In the current property market, we all want to buy our home or investment property at the lowest price possible.
And you now know that the asking price quoted by the selling agent will usually be more than the owner is willing to take for their home.
It's just part of the real estate game - vendors know the asking price will come down as part of the negotiation process.
So how much should you offer when negotiating for your next investment property?
If you ask the selling agent what price you should offer, you're asking the wrong person.
Remember, the agent is paid by the seller to represent them and to get the best price possible.
Despite this, I would still ask them what they would consider was a 'fair offer' and then ask them to justify it with a list of comparable sales.
If you’re thinking that the agent wants to make a sale, in many cases you are right.
In reality, the agent doesn't get paid unless a sale is made, so obviously, he is keen to sell you the house.
Most selling agents prefer an easy negotiation, knowing that sellers can easily get offended when they receive low offers on their homes.
This means they will probably recommend you make an offer close to the asking price.
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Note: So unless you use a buyer's agent to help you negotiate, you are really going to have to rely on your own research to work out what the property is worth.
By the time you end up at the negotiation table, you should have looked at many properties and have a pretty good idea of what similar homes in the area have sold for.
Remember it's the final sale price, not the advertised asking price that you need to focus on when you're doing your pre-negotiation homework.
In general, most properties sell for less than their asking price.
There is no standard discount, but as everyone knows there will be some 'argy bargy' about the price as agents tend to ‘list’ the property for sale at an asking price usually about 5-10% more than the vendor will accept to sell their home.
This means the asking price is just a starting point for the negotiations.
If you pay what the seller is asking you could be wasting money.
The trick is to know how much less the seller will accept. Sometimes it's only a few thousand dollars.
In a buyer's market, as we experienced over the last few years, many vendors were prepared to drop their asking price considerably.
Before deciding on what price to offer - here are five questions you should consider asking:
- How did the vendor come to the asking price for their home?
- Have there been any other offers made?
- How long has the home been on the market?
- Why is the vendor selling?
- Has the asking price been reduced during the time the property has been on the market?