"All offers considered" - what the?

[kort]

Okies so +1 and I are in the market for a property.....
We have found a place that we have inspected twice, however the problem is that the Real Estate Agent has not set a price on the property? All he is saying is that "Any offers over $x will be considered" - what the hell does that mean? We asked him "well what price is the vendor happy to sell for". The Real Estate Agent couldnt (or wouldn't) give me an answer - he said "the vendor hasn't come up with a price yet" - WTF?!

A friend told me that when the seller goes through a Real Estate Agent, there is some contract agreement stating what the target price should be? Is this true? Right now I feel the agent is just trying to "gauge" interest to push up this mysterious price. He even asked me "what do you think the property is worth" - I declined to answer saying I wasn't a sworn valuer of property (I don't think the seller has had the place valued).

I spoke to the agent and the house is up for 'private sale' - not going to auction. Apparently the buyer is "committed to selling" but so far:
* has not determined a price (other then all offers over $x will be considered)
* has not set a date of when they wish to sell by

The place "ticks all the boxes" which is why we are interested, however at the same time, this whole process seems a bit unusual...any thoughts/advice?

 

[ianvestor]

so far:
* has not determined a price (other then all offers over $x will be considered)
* has not set a date of when they wish to sell by

I'm just wondering why you think these are the vendors' responsibility. Let me ask you:

Have you determined a price? If not, why not?
Have you set a date when you wish to purchase by? Why not?

In general, the first party to state their bottom line (e.g. price) in a negotiation will come out worse off. You as a buyer want the vendor to first state a price, but the vendor would have more power if you first stated your position.

Likewise with deadlines... why would a vendor want to give out that information any more than you do?

WTF indeed

 

[boomtown]

If you are buying anything you should know the market value. Offer 20 percent below market and take it from there.

 

[bubbles]

Kort,

We had the same drama with the last property we bought... I hated working this way. I like to know their high and go lower rather than knowing their low and go higher.

I think we ended up paying too much (was offers above $400k and we paid $420k), but we really wanted this property as it was the other half of a duplex we already owned.

The owner was a slimebag and so was the agent...

 

[ianvestor]

I like to know their high and go lower rather than knowing their low and go higher.

How about knowing their 'low' and going lower?

 

[PrimeCommercial]

.... this whole process seems a bit unusual...any thoughts/advice?

Not unusual at all..The agent's just 'keeping the cards close to his/her chest' as they say. Its a pretty standard negotiating technique.

sort of a quasi tender process but I guess you get a 2nd and 3rd bite at the cherry.

 

[Perp]

I usually take ianvestor's approach.

I've heard this "rule" of negotiation that whoever names a price first "loses", but I just don't believe it.

In some cases where the market value of the item in question is very difficult to ascertain it's possible, because you might ask for $X when the person was willing to pay $2X, but for residential housing I don't think it's true, as the value can be determined with a reasonable degree of accuracy. Then the seller lists at the top of that range, the buyer starts offering at the bottom, and they end up somewhere in the middle. I think that's the case irrespective of who states a price first.

But I'm open to somebody being able to convince me that I'm wrong...

 

[DavidMc]

Yeah just ignore all of that stuff and do what Boomtown said. Unless you really really want it in which case just start say 10% under.

 

[see_change]

Senario not unusual

I prefer to have a starting price from the other side , but I'd want to have a pretty good idea of what the market price is.

Personally at the moment , given the current market ( don't know your specifics ) I'd go even lower 30 - 35 % low what you know to be fair market price.

Cliff

 

[troyhunt]

Like others have said; know your market. Do all the research you can to justify a low ball price then present it in an offer. Rationalise and justify the reason you're offering to pay a certain figure through comparable sales, other listing, market trends, etc. If you do this, you can be comfortable you're on the money, confident in your offer and it puts the vendor on the back foot when presented with comprehensive data. Its then up to them to provide you with evidence that it's worth a higher amount.

 

[Lamingtons]

They did say offers over $x.
So try to put in $x less $y and see what happens i guess?

 

[kort]

thanks for the response guys - most helpful!!

Okies last week the property was advertised at $X, and now this week the price has gone up to $X+100,000......I assume that this has been because there has been some interest (demand pushing up the potential price)....

The place is very nice but I think they are asking too much - even if though they say "offers above $x+100,000" considered, is it worth throwing in an offer less then that? (Section 32 contract yet to be released, so will not be making any formal offer until we have read through it)

 

[PrimeCommercial]

..... is it worth throwing in an offer less then that?

Definitely, they can only say no.

 

[islandgirl]

If you are buying anything you should know the market value. Offer 20 percent below market and take it from there.

Absolutely - you should know what the market value is anyway. If you are researching your properties correctly you should know that the suburb prices generally are and what the surrounding prices in the street are. What the seller wants is more often a wish list anyway.

I do hate slimebag agents that aren't forthcoming with information. Its just poor marketing and management in my opinion.

 

[Propertunity]

Okies last week the property was advertised at $X, and now this week the price has gone up to $X+100,000......

The asking price last week was meaningless. The asking price this week at $100K more is meaningless.

As I've said before:
A selling agent’s or vendor’s asking price or listing price does not have to correspond to any logic whatsoever. It is a free market economy, so they can ask what they like. Therefore, just because you might get a property for say, $50,000 under the listing price, this may be meaningless if it was overpriced by $80,000 or more, compared to true market worth to start with.

You need to establish the true market worth not make offers below their asking price on any given week.

 

[Collector]

If this was NSW I would ask the agent:

1. What is your esimate of the property? (on a agency agreement the agent must state his/her estimate value of the property, there is also a section for the marketing price)

2. If the the advertised price is $450,000+ or offers over $450,000, you could offer say $451,000 (we all know that the agent will try and get the price up from here - but what it means is that the agent can no longer advertise the property at $450,000+ or offers over $450,000 as this is misleading - the agent will soon get of changing the price if you keep offering just above the + or over price)


In NSW the agent must answer your questions to the best of their knowledge. Its up to the buyers to ensure they do.

 

[BayView]

I've heard this "rule" of negotiation that whoever names a price first "loses", but I just don't believe it.

Not actually true, as you say.

I can advertise anything at a price that is higher than I actually want, and settle for the price I want.

We did that with our B&B property. The was no comparable property in the are to value against. We asked the local agents what they thought it was worth.

They said $X, so we whacked on $100k more just for laughs, because everyone always offers you less than the asking price, right? Sold it for what they said.

The Indian vendors in the Fiji markets are masters at it.

 

[Carl]

I agree with what some of the others are saying - a place is only worth what someone else is willing to pay. i generally don't even start looking at places asking for a $...+ unless they have sat on the market for a while. This will get the owners accustomed to accepting a lower amount (if it doesnt sell in the meantime)

Perhaps ask the agent to contact you when there has been a genuine offer on the place from other purchasers. This will test his honesty, but at least other genuine offers will put a ballmark value on the property.

 

[kort]

Hey guys - top advice from all. Finally got the Section 32 contract and well, there are a few concerns in there - enough for us to walk away!!

In the contract, it was interesting what the council valued the property and land at, and what the seller wants to sell for. Whilst I realise that the council might undervalue property, in this instance the seller almost wants double.

Bottom line - the price the seller wants was WAAAAAY to much - was happy to walk away.

 

[Perp]

Are you sure that the Council's valuation isn't an unimproved valuation? (They often are.) In other words, the valuation often relates to land only, and it wouldn't necessarily be of concern if it's half (or even less) than the market value.