buying a house -- negotiation techniques

HELP: buying a house -- need negotiation techniques

Hi, folks, would like your thoughts on buying negotiation techniques.

Saw a property I liked very much. First open was last weekend & auction in 3 weeks time. I was quoted a price guide of “over 950K”.
On the weekend I did heaps of research in the area using RPDATA, and based on the sales around the area etc etc, my valuation is for around 1.1M.

Now, my question is: what’s the best strategy for securing this property and keep it under my estimate?

I am thinking:

Strategy #1: give an offer of $1.05m on Thursday morning (after the 2nd open house on Wednesday) and set a deadline of 6pm Friday evening for a definitely response. Then if they say no, I will say “I’ve done my bit, how much the vendor would like?” if they say “will go to the auction” then I will offer a reduced settlement period of only 2 weeks. If still “no” then will keep quiet then hope they will come back to me with something, in the end I can maybe meet them in the middle but still below 1.1M

Strategy #2: ask a friend to offer a low bid of $980K, and I will then come in with a killer offer of $1.08m – a 100K premium, then hoping the vendor will think they got a deal out of me to force a quick sale.

Well, in short I am really bad at doing this, but trying to not go to the auction as you’ll never know who you will be up against.

What do you think?
I really need some wise minds.

Cheers,
Mr.Fish
 
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You could try probing with a lowball offer "subject to acceptance within 24 hours" and attach a cheque for the deposit to see how badly they want to sell.

Being cheeky might get the agent offside however.
 
if it is a million dollar house, they will probably be happier to see it go to auction.
No cooling off period, no subject to...unconditional sale on the fall of the hammer.
It is a guaranteed result for the vendor.
This is what I have found in my experience with marketing higher end priced homes.

Cheers
 
Thanks guys.:)

Yes, it is a million dollar house...but where it is located, it's quite an average price range.

Actually, majority of other houses in the area have been/are being sold (for the past 1 year) at around 900K - 1.3M..

But CairnsAgent, you are right, for the past month, nearly every house went to auction...

hmm.....maybe that's the only way....

But then, from your expereience, what factors would make an agent or vendor wanting to sell without going to auction?
 
Lots of people hate selling by auction. There is the "saving face" value of selling prior to auction. If there are no bids at the auction, or if it doesn't get up to reserve, the crowd (including neighbours) may view you as a "try hard" or a loser. I am not saying that is the case, but I think you could feel a bit silly not selling your house.

I know we all hid in a bedroom when my mother sold by auction because we felt everyone was watching to "read" our faces and see our reaction if it was passed in - which it was.

Lots of buyers hate auctions. At my mother's auction, the reserve was not reached. Plenty of pre-auction interest but bids on the day. Passed in to a tree, I believe. That night two great contracts, both the same, both higher than the reserve - sold. The buyers didn't want to go through the stress of bidding at auction.

Wylie
 
In my opinion the only reason people would choose to auction over private treaty is that:
A) the property is unique and hard to price.
B) vendor wants a "result" date, something to have happend by a certain date, because even if it is passed in, most cases an under bidder will make a reasonable offer after the auction.
C) Outcome is final on fall of hammer....no building / pest, no finance, no cooling off.
D) liquidation.
E) market is so good vendor may achieve over market value.

O.k this is a little simplified, but you get the idea.
In most cases when a vendor has made the decision to auction they will follow it through, even if they are presented an offer that is above the reserve they have in mind....why?...simple, greed, most people believe that they may achieve a higher figure at auction, which is not necessarily the case.
My advice is make your best offer if you want the property, if they say no, make sure your offer has an expiry date that falls before the auction. Attend the auction and wait and see, you may just purchase the property below your original offer amount....maybe:)

cheers.
 
in general, what's a good timing to give an offer?

I am thinking on the first week's probably too soon?-- as so much so early will bring up the "greed" in vendor?

Any further suggestions?
 
I am thinking on the first week's probably too soon?-- as so much so early will bring up the "greed" in vendor?

Any further suggestions?
R/Agents in Brisbane at Auction open houses don't even quote the price
anymore,at least you know a rough idea what the vendor wants,imho..
I would just wait till the auction day,and turn up and see what happens
if the agent knows you are interested they will just play games..
willair..
 
Offer early. Vendors will think of the big advertising dollars they will be saving and this would influence their thinking, especially if the offer is close to what they are wanting.

If you leave it too late, you would need to go in cash unconditional, because anyone with an auction coming up would not want the place taken off the market, lose potential buyers and possibly have the purchaser pull out on a pest inspection or whatever.

Wylie
 
O.K what seems to be missing here is the fact that EVERY vendor is selling for different reasons, some keen to move on, some desperate to move on, some who are just down sizing, some who are "taking profits". There is not one single proven strategy as to when or how to make any offer, regardless of the sale method chosen by the vendor, unfortunately it comes down to the vendors situation. They get to have the final say..always.
As for agents not quoting price, well if they haven't been given a price by the vendor as is usually the case with auction, they would be breaking the law if they quoted a price. Most vendors inform the agent and auctioneer on the day of auction, it is up to the purchaser to determine the price.

Cheers,
 
Thanks everyone!

Ok, a bit more info, the vendors are two elderly parents with the son. (the son's living in the house I believe) the elderlies are moving to a nursing home -- I was told.

But of course this info alone does not tell you how keen they are to sell.

I will try to dig out some more info at this Saturday's open.

I still haven't made an offer yet:rolleyes:

Oh, Question: do you think offering an early settlement appeals to vendors? My theory is that "time value of money" -- the ealier they get their hands on money the better. But then what if they have plans already thus do not want to move out eariler than 6 weeks?
 
Make sure the agent presenting your contract knows that you are flexible and will make settlement to suit the vendor. That gives you a better chance than someone who is not flexible. After all, no vendor wants to move twice if they can avoid it.

Wylie
 
Right.. Just come back from the 2nd open house.

Not surprisingly, was told by the agent that there were 9 contract issued and 4 offers given over the past week. Already pushing it out to around 1.1M.

Looks like it will for sure go to the auction -- as CairnAgent put it: Greed.

But this time, with the amount of interests at the moment, greed will prevail!

As for me, unless someone suggest otherwise, will have to go with the flow and see what happens on the auction day =(
 
Just an observation about greed.
Greed is also occurring from the buyers point of view ,ie the desire to really possess a property.
Also I really think greed is not what you should be focusing on.

People are trying to get the best return for their investment, and to not do otherwise, is very stupid.
 
I think it depends on what market you're in as to whether you can get away with a low ball bid. Melbourne seems to be very hot at the moment. I was looking at a property advertised between 420K-460K in Doncaster East. I over heard the agent talking over the phone and apparently they had a few people offering around the 430K mark 2 weeks before the auction. She said unless it was something significantly more then there's no way the vendor would sell. The property sold for 566K at auction. If I was a seller with a good property there's no doubt I'd go to auction especially if people were making low bids. I think the only way to get a bargain is if the REA and the vendor don't know the market that well. It does happen.
 
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