The property market is one of the biggest sources of wealth for many people across the world, including Australia. As such, the affordability of houses and other properties has a direct effect on the financial life of investors. The change in rental prices can also impact the wealth of tenants from time to time. Given all these ripple effects, it’s clear the real estate industry plays a huge role in any country’s economy.
As a homeowner, you have a chance to reap big financial rewards from your Sydney property. One of the factors that would help you make the most of your next home sale is renovation. Investing in repairs and remodeling can significantly improve the value of your home. The good thing is technology has made it easier for you to find people who can offer helpful house services with little to no hassle on your part. For instance, browsing through local real estate websites can give you information about plumbers, electricians, and interior designers near you.
However, even with all the renovations, you still have to negotiate with potential buyers so you can sell your home at the right price. But how do you go about the negotiation phase? What are the things to keep in mind when naming your price?
- Ensure your house is in a good state
Before you even list your home in the property market, it’s important to consider its state. Does it require remodeling and renovation, or is it good to go as is? This is a crucial aspect to determine as it would give you an idea of how much to ask for once you get on the negotiating table with a potential buyer.
The benefit of undertaking a proper home renovation is it will significantly raise the value of your property. With a properly renovated house, you can confidently ask for a higher price than you would if you had sold it as is. The downside, however, is you’ll need a considerable amount of money to complete this process. It would also be time-consuming, and that can be a dealbreaker for someone looking to acquire the money as quickly as possible.
But what if you decide to sell the house as is? Generally, you’ll miss out on the benefits you would have otherwise reaped if you proceeded with the renovation. For instance, the value of your house might not be as high as you would have expected, especially if it’s been long since you’ve done any renovation. The advantage, however, is you can list it almost immediately. Whichever route you choose to take, therefore, you must be ready to face the consequences that come with it.
- Know your position
Deciding on whether or not to renovate your property is part of knowing your position as a seller. Everyone wants to gain the most profit possible from their sales, and there’s nothing wrong with that. However, as you set your goals, it’s important to remain realistic about the condition of your house and its current market value.
If you’re not sure how much your home would go for in the current market, you can search online for a free Sydney house price report and check the price of similar houses in the market within your area. That way, you can set the right price for your home and make it easier for potential buyers to approach you.
Another thing to keep in mind before setting your position is whether your house is “in demand.” Going through various online house reports and real estate forums will tell you whether your property is what buyers in Sydney are looking for. You can also consider such discussions when renovating your house so you can meet the needs of modern home buyers.
In addition to the state of your home, time also plays a crucial role in your negotiation process. How much time do you have at your disposal? Is there any urgency in your financial needs? If not, there’s no need to sell the house to the first buyer you receive an offer from. Set the minimum offer you’re willing to take and stick to it provided it’s reasonable enough for both you and the buyer.
Remember, your strength on the negotiation table lies in how well you can stick to your demands. If you’re not able to do so, you’ll be in a weaker position than the buyer. And you’ll probably sell the house at a lower price than anticipated, which brings the discussion to the next tip—don’t go below your list price.
- Stick to your list price
As a seller, it’s common for you to reject any potential buyer’s initial offer, thinking you can still convince the other party to raise their bid. Even if the offer is within your range, this is an expected reaction because buyers also anticipate a back-and-forth negotiation. That means even if their initial bid is high enough, that’s probably not their highest possible offer yet.
However, such scenarios are quite rare in the property market. The most common Sydney buyers you may come across are those who would name a price that’s few hundreds below your list price. So how do you handle these types of buyers? The key is to never go below your list price, no matter how persuasive a prospective buyer can be.
Perhaps one of the biggest mistakes inexperienced home sellers make is countering an offer with a value that’s higher than the buyer’s initial offer but below their asking price. Of course, this tactic can work nine times out of 10, but is it the best strategy? For someone looking to bag top dollar for their home, this may not be the right approach. Inasmuch as being flexible will help you close the deal quickly, you would end up selling your home at a price that’s way below its actual value.
So instead of swinging to the buyer’s tune, it’s best to counter the offer by sticking to your home’s listed price. Again, you need to confirm the estimated value of your home in the market to ensure you’re pricing your home fairly. Once you’re convinced you’ve done everything right, you can take your stand and wait for the right buyer. Someone who’s genuinely interested in your property will be ready to come back and make a better offer if their initial one was rejected.
