Buying a home is a big life decision, and it’s certainly a challenge when we’ve been in a global pandemic and all forms of media are saturated with coverage of the conflict in Europe.
If you had asked most real estate agents just a few years ago what impact such global events would have had on property prices, the honest ones would have admitted that they anticipated prices to fall, based on economic uncertainty.
Of course, here in Australia we have seen the opposite.
Average property prices increased almost 20% across Australia in 2021. And they’ve continued to head north in the first quarter of this year.
So, if you’ve found the home of your dreams, how should you negotiate its price in the current environment?
Read the room
Make polite conversation to uncover the seller’s motivation and whether they’re either in a hurry to get a deal done or delay their departure while they begin their own search for a new home. If you’re flexible and prepared to help out, you’ll be in the box seat.
Tell your story
Let the seller know you’re motivated and your finance is organised. That will allay common seller fears that their prospective buyers either can’t afford the deal or they’re tyre kickers.
How low do you go?
It’s tempting to try starting negotiations with a super-low offer, but that’s entering dangerous territory. Even if you’re the only party interested, the seller may reject you and your offer out of hand. If other buyers are in the mix, you’ll go to the back of the queue.
Seller’s market
Even with interest rates starting to move upwards from their historic lows, you can be confident that a rival buyer isn’t far away. So, if you’re seeking a discount on the asking price, don’t go lower than 5%.
Playing poker
Sellers will sometimes “hold” when offers fall short of expectation. If that happens, maintain a watching brief on the property as you continue your search. Interest rates and the cost of living will continue to edge higher over the next few months, and the seller may become increasingly anxious.