If you're considering buying property, it's only natural to want a deal.
However, I'll tell you what is significantly more important than getting a discount - actually getting the property, period.
Here are my insights on when it's right to negotiate on price and when you should lead with your best hand.
A Seller's Market
In a fast-paced real estate market such as we are experiencing in Cayman, it is very difficult to negotiate a meaningful discount on desirable properties.
High demand and low inventory mean it's a Seller's market. Essentially, with more buyers than available listings, Sellers have the upper hand. They are able to set ambitious price points and expect to entertain multiple offers. This is why Seller's markets coincide with upward market pricing. Simply put, the demand is greater than the supply. (For more Cayman real estate trends, be sure to read: Mike Joseph's Midterm Market Report.)
So, if you are interested in buying a property but find yourself in a Seller's market, like Cayman currently, my advice is to make your Offer as attractive as possible. There are many other prospective buyers, so do everything you can to make your Offer stand out. It is not worth offering $10,000 less than the list price just to get a deal. You run the risk of missing out on the property altogether.
Long Term Property Journey
Don't get me wrong. I'm not saying $10,000 isn't a lot of money. It is. However, when buying property, always think big picture. Is $10,000 worth not closing on the property?
Property is a stable asset class. And if you've done your homework right, in 3-5 years, that house will more than likely be worth well over $10,000 more than what you paid for it.
The Art of Negotiation
On the flip side, if the market is a little softer, and you are happy to take your time and pass on the property, then yes, by all means, play hardball.
Or if you're a seasoned property investor, putting down a chunky deposit to buy multiple developer units, and you don't mind walking away if the deal is unsuccessful, then yes, push hard for a discount.
But for most of us, it's more about getting a foot in the door. So, if the home serves to get you on the property ladder or move up it, my advice is to play it safe. As a first time buyer, you'll sleep a lot better knowing your Offer has been accepted rather than kicking yourself over $10,000.
Ask Your Real Estate Agent
Your real estate agent should be aware of your budget, timeline, and non-negotiables. Armed with that information, as well as a good understanding of the current market, they should be able to guide you on how to make your Offer to purchase as attractive as possible. And if the Offer is countered, because first offers are rarely accepted, they should be ready to assist you with a concrete negotiation strategy.
At Property Cayman, we get to know you. We'll discuss everything from price, closing timelines, financing conditions, inspection contingencies, right down to the number of kids (or pets) you need room for - and all upfront. That way, we not only present your Offer in the best possible light but we are prepared with a negotiation strategy in advance. A distinction that can be the difference between you closing on, or missing out on the property of your dreams.
If you're considering buying real estate and would like to chat more about price negotiations, offers and conditions, or the market in general, please feel free to reach out to me.
Yours in real estate and island living,
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From property valuations to financing, and purchase offers, buying a home can feel overwhelming, but it doesn’t have to be. Island living, it’s literally what we do for a living.