
Property Investment
What is the actual process for buying a property at Opes Partners?
Learn how the property buying process works at Opes Partners.
4 min read
Author: Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Reviewed by: Ed McKnight
Our Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.
Thereâs a lot of money at stake when you buy a house. You will literally spend hundreds of thousands of dollars.
So you need to negotiate to make sure you get a good deal.
But most of us only buy a house once a decade (at most). So here are the six tactics I use when I negotiate on behalf of my clients. You can use these the next time youâre looking for property.
This might seem counter-intuitive. You sign the contract to buy a property as the first step in the negotiation.
But (and this is important) it must be a conditional contract. That means you can cancel the contract, but the seller canât. At least not for a period (e.g. 14 days).
This increases your bargaining power.
This means you have the legal right to buy the property for an agreed price. And the current owner canât sell the property to someone else.
Just make sure your contract has a Due Diligence or âRight to Cancelâ clause. That way, you can still get out of the contract.
With this in place, itâs time to negotiate.
Like the saying goes: "If you don't ask, you don't get".
Once youâve got the property under contract, the seller will get excited.
As the âunconditionalâ date gets closer, theyâll think the property will sell. They may even start to spend the money in their head.
Thatâs when you ask for a price reduction. When they are emotionally invested.
But donât worry. You donât have to call the agent and have a hard conversation. At this point, youâve got the property under contract. So you have the conversation through your lawyer.
I recommend you say something like: âI am happy to go unconditional if I get a $20,000 price reduction.â
This makes the deal sound solid.
The seller starts to think, âMaybe I should lower the price. That way, I get a sale. If I say ânoâ, I need to open homes and find another buyer againâ.
Simply asking for a price reduction doesnât mean you get one. This is why the next step is essential.
Trust me, if you ask a seller for a $20k discount without any reason⌠they'll probably say no. They may think youâre trying to take the mickey.
But if you've got a building report that says some things are wrong with the property, you can use that as a reason.
You might say, âThis property needs a bit of work. Iâll need to spend money doing it up. I didnât know that when I made my first offer. So the price needs to go down for me to make this purchase work.â
You can also research what similar properties have sold for. If you see that similar properties sell for less, use this as evidence for your price reduction. Most of this data is available on Homes.co.nz and OneRoof.
Another option is to hire a professional valuer. They will give you a sense of what similar properties are selling for. If the value they give is lower than your offer, you can use it as the reason for the price reduction.
Not everything is about price. You want as many âbargaining chipsâ in any negotiation.
Even if you can't negotiate a scorching hot price, there may be other things that are valuable to you.
Things like:
Think about what you want (other than the price). These can make the property more valuable to you.
In the "good old days", I used to attach a cheque to any offer I made.
When the seller got the offer, they could see the cheque. It made the offer feel solid. Like I would 100% buy the property.
It shows you had the money ready to commit, and itâs enticing for sellers to see the money.
This doesnât happen as much anymore since banks have phased out cheques. But the principle remains the same.
You can still put in the contract that youâll pay the deposit when the seller accepts the contract. The real estate agent might push your offer above others since they know youâre a serious buyer.
Finally, you canât negotiate unless youâre prepared to walk away. If you canât walk away, youâll constantly second-guess yourself.
This often happens when you buy your own home. One spouse usually wants to play hardball on price. But the other spouse wants the house and is willing to pay for it.
So make sure you can walk away. Remember, there will always be other deals.
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.