4. What to do at the negotiating table
Experienced negotiators know that establishing an offer is a fine balance: go too low and the vendor will get their back up, closing the door on your negotiating position. If you have done your research on comparable sales and asked the relevant background questions, you will be in a better position to make the ideal offer. In the current market, sellers are generally in the drivers seat. Auction clearance rates have averaged more than 80% in Melbourne over the past three months. With more buyers than properties, aim to pitch your first offer at a level of 10% below the estimated market value of the property. Test the water before diving in by pitching a lower offer, to see how desperate the vendor is. Always start lower so that you have room to negotiate upwards – and so that the vendor feels they are getting some sort of win, too.
Your first offer should not be your last, as you may be able to buy the property at an even lower purchase price. Negotiating is a bit like playing a game of cards. Dont play your best cards too early – leave something up your sleeve.
Savings of up to 10% below the propertys market value can provide you with instant equity that you can leverage to buy further investments or fund your own lifestyle requirements.