Buying your first home: The art of making an offer and negotiating
If you’ve done your research, got your finance sorted and decided on a property to invest in then now could be the time to make an offer. With that being said, let’s get your negotiating and bidding skills in check so you’re ready to go sooner rather than later.
Making an offer on a house
Making an offer is a very important (and exciting!) step towards buying a property. Now that you have a clear idea of the type of property you’re after and its approximate price range, it’s time to determine your upper and lower limits of your offer price.
For example, you could start with a slightly lower price than your upper limit, which leaves you with a little more room for negotiation. However, you don’t want to make an offer that is so low that you’re effectively shut out of the market.
We can chat about your plan in a little more detail to see what will work best for your situation.
Negotiation is an art
Negotiation is a crucial part of the buying process, one 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.
The auction process
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.
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.
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 mortgage broker like me working for you.
This document has been created by Loan Market Pty Ltd (ABN 89 105 230 019, Australian Credit Licence number 390222). Any refinancing is subject to lender imposed terms and conditions including but not limited to loan serviceability, valuations and confirmed capacity to service both any existing and revised lending arrangements. The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances.