Well, stick around because, in this article, I will share everything you need to know to guarantee you get the best deal possible.
You must first consider your limit – understanding and setting your limit early on is key to a successful negotiation with the agent.
When securing a townhouse development site, it doesn’t matter what the agent or even the market suggests it is worth.
It only matters how much it is worth to you.
Even if someone thinks you are paying overs. If you have done the work and know your numbers, then it doesn’t matter. You should be able to bid or confidently make offers up until that point.
You are the only one who knows what kind of return you will be happy with.
Let’s look at the three common ways you can purchase real estate in Australia.
Off Market Opportunities
First off, we have off-market opportunities. By an off-market opportunity, we mean it hasn’t been advertised anywhere. And it’s potentially only gone out to yourself or a small selected few.
In an off-market transaction, the best thing you want to do is make yourself self-known to the real estate agent.
You also want to ensure that you’ve done all your due diligence. Because it is off the market, it will most likely be under less competition. Meaning less of the market knows about the opportunity.
Keep this in mind when negotiating with a real estate agent.
In this situation, I would suggest you start with a reasonable offer but not your best one. So you have somewhere to move if required.
It will also be vital that you understand what the vendor is after regarding deposit terms, settlement terms and price.
The agent may have other people interested who may be making offers. Some of you will think that the agent is making these people up.
Ultimately, you need to play your own game. Set your limit, and negotiate on those terms best you can.
If it is an off-market opportunity and the agent has been able to help you secure it with what you think is a good price.
Be mindful that the agent will be keen to list these townhouses on the way back through if you are planning on selling them.
It will be critical that you have those conversations with the agent early in the process. This can motivate them to help guide you into the purchase.
Buying a development site under a private treaty is simply a purchase opportunity that is being advertised but isn’t going to auction.
In this situation, the pricing being marketed, I believe in our experience, will be closer to the vendor’s expectations than a price range provided for an auction date.
In this situation, you can expect some competition from the market.
When negotiating a private sale, you must complete your due diligence to clarify where you sit.
Make yourself known to the agent as soon as possible. And again make sure you appreciate the vendor’s required deposit and settlement terms and, of course, price.
Again, remember, if you are planning to build and then sell the townhouses on the other end. You need to make that known to the agent early on as they will be motivated for the opportunity to sell them on the other hand.
That said, in this type of transaction, they will have less opportunity to guide you into the deal – if there is a chance, you can be sure they will take it if they know they are getting them back to sell on the other end.
As always, getting your due diligence done as early as possible with an auction-type transaction will be super important.
Because it is an auction, you know the date you are working towards. Even with that being the case. It will be vital that you call the agent and register your interest as soon as possible.
You want to confirm with the agent that the vendor is going to auction. You don’t want to run into a situation where the vendor decides to look at offers before the auction date. And it sold without you being involved.
This can and does happen. So, if you are keen, make it known to the agent and double-check the plan for the auction.
If they are going to auction, ensure you show up on the day with your limit set.
When it comes to bidding, it doesn’t matter if you jump in and start the bidding or get involved a little later.
The key will be once you start bidding. You want to bid strong and don’t stop bidding strongly until you hit your limit.
You need everyone in the crowd to believe that you are never going to stop and that you have got the deepest pockets. Even if it is your last bid, make it quick and decisive.
One final piece of advice when negotiating with a real estate agent is to not play coy with the agent.
The agents are motivated to close a deal with you the same as you are with them. So you need to be as transparent as possible to get them working for you.
And remember – do not FOMO, stick to your numbers. And be patient and disciplined because there will always be another site.
Don’t hesitate to reach out at any time.