Posted by Matthew Campaigne Scott
Here are four important considerations when negotiating the asking price of your prospective home so you can bring down the monthly repayments you calculated with your bond calculator.
Probably the biggest purchase you’re likely to make is a house. So bringing down the asking price even a couple of per cent will save you thousands of Rands.
Here are our 4 easy methods of negotiating down the price of the property you have your eye on.
- Start low
It may be that you have to put in an offer on the property before you get any reaction from the seller.
If this is the case put in an offer below what you worked out using your bond calculator, this will then allow you to up your offer at a later date which will then seem more attractive to the seller.
It’s also wise to explain your offer; state exactly what work the house needs and how much it will cost, or that other properties of a higher standard went for less than the listed price nearby.
Explaining your offer in this way not only makes the seller think twice about their valuation but also makes you appear serious about purchasing the property by showing that you haven’t simply plucked a number out of mid air.
In reality you can often tell quite quickly if you like a property or whether you don’t ever want to set foot in the house again. However, if you are interested you shouldn’t get swept away with the excitement of finding somewhere you’d want to live.
Any flaws or work that need doing represent an opportunity to knock some money off your offer price. So taking the time to thoroughly inspect the property, inside and out, could give you the ammunition you need to negotiate.
Estimate the cost of any work required and take this amount off your offer price – you’ll be justified in doing so.
You should also find out whether there are likely to be any major expenses in the near future – ask when the geyser was last serviced and when the roof was last repaired (or resurfaced if it’s flat). Again, if work is likely to be needed in the near future you have a legitimate reason to go in with a lower price.
You should also consider whether parts of the property need redecorating and how much this might cost and factor this into your negotiations.
- Ask for extras
If the person selling the house isn’t willing to budge on price then you may want to negotiate over the additional costs you face when buying.
It’s estimated that the cost of actually purchasing a house can easily exceed £5,000 when you consider legal fees, valuations fees and surveys.
Asking that the seller contribute towards these fees could be a good way to cut the cost of purchasing the property and save hundreds or possibly thousands of Rands – even if you don’t manage a reduction in that actual house price.
- Do your research
You’ve already done some research by using your bond calculator, now consider researching the ‘going rate’ for other properties in the same area.
If you can argue that the asking price is above what similar properties sold for nearby, you will have a strong case for a reduction in price.
You should also check the asking price of other properties currently on the market and see what they offer in terms of space, features and presentation.
- If other properties are of a similar standard but the asking price is higher, then the owners of the property you’re looking at could be struggling, or in a hurry to sell – both of which could work in your favour when negotiating over the price.
- If other properties are of a higher standard but going for an equal or lower price you need to question whether they’d be a better investment than the one you’re currently looking at.
- If other properties are of a similar standard but are on the market for less than the property you want to buy, you can use this to your negotiating advantage.
If you think the property is overpriced mention it to the estate agent – they may feed this back to the owners who could drop the price of their own accord.
Ask the agent how many viewings the property has had and whether it’s received any previous offers. If there hasn’t been a great deal of interest, it gives you licence to go in with a lower bid when you start negotiating.
If you discover that the property has had lots of viewings but no offers then quiz the estate agent about why they think this is the case and use this knowledge to your advantage.
You could also ask for certain things, such as curtains and appliances to be left by the current owners to reduce your set up costs even further.
After you’ve gone to the trouble of using a bond calculator to work out your monthly repayments that price you can afford, then you’ve shown intent and are ready to negotiate. Be strong and don’t back down – remember you’re the customer and you hold most of the cards. Don’t be afraid to consider the points above when proceeding with your house purchase enquiries.