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Making the most of a buyer’s market: Top tips for successful negotiation
Buyers have found themselves in a prime negotiating position as sellers bring their foot off the pedal after weeks of lower demand. Here is how to negotiate and make the most of the market conditions.
Sellers have been gradually meeting buyers’ pricing expectations, with vendor discounting rates on the rise, making it an ideal time for buyers to fine-tune their negotiation skills.
Cotality’s latest Monthly Housing Chart Pack showed, in the three months to June, the median vendor discount across the combined capitals rose to 3.6 per cent, from 3.0 per cent in the March quarter.
LEVR property investment director, Josh Crealy, said he had seen mixed results in the market, with the higher end experiencing more discounts than the lower end.
“It depends on which market you’re in and which price point as to how you negotiate because they’re acting in opposite directions at the moment,” he told SPI.
“But for people who are looking at higher price points across the board, there’s a lot of negative sentiment out there, and things are struggling to sell.”
According to Crealy, buyers currently have the power to “low ball” in higher price points, making their first offer lower than what they were prepared to pay with the help of recent sales data.
After making an offer, he said buyers should always try to get a counteroffer from the agent.
“If they come back and reject your offer, ask them, ‘Can you please give me a counteroffer?’ Then you might have to go back and forth a few times before you get to where you want to be,” he said.
To ensure that an agent simply didn’t move onto another buyer, Crealy said the prospective purchaser should maintain constant communication, staying at the forefront of their mind.
“You don’t want to give them an offer and then just disappear because agents are very busy at the time. If you don’t follow up, they’ll sell it and won’t tell you,” he said.
“When you’re at the open house, have a good chat with them and then speak to them on a regular basis.”
To find out whether there was scope for negotiation, Crealy said buyers needed to test out agents with their initial offer and observe their responses, but could also look at the days on market.
“Some properties are on the market in those higher price points longer. You could put an offer in, and then it might be sitting there four weeks later still, and then they come back to you.”
“But that’s why I also like to put deadlines on offers – so saying, ‘here’s my offer that expires on this date’, just so that you create a little bit of urgency as well.”
According to Crealy, buyers should also find out the seller’s motives for selling and use them to their own advantage, particularly if the vendor wants to sell their property quickly.
“Is it a short settlement? Do they want certainty? Do they want a 10 per cent deposit? A lot of owners value certainty at the moment.”
“You’re just trying to find out how you can tailor the offer because you’ve got two things when you’re buying a property that the owner considers obviously, the price and then it’s the terms.”
According to Cotality’s head of research, Gerard Burg, the data reflected the decline in housing demand over the past few quarters as a result of various affordability pressures.
He said that, as a result of a decrease in sales volumes and an increase in stock available, buyers had more power when negotiating with sellers.
“Right now it is a buyer’s market (for the buyers that remain), with plenty of choice of properties and limited competition,” he said.
“They are able to take longer to consider their options and have time to negotiate with vendors to secure a better deal, meaning the discounting rate has been moving up.”
Burg said there could be potential further hikes in the discount rate in the coming months, but it would depend on how the near-term supply response transpired.
“If we start to see vendors pull properties off the market in larger numbers, this would see another shift in the supply-demand balance. If this happens on a large enough scale, this could reduce some of the discounting pressure.”
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