However, sellers who use this negotiation style are likely to repel many potential buyers. So be sure it’s a risk you’re willing to take before committing to this strategy. One thing’s for sure, though—you’re likely to enjoy many benefits if you succeed. You won’t need to waste your time on buyers who aren’t serious about purchasing your property. Although it might take longer for you to get the right candidate, you’ll be able to sign a deal that meets your needs and desires.
- Understand the buyer’s position
So you’ve already set your position at the negotiation table, but what about the buyer’s? Why are they looking to purchase a house, and how urgently do they need it? Understanding the perspective of the buyer can be very helpful during the home-selling process. For instance, if the buyer needs to move in as soon as possible because of work or family issues, they might be willing to pay top dollar for your home. This puts you in a stronger position during the negotiations.
But then again, be sure to play your game wisely if you don’t wish to lose another potential buyer or waste your chance to make the highest possible profit from your sale. Remember, many buyers already know how negotiations work, and they might not be willing to open up about their real reasons for purchasing a house. As such, you need to be strategic in whatever questions you ask during discussions. But once you find the information you’re looking for, it’s important to keep your side of the story a secret.
Remember, everyone’s trying to get the best deal. So what can be a liability for the other party can be an opportunity for you to get what you want. Once you reveal to the buyer your reason for selling the house, the negotiating power will shift to the buyer. So the best way to go about questions that try to push you on your reasons for the sale is to use open-ended statements. The ultimate goal is to avoid making it sound like you’re desperate for the deal to go through. This way, the buyer won’t have the opportunity to take advantage of whatever situation you’re in.
- Set an expiration date for your counteroffer
It’s in the nature of every seller and buyer to counter each other on the negotiation table. And even while your negotiation with a buyer is ongoing, you’ll still receive offers from other interested parties. Unfortunately, it’s not always a good idea to accept another bid without ending your current discussions, no matter how tempting the new buyer’s offer may be. It’s not illegal, but it’s also considered somewhat unethical.
How then should you handle such a scenario to avoid future regrets? For one, you can engage the other new candidates by letting them know there’s another buyer willing to purchase the house at a given price. But this could either motivate the involved parties to improve their bid or result in a loss of yet another potential buyer.
Putting an expiration date on your counteroffer is another strategy that could get you out of this dilemma. Let the buyer know you’ll be accepting other offers after a given number of days. This compels the buyer to make a decision quickly and allows you to either close the deal or move on to the next potential candidate.
- Avoid getting too emotional
Emotions are a liability when it comes to home selling. This problem is usually encountered in negotiations involving inherited properties. It’s difficult to put a price on a house you grew up or lived in. To you, that home is priceless and should be valued as high as possible. But to another person, it’s just a house like any other.
Therefore, you shouldn’t be upset at whatever offers are sent your way. Instead, be cool and ask the buyer to raise their bid or reject the offer respectfully. Doing so will ensure you don’t lose any potential buyers unnecessarily. It would also help both of you to treat each other with respect, which is crucial in any business transaction.
- Offer to pay closing fees
Given the costs incurred before, during, and immediately after the moving process, you can understand why many buyers today ask sellers to pay for the closing costs. Generally, these expenses include transfer fees, attorney fees, and the real estate agent’s commission. Agent commission in Australia, including in Sydney, isn’t regulated. Therefore, the amount you pay will depend on the type of agent you get.
As a seller, you would want to sell your house at a profit but at the same time offer a reasonable price. So be sure to do your calculations and include all the selling costs before making any counteroffer.
Take a situation where a buyer offers to purchase your house at AUD$2,500,000 and the closing fees amount to AUD$20,000. The best way to handle such a situation is to make sure whatever price you give as a counteroffer should have at least AUD$20,000 on top of it to cover these expenses. Doing so will motivate the buyer, and you’ll have a higher likelihood of getting the deal closed.
Of course, you can cut the amount of these closing costs by selling without an agent. However, this comes with repercussions that may significantly affect the success of your home sale. So it’s important to weigh the pros and cons before committing to this option.
Negotiating Sydney house prices can be a huge task for someone who’s trying to sell their home for the first time. So if you find yourself in this situation, the first step to take is to ensure your home is in good condition and to understand your position at the negotiation table. With that in mind, make sure to stick to your listed purchase price as long as you’re not in a desperate financial situation. Trying to understand the position of the seller will also go a long way in ensuring you get the best possible deal.