Whether you call it “buying low” or “turning a profit on the front end,” the concept is still the same. As an investor, it is mandatory that you purchase each property for as low a price as you can negotiate. If a property is already a bargain and the seller won’t budge, you may want to purchase it anyway, but you should also leave no stone unturned in your quest to maximise your capital gains.
The best way to negotiate a lower price is to ask questions and listen to the answers. Take note of anything the seller reveals that can be used to negotiate a lower price on a property. Here are a few of our favourite questions.
“Why is the Owner Selling This Property?”
You are looking for signs of motivation or distress here, such as death, divorce or job relocation. Anything that indicates the seller may be in a hurry and will take less money is helpful.
“How Soon Do They Need to Move?”
Similar to the first question, we are looking for reasons the seller may be in a hurry to sell. This always provides leverage for the buyer.
“How Long Has This Home Been on the Market?”
The longer it has been on the market, the higher the chance that it is overpriced or that other prospective buyers have found reasons not to buy. In some cases, it also means the seller is obstinate. This can often be more of a disqualification question than a negotiation question. Either is useful.
“Will the Seller Negotiate the Price?”
Sometimes the answer is “no.” It might be time to move on. But if the answer is “yes,” it can provide a great opportunity for negotiation. The agent might even blurt previous offers if you listen long enough.
“What Other Properties Do You Have at This Price?
This lets the selling agent know that you are not emotionally committed to buying this particular property. You also might find a better property, which you can either view or use as a negotiation tool.
Talk to Investors Edge Real Estate
At Investors Edge, we help investors buy, sell and manage investment properties in the Perth market. Investment property is our specialty and our passion. Call 1300 472 427 today.