When it comes to making an offer on a dream home, it seems everyone’s an expert.
Go in high, some people insist. Low-balling is the way to go, according to others. But the reality is more complex.
Jarrod McCabe, associate director at Wakelin Property Advisory, an independent buyers’ agent in Melbourne, says there’s no “one size fits all” approach to putting in an offer – especially on a dream home.
He recommends buyers put well-meaning advice aside and instead treat every potential purchase as unique.
“The first piece of advice is to understand that every negotiation, and every property sale, is different, so there’s no hard and fast rules,” McCabe says.
“This is especially true when you consider you can buy at private sale, before an auction, at auction or after auction, in a ‘passed-in’ scenario. All these situations vary greatly, so you need to work on a case-by-case basis,” he says.
McCabe says being successful comes down to four key factors:
Just like the Scouts say, buyers need to be prepared, McCabe says.
“Look at recent sales evidence and compare directly to the property you’re looking at, to understand where the property value sits,” he says.
“You need to have a good understanding of the local market and other similar properties that are available and use that to your advantage when making an offer and negotiating,” McCabe says.
Would-be buyers must also understand the specific sale methodology being used to sell the property, McCabe says.
“You need to ask questions to understand how the sale is going to be handled, so you can approach it in the right way,” he says.
“What is the offer process? Will the property go to the highest and best offer? Will there be a boardroom auction? Will the agent give the first bidder a right of reply? Will offers be disclosed? These are the sorts of things you need to know, as different agents handle sales in different ways.
Also investigate settlement terms, deposit amount and other aspects of the contract of sale, which can be exploited in a negotiation.
“It’s impossible to buy a property without knowing the rules of engagement.”
Even when a dream home is involved, buyers should remain objective and be prepared to walk away.
“It’s simple, if you’re not prepared to walk away, you will get taken for a ride at some stage,” he says.
“Be determined, single-minded and well-informed. Most people who are that way tend to do well.”
McCabe says buyers need to strike a careful balance in their communication with the selling agent.
“Some people say ‘don’t tell the agent anything’, but there is absolutely nothing wrong with showing you’re keen on a property. Tell them you really like it and that you would like to be kept in the loop, that’s a good way to approach it.
“Of course, never tell the agent what your budget is, keep that close to your chest, so you can get the property for the best possible price.”