I spoke with a friend a few weeks ago, she was looking to buy her first property and was chasing some advice. The first job I gave her was to talk to her broker or bank and get a full pre-approval. I explained to her that to get your finance pre-approved costs nothing and drastically improves your negotiating position. But like most buyers, she had her preliminary meeting, got an idea of what she could borrow and went out straight out in search of ‘the one’. Most buyers do this and most brokers don’t push for a full pre-approval in the early stages.
The wash up is of course she found a home and given the heat in the first home buyers market she had competition from other interested buyers. She missed out to a cleaner contract.
A clean contract is a term used to describe a contract with less conditions. In any negotiation two things have weight; price and terms. A full pre-approved loan means the buyer is still borrowing the funds, but they don’t need to add the condition ‘subject to finance’. We call this a cash contract.
There are a number of these no or low cost activities that buyers and sellers can do that will help them during the sale process. Here’s a quick list of a few things for buyers & sellers that are simple, easy and could make you thousands of dollars.
Cash contract: A contract that is not subject to finance is referred to as a ‘Cash Contract’. Your bank will still likely want a valuation but your contract will be much more attractive without the condition and like in most negotiations the seller will often take less for cash! Talk to your broker.
Tell agents your budget: Many buyers are reluctant to tell agents their budget. The concern is usually tied to a fear of overpaying. But telling an agent doesn’t mean you’ve got to pay that price. It just allows you to ask the question “My budget is X, is this property in my price range?” With no prices on auctions in Queensland this can save you wasting time on properties out of our price range.
Be flexible on your settlement: Some owners are selling to get prepared for their next stage while others have a more pressing reasons. If you can offer a quicker settlement, it might remove stress or costs for the owner and mean you can secure the property for a better price. Similarly if you can offer a longer settlement it may give the owner the time they need to prepare for their move.
Bidding – You’ve gotta bid: Owners go to auction to sell their properties. Without bidding they can’t establish a value or the level of interest. By presenting owners an opportunity to sell at their auction you can test their true motivation to sell. Fortune favours the brave and buyers who don’t bid will miss out on properties or on the post auction negotiations if the property is passed in.
Get a building inspection done: One of the hurdles buyers have is spending money on properties they may never buy. A building inspection can now be done by the owners and transferred to the buyers. Giving buyers a copy of your building inspection can mean gathering more buyers, leading to more competition and a higher price.
Give access: 2016 is a busy time for everyone. Some buyers can make open for inspections while others can’t. If you’re on the market, a buyer wanting access is a non-negotiable and you’ve just got to make it happen. I suggest multiple after hours open homes and be prepared that you may need give access just after the baby has gone to sleep!
Display home quality: Your home must present as though it’s lived in, clean with no clutter. Now obviously no one really lives like that, well that’s what I tell myself! To get an idea of how to present your home go and visit some new developments. They will have a display home, that’s the standard you need to squeeze the extra dollars from the market.
There are many things you can do to improve your position. But my last piece of advice is around agents. Anything that sounds to good to be true generally is. When selling chose the agent who you think will get you the highest price, not the one who gives you the highest estimate or the lowest fees. Those agents tend to be the least skilled in the market and while they seem good on the surface, you’ll soon discover you get what you pay for.
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