4 Effective Condo Negotiation Tips: Buying a Resale Condo

Searching for your dream home is never an easy task. After you have shortlisted units that you like, be sure to try these 4 condo negotiation tips to help you get the best deal. 

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     Table of Content

• Tip 1: Is it Exclusive?
• Tip 2: Know Your Sellers
• Tip 3: Number of Listings
• Tip 4: Be IPA Ready

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📌 Tip 1: Is it Exclusive?

• The first thing is to check if the owners have engaged an exclusive agent or not.
• When an owner engages multi-agents to sell their property, it may not mean they are desperate and ready to accept any offers.
• They might just want to speed things up and close the deal fast
• This strategy may backfire as there are ways to exploit this arrangement.
• Assume that you have viewed and like the unit, you can give a low offer to the seller’s agent and remind them that you are aware that this is not an exclusive listing.
• To avoid losing out to other competing agents, that agent will be motivated to help you push through the deal and negotiate with the seller
• In a multi-agent situation, it is very hard for the property agents to hold the prices as they are worried of losing the deal to their competitors  

📌 Tip 2: Know Your Sellers

• Before putting up an offer, it is always good to understand the owners’ situation.
• Are they the first owners?
• First owners will usually be sitting on bigger profits if they have been around for more than 10 years.
• This may signal more room for negotiation. What were their purchase prices?
• I have seen many second owners who entered at very high prices and expect big capital gains
• My advice is not to waste too much time in negotiating with unrealistic sellers
• Sometimes direct questions like “Why are you selling?” may not get you a truthful answer.
• Asking indirect questions may help you understand the owners’ motivation for selling
• For example, “Have you found a new place?”, “Do you need extension of stay?”.
• After knowing the sellers’ needs, review your own situation and determine what are your bargaining chips.
• Many buyers overlooked the fact besides pricing, there are many other factors at play during negotiation.
• Some sellers may need “Longer completion period” or “Extension-of-Stay”.
• Sellers who need the above concessions may prefer to close the deal with you over another higher offer
• Some buyers who need a longer option period (i.e., >2 weeks) may think they need to offer a higher price to secure a deal
• Instead of offering the usual 1+ 4 (1% option fee + 4% exercise fee), you can propose a 2 + 3.
• This is a win-win situation because the owner will feel more assured with a higher option fee and you can enjoy a longer option period without paying more.

📌 Tip 3: Number of Listings

• The final selling price will be determined by supply and demand factors.
• After shortlisting a particular condo, find out the number of listings in the listing portals
• View as many as possible to give yourself more options.
• You will put yourself in a tough position for bargaining if you only have one unit in mind.
• If possible, let the sellers’ agents know that you are considering a few other options in the same condo.
• When they know that you are a serious buyer, they will be motivated to bridge the price gap between buyers and sellers.

📌 Tip 4. Be IPA Ready

• My advice is to get an In-Principle-Approval (IPA) done before viewing.
• An IPA is a pre-approval stating the loan amount that the bank will extend to you based on your income.
• You can call up any bank or get your property agent to refer you a trusted banker.
• An IPA is non-binding and you are free to choose others banks later.
• Some buyers feel they can get an IPA done after they have found a property they like.
• In a fast-moving market, “right-priced” listings will be gone very fast.
• Besides IPA, you also must be mentally ready to make an offer when you see a good deal.
• Remember, it could be your 10th viewing but it may be the 100th viewing for the owners.
• It is common for owners to reduce their asking prices after a few months of marketing.
• When the owners experience “sellers’ fatigue” and signal to their agent that the price negotiable, you have to be mentally ready to grab the deal.  
• There are also special cases where owners suddenly become very motivated to sell
• For example, owners who need to sell their first property within 6 months in order to claim back their additional buyers stamp duty (ABSD)

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