What to ask to get the best price when buying property
Keen property investor Stan Moraitis says buyers should stick to their guns when negotiating price. Picture: Andrew Henshaw
Money talks when it comes to buying property, but it also helps to know the right questions to ask when you get down to negotiations.
Leading buyer’s advocate Frank Valentic and negotiator Julia Ewert share their tips for coming out on top in a property deal:
WHY ARE THEY SELLING?
Mr Valentic, director of Advantage Property Consulting, said it was important for buyers to try to find out about the vendor’s situation and what was motivating them to sell.
Asking these questions will give buyers an idea of how motivated the vendor is to sell.
“Has it been a rental property or have they been living in it? If they have lived in it, they have an emotional connection to it and it may be harder to get a good price,” he said.
“But if it is an investment, you have a better chance of getting a better deal.”
Mr Valentic said ascertaining if the sale involved the “five Ds” — distance, death, divorce, deadlines or debts — could give a buyer the upper hand.
Distance involved a vendor selling to move to another city or even overseas, such as for a work relocation.
“Death normally causes a motivated sale, people want to get it sold. Divorce is another reason to sell as assets need to be separated,” Mr Valentic said.
Deadlines, for example when the vendor has already bought their next home and needs to sell the existing one to avoid an overlap, could also work in a buyer’s favour, while debts were another reason sellers might be looking for a quick sale at a discounted price.
Ms Ewert agreed finding out why a vendor was selling could provide useful ammunition for a buyer.
“Have they bought elsewhere? If so, they are likely to want a quick sale,” she said.
“Are they struggling to make mortgage payments? It would give you a clue as to whether they will hold out for the highest price or may accept something lower for a quick and easy exit.”
If a quick settlement is wanted, vendors may be more willing to accept a lower price.
WHAT IS THEIR PREFERRED SETTLEMENT DATE?
Knowing if the seller wanted a six-month or 60-day settlement could change the strength of your offer, Ms Ewert said.
“If the seller is seeking the fastest possible settlement period, then a lower-priced offer with a fast settlement may motivate them to accept,” she said.
“If they are seeking a longer settlement period, then the price of your offer may not be the number one motivating factor for the sellers.”
Mr Valentic said sellers sometimes asked for a very specific settlement period, like 92 days. This would give a buyer an idea of how motivated they were to sell.
HOW LONG HAS IT BEEN ON THE MARKET?
If a property has been on the market for a while, Ms Ewert suggested asking the agent why they thought it hadn’t sold.
“You could uncover such information as the sellers have unrealistic price expectations, an issue with the property that makes it more challenging to sell, or some complicated requirements in relation to the block, or the building structure,” she said.
DO YOU AGREE WITH THE PRICE SET BY THE VENDOR?
Ms Ewert suggested watching the agent’s body language when asking this question.
“Look for any hesitation, break in eye-contact or uncomfortable shifting,” she said.
“You’re testing here if the property is priced correctly.
“If the agent thinks otherwise, it’s possible they will give you a clue as to any disconnect between their own opinion and the seller’s opinion.
“If they believe the price is right, they will likely answer without hesitation and with confidence and enthusiasm.”
Mr Valentic recommended buying off-market or through private sale when possible to get a lower price.
“Avoid auction emotion and try to make strong offers before auction to catch other buyers off guard,” he said.
Putting an offer in before auction could see the agent set an impromptu deadline for other buyers to also put offers forward.
This could catch out the competition who might not be ready to make an offer.
He also suggested making an offer that ended in an unusual increment, for example, $580,300 instead of $580,000.
“It makes it look like you have pushed yourself to the limit,” Mr Valentic said.
He said buyers should have a short list of options, rather than pinning all their hopes on one property.
“When you are negotiating, put forward your offer and create a deadline and say if not I will go for another property, and name the property,” he said.
“It will create that fear of loss for the vendor.”
He said buyers must also be prepared to walk away from negotiations.
“Paying the right price might mean missing out on a property, but there will always be another one,” he said.
Stan Moraitis recommends keeping emotion out of it when negotiating price. Picture: Andrew Henshaw
STICK TO YOUR GUNS TO STAY ON BUDGET
Being able to keep emotions at bay is an important skill when negotiating property prices, according to keen investor Stan Moraitis.
Mr Moraitis, a tiler by trade, has got the bug for flipping properties and hopes to make it a full-time job.
“I buy well, get in and do a quick renovation in six to eight weeks, and get it back on the market,” he said.
“I have learnt to not buy emotionally, have a game plan, do your homework and wait for the right deal to come along.
“Stick to your guns and make an offer in your budget and stick to it. If they come back and take it: great; if not, there will always be another property.”
Mr Moraitis has bought a couple of properties in a group opportunity through Advantage Property Consulting director Frank Valentic.
“He (Mr Valentic) negotiates off-market to try and get things a bit cheaper,” Mr Moraitis said.
“The group opportunities are really good, we buy in bulk. Everyone pays a lower price and then we can flip the property and sell it again.”
Mr Moraitis was involved in the purchase of three two-bedroom units at 28 Embankment Grove, Chelsea late last year.
CoreLogic data shows each buyer in the group secured a property for $475,666.
Mr Moraitis has since flipped his property, unit No. 3, and sold it in September for $691,000.
One of the other units has also been flipped and it sold for $650,000 in July.
He said he had now done two or three properties through Mr Valentic and six or seven in total.
“I want to do it full time,” he said.
Article by Tessa Hayward 26 OCT 2019