Welcome to part 6 of our Buy Property in Australia from Overseas Series. This week will look at real estate negotiations. (To start at the beginning of the series, read Part 1: Real Estate Industry Professionals Foreign Investors Should Deal With)
A buyer of real estate is left with the burden of negotiating the best price. With foreign investments in Australian property, there are only so many types of property you will be approved to purchase by the Australian government. This can make negotiating a little tricky since developers often like to get the price they set on a newly developed home, but there’s no harm in negotiating a sale’s price whether it’s a newly developed home or a vacant piece of land. Below are some tips for negotiating the best terms on Australian real estate.
Research the Market Value
Working with a real estate agent is the easiest way to research the market value. It’s part of an agent’s job to know whether a home is being listed at below or above fair market value. It’s much easier to negotiate a home that’s listed above fair market value because you will have proof that homes in that area or neighbourhood are not selling anywhere near the seller’s asking price.
The same is true for vacant land. If a piece of vacant property is being sold for much higher than other pieces of property in the area, you have the upper hand if the seller is trying to unload the property quickly. In areas where there are more sales than buyers, knowing the fair market value can greatly increase your chances of negotiating a lower selling price.
Know You’re Maximum Amount before Negotiating
If you’re looking at Australian real estate in an area where there are more buyers than sellers, you will probably have a situation where there is more than one person bidding on the property. You must go in knowing the maximum you’re willing to pay and sticking to that price. Competition can sometimes get the best of us, but trying to outbid another buyer just to come out on top can leave you with an extremely high mortgage or a property that really isn’t worth what you agreed to pay for it.
Start your bidding out on the lower end of the scale. If the competition is really fierce for a particular property and you keep getting outbid, consider upping your starting bid to level the playing field. In some cases, you may need to start at the highest range to secure a favourite property, but remember that negotiating from the lowest price point gives you a buffer to play with when negotiating.
Get an Inspection before Signing Paperwork
Make sure you have an inspection of the property done before signing the final contracts. A bad inspection can give you some more wiggle room for negotiating a lower price. In a newly developed home, there probably won’t be too much wrong with the property. With a piece of vacant land, an inspector may find that drainage is poor, the land is already eroding, or a number of other problems that you may face in the future. If an inspector finds something that will cost you immediate money to fix, you can use the cost of the repairs to lower the price of the home. In some cases, the seller will agree to fix the problem before closing on the property.
No matter how long negotiations take, always stay in communication with your Australia real estate agent. If you think an asking price is too high, let the agent know why. If you communicate well and don’t act too desperate for a property, you should be able to handle the negotiations.
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