be careful not to be insulting by low-balling them!
"Negotiations are par for the course and that's why it's a good idea to make your first offer a little less than your upper limit."
Before you even think about putting an offer on the table, ensure you have all your finances in order. You should be ready to hand over the required deposit as soon as the contract has been accepted.
It’s best practice to have your full finance approved by your lender before making any offers. At the very least, arrange for pre-approval. If you haven’t sorted this first and your offer isn’t conditional upon finance, you will incur penalties in the way of a holding deposit.