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Strategic Buyer’s Guide in Real Estate:
If you have a deposit saved up, have found the most suitable property and received a “decent offer” which is within how much the bank is prepared to lend you, you will know how much you can afford to offer.
However, do not restrict yourself to properties within your budget. Properties have an asking price, but this is usually at least 5 to 10 per cent above what the vendor actually expects to achieve. So if you can afford to buy a property worth 70,00,000 rupees you could still view homes on the market for 80,00,000 – 90,00,000 rupees and then make a “cheeky” offer of 10,00,000 rupees under the asking price.
Make sure to ask the sellers to make an offer bearing in mind that to show you around knowing your budget, so this way vendor will look to quote for a sum close to what you can afford.
1> Always start low. You can always increase your offer. Keep the negotiation quick, as you want to seal the deal. You do not want to lose out because someone else makes a better offer in the meantime.Have a reasonable idea about the price spread/ range in the market & quote a price atleast with in the lowest range.
2> Negotiate from a position of strength. Find out what similar properties are actually selling for and use this as a bargaining tool.
3> Remember if the property has been on the market only a few weeks, the vendor may be less inclined to accept an offer. After a few months, they will probably realize that they need to cut the price if they want a sale.
4> Ask the vendor when it could be let out. If it is to be nearer a school then you may be able to negotiate a good price for a quick sale so they can be there for the start of term. Visit the property at different times on different days, just in case they want to move because of the busy rat run or because the neighbours play loud music until 2am. But remember, this is just hypothetical point for a property buyer & not to used for deciding on potential buying opportunities.
5> Sell yourself. You want the vendor to choose you over other potential buyers. So make sure you convey to the vendor that you have no property to sell, have a mortgager/banker lined up and can move quickly. As the turn around time is lesser if the deal gets financed by a banker else in cases where buyer needs to sell some property to re-finance this new deal, the time taken would be much more higher due to many dependency factors.
6> Do not get so swept up in your desire for a particular dream home that you offer more than you can afford. Be realistic in your offer. You do not want to lose the only home you have wanted to buy for the sake of 10,00,000 rupees for example.
7> While property values and transactions are way down from their peak, the best properties still sell quickly and for close to the asking price. Also bear in mind Stamp Duty & other legal documents you would need to execute. Click Next To Continue Reading..
Negotiation is Really an Art in Real Estate – Simple Things You Must Know.
– Article by Suman Adithya Rao (SEBI Certified Research Analyst, Management Graduate in Entrepreneurship & Small Business Management)
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