How to negotiate with real estate agents when purchasing your first home

1. Do your research beforehand

Before you start negotiating, it’s important to have a good understanding of the property market, as well as the specific property you are interested in. Knowledge is power, and being well-prepared will give you a significant advantage.

a. Research property prices in the area

Look at recent sales of comparable properties in the area. This will give you an idea of the fair market value for the home you’re interested in. You can use websites like Domain, Realestate.com.au, or attend open houses to gather information. If the asking price is higher than similar properties, you have a stronger case for negotiating a lower price.

b. Understand market conditions

The current market conditions will play a big role in how much negotiating power you have. In a seller’s market, where demand exceeds supply, you might have less leverage for negotiation. In a buyer’s market, where there are more properties available than buyers, you may be able to negotiate more aggressively. Pay attention to the market trends in your area to guide your negotiation strategy.

c. Know the property’s history

If possible, find out how long the property has been on the market. If it’s been listed for several months, the seller may be more motivated to negotiate a lower price. Similarly, if the property has had a few price reductions, this could indicate the seller is ready to accept a lower offer.

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2. Understand the role of the real estate agent

Real estate agents work for the seller, not the buyer. Their goal is to get the best possible price for the property, which means they may not always be forthcoming with information that could benefit you as a buyer. However, knowing the agent’s role can help you navigate negotiations more effectively.

• The agent’s duty is to act in the best interest of their client (the seller). This means they are unlikely to offer you a substantial discount without the seller’s approval.
• Transparency: While the agent might not be entirely transparent about the seller’s situation or bottom-line price, they will provide certain information that could be helpful, like the number of offers on the property or the seller’s preferred settlement terms.

Understanding this dynamic can help you remain calm and strategic when negotiating.

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3. Make a reasonable offer

When it comes to negotiating, your first offer should be reasonable. Offering too low can alienate the agent or the seller, while offering too high means you might overpay for the property. A fair offer is based on your research, the condition of the property, and market conditions.

a. Start with a fair offer

Your initial offer should reflect what you believe is a reasonable price based on the research you’ve done. You may want to start a little below your maximum budget to leave room for negotiation, but avoid making an offer that is too low as it may turn the seller off entirely.

b. Use comparable sales to your advantage

Bring evidence of recent sales in the area that justify your offer. This can help demonstrate that your price is fair and reasonable and gives you leverage in the negotiation.

c. Consider the seller’s position

If you know the seller is motivated to sell quickly – perhaps because they’ve already bought another property or need to relocate – use this to your advantage. They may be more willing to negotiate on price or settlement terms.

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4. Ask about extras and flexibility

Negotiating isn’t just about the price. There are often other elements of the sale that you can discuss with the real estate agent, such as:

a. Settlement terms

Flexibility around the settlement date could be a point of negotiation. If you need extra time to arrange your finances or move in, it’s worth discussing this with the agent to see if they can accommodate your needs.

b. Repairs or renovations

If the property requires repairs or updates, you can ask the seller to either complete the work before settlement or reduce the sale price to cover the cost of repairs.

Being flexible on certain terms could be beneficial, especially if the seller is resistant to lowering the price. Find out what’s most important to them and see if you can work something out.

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5. Don’t be afraid to walk away

One of the most powerful negotiation tools is the ability to walk away from the deal if the terms aren’t right. If you feel the asking price is too high or the agent isn’t willing to negotiate fairly, don’t be afraid to make it clear that you’re not desperate to make a purchase. Walking away can sometimes prompt the seller to reconsider your offer, especially if they are motivated to sell quickly.

Be respectful but firm in your position, and always keep your budget and limits in mind. It’s important to know your maximum price and stick to it, as getting emotionally attached to a property can cloud your judgment.

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6. Use a professional negotiator (if necessary)

If you’re not confident in your ability to negotiate, you might consider hiring a professional buyer’s agent. These experts specialise in negotiating property deals and can help you secure the best possible price. While they do come with a fee, their knowledge of the market and experience in negotiations can often save you more money in the long run.

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7. Be patient and prepared for counter-offers

After making an offer, be prepared for counter-offers from the seller. Negotiations often involve back-and-forth discussions, and the seller may not accept your first offer right away. Responding promptly and respectfully to counter-offers is key to keeping the negotiation moving in your favour. If the price is still too high, you may want to ask for a reduction or other incentives (like inclusions or repairs) to make the deal more attractive.

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Negotiating with real estate agents when purchasing your first home can seem intimidating, but with preparation, research, and a clear strategy, you can negotiate confidently and effectively. By understanding the market, making reasonable offers, and being flexible with terms, you can secure a property that fits within your budget while getting the best deal possible. Always remember that the key to successful negotiation is a balanced approach – be fair, stay informed, and don’t be afraid to walk away if the deal doesn’t meet your needs.