Finding the perfect investment property is only part of the process. Make sure you know how to negotiate effectively on price.

But if you can’t keep a lid on that excitement you can find yourself spending far more than you ever intended.

According to ME head of home loans, Patrick Nolan, not everyone is a natural born haggler when it comes to negotiating what you’d like to pay, but he said these tips could potentially stop you wasting thousands.

“On a home costing, say $500,000, knocking just one per cent off the list price can mean a saving of $5000,’’ he said.

“It will also keep a lid on stamp duty, which is levied on the final purchase price.”

HOME SALES RISING

HOW TO AVOID AN AUCTION DISASTER

Keeping a cool head in negotiations can stop you potentially spending thousands more for a property. Picture: Thinkstock.Source:Supplied

KNOW THE MARKET

Make a realistic offer – no seller is going to accept a ridiculously low offer.

“It’s impossible to know what a fair price is unless you have done your homework,” Mr Nolan said.

“Check out what other properties are selling for in your area to get a feel for current values.

It was also important to know the sellers as in know why people were selling, if someone is looking for a quick sale because they have bought elsewhere then that helps buyers determine whether they can push harder during negotiations.

KEEP YOUR COOL

“It’s hard to drive a bargain if you’ve been gushing about how much you love the place to the selling agent,’’ he said.

Mr Nolan said stay cool and give the impression you might not be as keen on the property as you actually are.

“If the agent thinks you’re completely hooked your attempts to negotiate could fall on deaf ears.’’

BE READY TO ACT

Make sure you know how much you can spend. There is no point negotiating a great price and then being able to follow through on the deal.

“Having conditional loan approval in place can be a game changer when it comes to price negotiations. It lets you know just how much you can really afford to pay, and it adds credibility to any offer you make.’’

Do your calculations before you make an offer - you need to be ready to act.Source:ThinkStock

KNOCK OFF AROUND 5%

While there is no such thing as a typical buying discount. Mr Nolan said vendor discounts varied widely in line with the state of the local market, the nature of the property and the vendor’s individual circumstances and where it is, whether is a suburb of high demand or not.

“If you think a property’s asking price is fairly realistic, offer 5 per cent to 10 per cent less than the advertised price. If you believe the asking price is way over the top, or you know the property has been languishing on the market for a long time, try to knock off 15 per cent.’’

DON’T LET IT GET PERSONAL

Don’t let negotiations turn into a battle of wills.

“The longer price negotiations take, the greater the odds that another buyer will jump in and snatch the property from under you.

From an investor perspective buyer’s agent Chris Gray CEO of Your Empire, said anyone can buy like a professional you just need to be prepared.

RESEARCH

Find out everything you can about the best suburbs to buy in and the median price.

There are free sources of information such as newspapers, property websites and sources where you have to pay Australian Bureau of Statistics and CoreLogic RP Data.

“In my experience, you get what you pay for, so it’s worth investing in the most up-to-date and unbiased information. ‘’

GROUNDWORK

“In order to have a sound understanding of property values and what’s available in a new area, you need to inspect and analyse at least 50 to 100 properties.’’

KEEP A FINANCIAL PERSPECTIVE

“Buyers can often get emotional over a property purchase, which can freeze their decision making,’’ he said.

“It’s important to remember to keep a financial perspective, as there’s a lot of money at stake.

Finding the perfect investment property is only part of the process. Make sure you know how to negotiate effectively on price.Source:News Limited

Property investors need to make factual decisions and to have a firm understanding of what to buy and what not to buy.

MAKE CONTACTS SO YOU CAN LEARN BEFORE OTHERS WHAT IS ON THE MARKET

Mr Gray said researching the market and networking were crucial when looking to bag a bargain.

Smart investors must know when to watch out for market opportunities that will help them bag a bargain such as silent sales.

A silent sale is a property that is sold before being advertised to the public.

“This is beneficial for buyers as there is no competition and you may be able to get the property for a cheaper price.’’

Mr Gray said you can increase your chances of purchasing silent sale properties by building up a relationship with agents.

SPEED

Time is of the essence – you can often get a better price by just having a signed contract a few hours before someone else.

“Giving an agent a signed unconditional contract with a 10 per cent deposit is a guaranteed deal and agents love knowing the deal will go through.

“If you concentrate on issues that are worth a few thousand dollars, you could miss out on a deal that would make tens of thousand dollars in the long term.’’