Buyers should research the local and wider property market to determine the value of the property before making an offer. This will help you decide how much your initial offer and your highest offer should be.

Both financial and emotional aspects will determine these levels. It is reasonable and quite normal to become emotionally attached to a property and feed off this when making offers. However for your own peace of mind you should know how much the property is really worth to justify this emotional aspect when making an offer.

Consideration should also be given to the asking price (if there is one) as it may be assumed the seller has reason to justify this price. If there is no obvious reason why the asking price is set at a certain level, ask the seller before making an offer. They should be able to justify their position. If you believe the asking price is high, you should also be able to justify your position. The best and easiest way to do this is to obtain information on recent sales of similar properties in the area.

Links to companies who sell recent sales information

There is no point in disagreeing over the asking price if neither party is able to substantiate their point of view through FACTS. Even if the seller doesn't agree, you have alerted them to the fact that they may be over-estimating their price. If you don’t feel comfortable discussing this directly with the seller, use PropertyDeal’s question and answer feature or email them.

It is important to take these steps prior to making an offer otherwise you run the risk of offending the seller with a low offer. In such a case the negotiation may not proceed any further as they will not take you seriously.

As noted earlier, consideration should be given as to how conditional offers will be viewed by the seller. Sellers prefer offers without a lot of conditions, because every condition represents a degree of uncertainty for the seller, and makes them wonder if the conditions will be fulfilled. While they have to wait for the conditions to be fulfilled, they may lose the interest of another buying party.

There are ways around some of the standard conditions in a contract. If you have to obtain finance to purchase a property, gain pre-approval from your bank. This way you will effectively be a cash buyer which provides a greater degree of certainty for the seller. They will assume you are a serious buyer and they may be more negotiable.

Expect the vendor to counter offer your initial offer. As a general rule of thumb, it takes approximately six counter offers before an agreement on price is reached. You can also expect the seller to include an escape clause should your offer contain a number of unfavourable conditions. If the offer is subject to the sale of your own home, the seller will almost certainly include this clause. In this case, there is little option but to accept as they are taking an extra risk and feel comfortable with an assurance they are not tied in for an unreasonable length of time.

In a case where you make an offer subject to a valuation report, builder's report, title search or LIM (all very common clauses and recommended by PropertyDeal) and the seller counter offers with an escape clause - be wary. You will probably spend a reasonable amount of money to meet these conditions and you don't want to end up having to rush through a process that requires time and consideration. When spending such money, your risk of having the contract cancelled needs managing. 

It’s a tricky business negotiating on price and conditions and balancing the risks and rewards. Understanding both partie's needs, and how the seller may be thinking is the way to get the best result.

What KIND OF OFFERS Sellers Dislike

     Unreasonably low offers can offend, unless justified by factual market information

     Offers with finance conditions

     Offers with a number of other conditions with no assurance the conditions will ever be met

What KIND OF OFFERS Sellers Like

     A cash buyer with pre-approval for finance

     Matching your conditional agreement with an escape clause

     Reasonable offers which are supported by market evidence

LINKS FOR WHERE TO GET RECENT PROPERTY SALES

     www.terranet.co.nz

     www.whatpricemyhouse.co.nz 

     www.qv.co.nz

     www.reinz.co.nz