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It’s always nice to be able to keep a little money in your pocket when you’ve found the perfect home. But how do you go about determining fair market value for a property so you can negotiate with confidence?
Do your research
Educate yourself on the local area and the property market. Take note of recent sales, paying particular attention to houses like the one you’re interested in – these will help you determine a fair market value for the property. Consider if it’s a buyer’s or seller’s market, and how quickly homes are selling. If property prices are falling or there are a lot of houses for sale, you might be in with a better chance of having your offer accepted.
Find out as much as you can about the property
Arming yourself with as much knowledge as you can about the property will also help in your negotiations.
- How long has it been on the market?
- How many people are turning up to the open for inspection?
- Why is it being sold?
- Are the vendors in a hurry to sell? Have they bought elsewhere?
- What is the age and condition of the home?
- Are there any obvious structural issues?
- Is there anything negative about the house?
- How big is the yard?
Some of these questions might be answered by the agent but always remember they are working for the vendor. You may be able to uncover some information using your own research and observations.
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Get a professional opinion
Obtaining a property valuation from a registered valuer will give you a firm idea of the property’s market value to guide your negotiations. They have in-depth knowledge and access to reporting information that may not be available to you. They’re especially helpful if you’re new to buying property or new to the area. There is a cost involved, and it may take a few days to organise and get the report.
Get your pre-approval in place
Having a home loan pre-approval puts you in a strong negotiating position right from the start. Getting this in place before you even start your search will help you narrow your focus to properties that match your needs and your budget.
- Useful reading: A guide to mortgage pre-approval
Know how to negotiate
If you’ve followed these steps, you’ve got all the information you need to work out your price range and start negotiations with the agent. Here are some extra tips.
- Take a firm but friendly approach and make it clear you’re serious about buying.
- Don’t feel pressured to let them know your budget – advise you have sufficient finance to complete the purchase and would like to negotiate a fair price.
- Be open that you’ve done your research and use this in your negotiation.
- You can also negotiate the deposit amount, settlement time frames and other conditions.
- Use lowball offers with caution. If you go in too low, it might cause the seller to refuse any further negotiations.
- Put your offer in writing with any conditions attached, so it’s clear to the seller.
Be prepared to walk away
There are a few things that help to make a property purchase feel ‘right’.
- It suits you and your family’s needs,
- It’s a home where you feel happy and comfortable (It’s the vibe of the thing – Dennis Denuto), and
- You paid a fair price.
If you can’t reach an agreement with the seller, this may not be the house for you.
Preparation is key
Being prepared is important if you want to get the best price, especially if properties in your desired area are in demand. Your local Yellow Brick Road mortgage broker can help you tick all the boxes, so you’re ready to move when you find the right house.