The art of investment property negotiation

Negotiating well on investment properties can allow investors to make a material amount of equity upon entry. Using the tactics below can allow investors to minimise their purchase price.

Competition hurts your chances On most occasions, competing buyers for a property present a diminished chance of securing property for lower a price. When negotiating, try to limit competition from other buyers by seeking a property that doesn't have the same level of interest as others in the area. This may include aged listings which are no longer appearing at the top of search results or no longer front of mind for agents. It can also include seeking off-market / pre-market properties that real estate may offer you (often requires building a relationship).

Giving deadlines to offers A way to force answers on your purchase offers from the vendor/agent is to put an expiry on your offer. You may say that you need an answer to your offer within 24 hours because you are thinking of purchasing a similar property elsewhere. If a vendor doesn't accept the offer, they may reach out to you in the future and if they don't, you've simply saved time and can start your search again.

Negotiating isn't just about price A contract is made of a purchase price and terms. You can use the terms to help the vendor/agent to reduce the price you pay. In this environment of credit uncertainty, some vendor and agents need the certainty of contract completion or need access to liquidity ASAP. By lower the settlement days and going unconditional, you can help solve a particular issue for a vendor which may give you leverage when offering a lower purchase price.

Building and pest discounts Once you have entered into a contract, a good way to reduce the price further if there are issues with the property is by asking for a discount to rectify issues that have come up in the building and pest inspection reports. This is dependent on the property and vendor, as a vendor can reject claims on non-material / non-structural issues.