top of page

Overcoming Pressure Tactics in Real Estate Purchases

Okay let’s say you’re in the market to buy a new house or apartment.

You’ve been to a few inspections, had a bunch of conversations, and spent countless hours on or perhaps

You're starting to get a good feel for the market.

You’re now able to start thinking about putting in an offer.

But you know, like we do, that once you express interest in a property you will be put under some pressure to make a formal offer and submit a contract to the seller.

And if the market is hot, you also know that you’re going to have limited time to consider what, if any, offer you might want to put in.

So what can you do to protect your interests but not lose a desirable opportunity? Here are a few tips to help you manage your risks and rewards.

Remember: The Agent represents the Seller

The seller’s agent might be friendly, affable, chatty, good looking, professional or any combination of those things. In fact, a good agent is supposed to be those things – it helps them build rapport and do their job better.

But ultimately the agent isn’t working for you. Their job is not to get you the best deal you can get.

Their job, by and large, is to maximise the sale price for the property and secure the best terms possible for the seller.

This, of course, involves the implementation of any number of tactics that we can discuss another day.

So by all means stay friendly with the agent (they’re just people, after all) but don’t trick yourself into thinking that they’re somehow working for you.

Befriend a Builder

In the current environment of unaffordable property, many people are going to be interested in older properties that might require a “bit of work”.

The problem here is that figuring out just how much of a “bit of work” any property needs is pretty difficult, unless you have some experience or expertise in such things.

To get a secure and proper budget, of course, takes the one thing you usually don’t have: time. As a result you can be left plucking numbers out of thin air to try and price up your offer appropriately.

Naturally, this can go horribly wrong if it leaves you with a $150,000 renovation that you thought could be done for $50,000.

It can be smart to try and find a suitably qualified friend or family member that can be bribed with a slab of beer, and chew their ear a bit about red flags, things to check, specifics for renovations, and the like.

It’s even better if they might be prepared to come with you to an inspection and be able to ballpark what a renovation budget might look like for the property in question (though we appreciate that can be pushing the friendship a bit, and might require a second slab of beer).

That way you can be slightly more informed going in about what you need to be looking for when it comes to properties that are viable to renovate within your budget rather than trying to figure it out on the fly within the space of a couple of days.

Finance Pre-Approval

Banks these days ask a lot of questions and don’t necessarily have stellar turnaround times for finance applications. Where finance approval is often required within 14 days from a contract being signed, it’s important to put yourself in the best position possible to avoid requests for extensions that might be declined.

Therefore, it’ s a good idea to take your finance application as far as you possibly can before even heading out to the market to go house-hunting. Generally speaking this takes the form of a finance “pre-approval”.

This means your bank will be fully informed about your repayment capacity, your available cash, and have all your financial documents already in-hand and processed. With that, you can have some confidence that the amount you might offer for a purchase is within your borrowing capacity.

Then, all the bank should (usually) need to do is get a valuation on the property in order to get your approval completed.

Of course, things can get a bit more complicated if you’re also borrowing to renovate or build in the same loan (see above) but it’s still a good idea to have chosen a financier and provided them as much information as possible to check for any issues before signing a contract.

Have your Contract Terms Ready

Ok, we completely understand that nobody really wants to incur lawyer’s fees BEFORE they even have a property lined up.

However, there is a good reason to have your lawyer on board before you get to the stage of contract negotiations. We can sum that reason up in one question:

Do you really want the seller’s agent (see above) to prepare contract conditions that you need?

The answer is no.

And even if the agent might have the best intentions, the fact is that they’re not a lawyer, and they’re certainly not YOUR lawyer.

In what is going to be a pressurised situation, the agent is going to tell you to submit your offer by close of business, and (more often than not these days) they’re going to want that offer to be in the form of a signed contract that’s ready to go.

Of course, you don’t have to comply with that request, but nor do you want to give “difficult buyer” vibes either.

So the best middle ground is to have your special conditions for your contract ready to go, well before you get into the arena of negotiations. That way you can be confident that they suit your needs, because they’ve been prepared by someone who’s in your corner.

Included in this preparation is an understanding of what kinds of due diligence you might need.

Remember, your default position is a “buyer beware” situation for most risks associated with buying a property. That means it’s on you and your lawyer to discuss what searches, checks and possible “outs” you might need to be comfortable signing a contract.

Building and Pest

You probably know that most contracts involve a “building and pest” condition – where you get to select and send an independent building inspector to verify the condition of the house you’re intending to purchase.

Sometimes, however, a seller will offer you “their” building and pest. Perhaps one they got done in preparation for the sale, or at the recommendation of their agent.

Should you take it? Maybe…

As a general rule, the safer option is still to get your own independent building and pest inspection.

However, if you are confident that the seller’s inspection was completely independent and comprehensive, you might opt to rely on that to satisfy yourself about the condition of the house. The one main recommendation here is this: ensure that you get the inspection report either “signed over” to you by the inspector, or reproduced under your name.

Otherwise, if anything goes wrong down the track you might find that you can’t actually rely on its contents.

Don’t Accidentally Sign a Contract

Technology is a wonderful thing, provided you understand it.

Modern agents have taken to circulating contracts for review via DocuSign or similar e-signing software.

Unfortunately, for the uninitiated the process of simply trying to review, or download the contract for your lawyers to review, is not always intuitive.

And in the random clicking and accepting that ensues as you try to simply get a copy of the document, we have seen more than a few people accidentally sign a contract.

If you aren’t 100% sure what you’re clicking, then don’t. Just call the agent and ask them to email it to you.

Don’t Succumb to Pressure

We appreciate this might be a little bit like saying “don’t worry” to someone, but it’s something to keep in mind.

The agent’s primary goal is to pressurise you to make your best and highest offer, as quickly as possible.

Your goal is to avoid getting yourself into a bad contract for a bad price with long term negative consequences.

It can be easy to allow the fear of missing out to take over your decision making, but it need not be so.

If you do your preparation well, you know your numbers, and you are confident in your position then that is a good place to be to make an offer.

If in doubt, run your thought process past a trusted friend and “stress test” your intentions against their more objective view. You don’t have to accept everything they say, but at least it can offer a buffer against what is sometimes a high pressure situation.

Ready to Buy? Come and See Us!

We mentioned earlier that having a solid set of contract terms in hand before negotiating is a good plan.

If you’re ready to buy and starting to consider serious offers on your new property, then reach out to us and we’ll be happy to help you at every step of the way.

22 views0 comments


bottom of page