Buying a property can be one of the most exciting and stressful experiences of your life. Whether buying your first home, your forever home, or an investment property, the key to success is knowing how to navigate the process with clarity and confidence.
There are two main ways homes are sold in Australia – by private treaty or auction. Each method requires a different mindset and strategy. Here are my top tips for both methods.
Buying via private treaty: Negotiation know-how
In a private treaty sale, the seller lists the property with either a fixed price or a price guide. From there, it’s all about negotiation. Here’s how to get the best outcome for yourself.
1. Do your homework
Before making an offer, research recent comparable sales in the area. This will give you a sense of the property’s fair market value.
2. Ask the agent the right questions
Find out how long it’s been on the market, if any offers have been made, and whether the vendor has a preferred settlement period. These insights can guide your negotiation strategy. For example, you may be able to trade a shorter settlement for a lower price.
3. Make your first offer count
Put your offer in writing and confirm you have pre-approved finance. Start somewhere below your walk-away price and move your offers upwards in small increments. Put a deadline on your offers – 5pm the next day is fair – to encourage a decision.
4. Try an odd amount as negotiations continue
If you’ve already made a few offers, try an odd amount like $933,500 instead of $935,000. This suggests there’s some logic behind your offer and also implies you’re at your limit.
5. Understand vendor psychology
Sellers want two things – a good price and confidence the sale will go through. If your finance is sorted and you can sign the contract quickly, you become a safer bet.
Buying at auction: Bidding to win
Buying at auction is a different experience. It’s fast, public and more emotional. There are also clear benefits for you. You’ll be able to read the other bidders’ body language, their offers will be transparent, and their presence should reassure you of the home’s appeal!
Here’s how to go about bidding at auction.
1. Understand the rules
Auction sales are unconditional. That means no cooling-off period and no chance to negotiate terms after the event. Do your due diligence beforehand. Get building and pest inspections done, read the contract carefully and make sure your finance is approved.
2. Stand in a good position
Position yourself where you can clearly see the auctioneer and your competitors.
3. Start low, then wait
Make a low bid to start the auction. Unless the property looks like it’s going to be passed in, don’t bid again until the reserve price has been met and the home has been called on the market.
4. Project confidence
Create the impression that you will continue bidding until you own the home, no matter what. Timid bidders are often put off by the aura of unstoppable self-assurance.
5. Call out your bid in full
When the bidding is down to small increments, it’s easy for buyers to lose sight of the amount of money being offered. Calling out the full amount of your bid is a reality check for other buyers. For example, say “$955,000” instead of “$5,000” (your bidding increment).
Final tip
In my experience, fate can play a hand in these things. It’s better to feel the short-lived disappointment of missing out on a property you love than the long-lasting remorse of paying more than you are comfortable with. If you miss out on a property, accept that it wasn’t meant to be and look forward to finding something better soon.
By John McGrath, Chief Executive Officer of McGrath Estate Agents.
