Negotiating on the Property Price: The Biggest Mistakes to Avoid

Successfully negotiating the purchase price of a property to score a better deal can be a big win that could potentially save you thousands. 

However, this crucial step in the home-buying process can be as nerve-wracking as it is exciting - and knowing how to approach the negotiations will help you move forward with confidence.

Below are some mistakes to steer clear of when negotiating the purchase price of your new home. 

1. Not doing your homework

Entering negotiations without adequate research is like running a marathon with no training!

Spend time researching the local property market, including the going rates for similar homes in the area, recent sales, and how long properties are generally staying on the market.

Not only will this knowledge help you make a realistic offer, but it will also strengthen your position during negotiations.

‍2. Being overly enthusiastic

We know how easy it is to fall in love with a property, but showing too much keenness during your property negotiations can serve to weaken your position.

If a seller or their agent perceives your emotional attachment to the property as a willingness to pay more, you could end up losing out.

Our advice is to put on your best poker face, expressing interest and appreciation without letting on that you’re secretly dying to call this place home!

3. Starting too low

While it goes without saying that you want to get the best deal possible, making an offer that’s ludicrously low can mean you’ll end up offending the seller and potentially shutting down negotiations before they even start.

Your initial offer should be realistic and reasonable, supported by market research into comparable properties in the local area.

When it comes to making an offer, it’s a delicate balance between showing you’re serious about the purchase and leaving room for negotiation.

4. Overlooking the terms of sale

Focusing solely on price without considering other aspects of the sale can be a misstep. 

Important contract terms such as the settlement period, inclusions (like appliances or furniture), and any special conditions can also be negotiated to provide value.

It’s worth bearing in mind that in some cases, having flexibility on these terms can make your offer more attractive to the seller compared with a higher price from a buyer with more demanding conditions.

5. Not getting conditional approval

Failing to obtain pre-approval for a home loan when you enter your property negotiations can put you at a significant disadvantage.

If a seller knows you already have secure financing, they’re more likely to take you and your offer seriously.

What’s more, conditional approval gives you a clear budget, helping you negotiate within your means.

‍6. Not being prepared to walk away

While it can be hard to let go of a property you had your heart set on, being too invested can lead to overpaying.

It’s important to remember that there are other properties out there, so if negotiations reach a point where the price exceeds your budget or the value you’ve placed on the home, be ready to walk away.

This mindset not only prevents buyer’s remorse but can also lead to better deals when the seller realises you won’t budge.

7. Negotiating without professional help

Property transactions are fraught with complexities and legalities which can be tricky to navigate for non-experts.

A buyer’s agent or a conveyancer can provide you with valuable advice and represent your best interests during negotiations.

When dealing with difficult negotiations, the experience and expertise of a professional can end up securing you a better price and more favourable terms.

8. Ignoring the state of the market

Understanding whether you’re currently in a buyer’s or seller’s market can help steer your negotiation strategy,

In a buyer’s market, where supply exceeds demand, you may have more room to negotiate a lower price. In a seller’s market, where demand outstrips supply, your ability to negotiate may be limited. 

Tailor your approach to the market conditions, being more aggressive in a buyer’s market and more strategic in a seller’s market.

9. Not understanding the seller’s motivations

Knowing why the seller is moving can give you valuable leverage in your negotiations.
For example, let’s say they’re in a hurry to sell to a job relocation - they may be willing to accept a lower offer for a quick sale.

On the other hand, if they’re selling to upgrade and aren’t in a rush, you know they may hold out for a higher price.

By steering clear of these common pitfalls, you can approach your property negotiations with more peace of mind - and hopefully secure your dream property at the best possible price.

Keen to learn more about the home-buying process? Check out our other articles and stay in the know about all things home loans.

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This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.

Unloan is a division of Commonwealth Bank of Australia.

‍Applications are subject to credit approval; satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000.

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‍There are no fees from Unloan. However, there are some mandatory Government costs depending on your state when switching your home loan. For convenience, Unloan adds this amount to the loan balance on settlement.

* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.