Buying your first home: The art of making an offer and negotiating
If you have been following the property market for sometime now, have done your research, arranged for your finances, and have made up your mind on the kind of property that you want to invest in, it could be time to make an offer. Going hand in hand with this are negotiating and bidding in auctions, which are valuable skills that could get you the property that you want.
Making an offer on a house
It is an exciting time when you are all set to make your first offer after years of aspirations and dreams. Making an offer is a very important step towards buying a property; and it is worth all the time and patience, since you would have formed a clear picture of the property market in your area and the industry in general.
Now that you have chosen the type of property that you are after and its approximate price range, it’s time to determine your upper and lower limits of your offer price.
You could start with a slightly lower price than your upper limit, since this leaves you with some scope for negotiation. However, you would not want to make an offer that is so ridiculously low that you are effectively shut out of the market.
However, you could very well expect your first offer to be rejected, especially when there are many buyers. But that should not deter you from making an offer in the first place – every effort you take and every offer you make is a learning process in itself that gets you closer to your dream home.
Negotiation is an art
Negotiation is a crucial part of the buying process that could decide between a profitable price and a considerable loss in comparison with the market price of the property. You could invariably expect the seller to push your offer as high as possible in an effort to squeeze every cent out of your budget, and possibly stretch it even further.
You would end up revealing the upper limit of your bargaining price if you were to respond to every nudge and call from the seller. Keep your cards close to your chest and abstain from revealing your final offer.
And remember – desperation is a sign of weakness, and sellers would be sure to sense it and cash in on that. Even if the house that you are after is the perfect match for all your needs and turns out to be virtually irresistible, keep it all to yourself. One way to do that is to counter the seller or the agent with critical aspects that could diminish the value of your offer, such as structural issues or location factors. Again, it’s all about playing your cards close to your chest till you get the absolutely best price on the property.
The process of auctions
An auction can often be unnerving even for the most confident bidders – to bid in an anxious crowd and put up a claim to the property that you like may seem like a never-ending moment. Part of the stress could also be due to the uncertainty surrounding the actual price that the seller wants, often a shot in the dark with nothing more than a qualified, wild guess.
Nevertheless, auction is a reality in the life of a buyer, and when it comes to the day, you need to be as prepared as possible. Be sure about the processes involved and do not forget to register for bidding of residential and rural properties – in NSW, for instance, it is mandatory to register for bidding with name, address and proof of identity. If you were to bid in an auction jointly with one other person, it would suffice if one of you registers for bidding.
How to bid in an auction
Auctions are conducted in strict accordance with the provisions of law, and it is important to know the legal processes and requirements involved. The auctioneer makes one bid on behalf of the seller, and prospective buyers take it up from there.
You could also make an offer prior to the commencement of the auction, but you stand the risk of overpaying if you do so. State laws on the bidding process could vary, and it is important to do your research before arriving at the auction. Visiting multiple properties before bidding in an auction, and also visiting a few auctions, would give you a fair idea of what to look forward to in a property auction.
If you turn out to be the highest bidder of the property, you will need to pay the deposit and sign the contract then and there. The standard deposit is 10% on fall of the hammer. Auction purchases do not feature cooling-off periods, so it is critical that you are sure about your offer price before making the bid.
You've got this!
Making an offer, negotiating with the seller or their agent, and bidding in auctions are important processes that would help you go up the learning curve. And the more comfortable you are with them and the legalities involved, the more likely are you to get the prized property that you want.
If you’re looking to buy a home, make the right call and get a Loan Market broker working for you by calling 13 56 26 or explore our website to get started.