If you find your heart set on a property that is just outside your price range don’t despair: with the right strategy you might be able to drive down the price and buy that home of your dreams.
Buying a first property can be an emotionally turbulent time.
Beyond the stress of arranging finance, trawling the web for bargains and attending a plethora of inspections, there’s the added drama when you discover a place that is perfect in all respects... except for the price.
So what happens when the home of your dreams is just beyond your price range?
With a few savvy techniques, you may be able to talk the seller down to level that you can afford.
• Cash on the hip: Make sure you have pre-approved finance with a reputable lender, complete with a letter of approval, before making your price offer. If the seller is aware that you are financially ready-to-go, a reasonable lower offer will be taken seriously. • Make it snappy: If you have pre-approved finance, you can ‘sweeten the deal’ by offering a short settlement. So rather than the standard six-week settlement period, be ready to settle in three or four weeks, for example. For most vendors the faster the settlement the better and this may make them more open to accepting a lower offer.
• Lose your ‘cool’: Tell the agent you will agree to waive the normal five-day contract cooling-off period and you’ll give the seller more confidence a deal will be done, offering greater leverage to negotiate on price. Just make sure you have written finance approval first and seek legal advice prior to making an offer. • Critical eye: Don’t be afraid to tell the agent of any defects you see upon inspection. Use the fact that you will need to spend extra money rectifying those defects as leverage when negotiating the purchase price.
• Land tax and GST: Get a draft contract from the agent – it will say whether the seller will require you to pay land tax and/or GST on top of the purchase price. Use these factors in your price negotiations. If you’re a first home buyer, it will be easier to talk your way out of paying these – and a saving is a saving.
• Dangle a carrot: There are several ways you can use your deposit to sweeten the deal, however as each have their own benefits and risks, it’s best to make a quick call to your solicitor or conveyancer first:
– Consider offering a higher deposit up front to assure the seller of your seriousness to buy in return for a slightly lower purchase price
– Consider agreeing to release an amount of your deposit (say five per cent) to the seller before completion; this is a useful tactic if the seller is buying another property
– If the settlement is to be for a normal or longer period, consider allowing the deposit to be invested from the date of exchange to completion, with any interest gained on the deposit to be shared equally between the parties. The seller may accept your offer knowing they will get more money the longer settlement is dragged out.