Feeling a bit used ...

[Jodie701]

Some of you know we bought our first IP OTP a few months ago. We asked the company we bought from if it's possible to get a discount and they said "no", so we didn't push the issue.

In the past few months, I've since heard from others who have bought OTP in the past that say they got a 10% discount on the asking price.

Would a discount be a standard common thing for OTP?
Is it likely that the company said "no" to us because firstly they know we're new at this and don't necessarily know what happens and second they could drop the price for those who are persistant rather then just accept the no answer?

A 10% price cut would have saved us $41k

 

[f4j]

isn't the discount the whole point of buying off the plan?

 

[Rolf Latham]

Hiya

I get this a lot.

Broker XYZ said we can get this rate.

Talk amongst friends and work associates is cheap................show me the paper and the money.............................

Its unlikley in most OTP deals, in a NORMAL market that there are 10 % off the list price, and if you arent comparing the one development to itself, then there are other variables entering the picture.

Doesnt hurt to ask, but I suppose, if one feels that this 10 % extra margin is actually there to be had, I would grab myself a good negotiator or buyers agent and pay the fees and save the difference.

ta
rolf

 

[boomtown]

Regretably buying OTP is full of games. Which is one of the reasons I don't participate in OTP.

 

[AlmostBob]

Yeah, you might have been hard done,

it is a learning process, push a little harder next time​

but you might not have been

some developers asking price is the price, others pad them up so they can offer a discount​

and some reports of How Great Am I, I got *** are fibs​

 

[buzzlightyear]

I knew someone who worked at a large construction company, who were offered a discount on their development. (It was a large one in Melbourne). They were offered a whole...................wait for it.......................2%

People tend to exaggerate, misrepresent and skew this type of information, more for personal self-aggrandizing reasons. As Rolf said, talk is cheap....

 

[WinstonWolfe]

keep in mind a developer's priorities can change quickly.

if the market looks like it is going to pick up or interest rates are going to go down, a company is less likely to discount.

A developer I bought land from last year had shortly before discounted the blocks for a short period because his cash flows were tight and sales didn't look like improving.

The guy who bought the block beside me paid 17k less. It didn't bother me, because he bought at a different time. You win some you lose some.........prices are very much about supply demand and risk reward.

You are more likely to haggle a lower price when few others are buying. If you run with the crowd, you can't expect to be treated differently.

 

[PrimeCommercial]

Also if you asked 'Would it be possible for me to get a discount?' your answer is always going to be flat NO. You usually have to negotiate a tad harder.

 

[lizzie]

i feel ww might be on target. often developers have to pre-sell a certain proportion of their development to be able to get finance, and if they look like falling short of the required sales number they may have to discount to get the sales over the line - so that they can get finance, so that they can build the project.

or, if the development is already underway, the builder may have "moved on" to his next project and need to free up some cash with some quick sales.

or, the builder may not have "moved on" but the interest rates on the financing may be sucking him under and he needs some quick sales.

it is no different from discounting for any property sale - last week maybe i could have bought a free standing house at $300,000, but next week it might drop down to $280,000 if the owner is desparate for a sale ... so do i wait and possibly miss out or do i feel it is good value at $300,000?

 

[ianvestor]

Also is you asked 'Would it be possible for me to get a discount?' your answer is always going to be flat NO. You usually have to negotiate a tad harder.

Yeah, next time ask them if they might possibly consider thinking about maybe warming to the idea of giving you a discount.

 

[depreciator]

Some of you know we bought our first IP OTP a few months ago. We asked the company we bought from if it's possible to get a discount and they said "no", so we didn't push the issue.

In the past few months, I've since heard from others who have bought OTP in the past that say they got a 10% discount on the asking price.

I'm assuming these people you are talking about did not get a 10% discount buying into the building you bought into?
There are all sorts of games with OTP, Jodie. Next time someone tells you (smugly) that they got a 10% discount off the asking price. Just say to them: 'Well, you dill, obviously the asking price was inflated. That '10% discount' was marketing spin and brought the apartment down to market value. I would have asked for 20%.'
Scott

 

[Bill.L]

Hi,

Jodie, If you have been reading this forum for a while, why did you buy an OTP from a developer at the conclusion of a property boom in the first place???

bye

 

[Ausprop]

Hi,

Jodie, If you have been reading this forum for a while, why did you buy an OTP from a developer at the conclusion of a property boom in the first place???

bye

echoed sentiment - where is the property and who did you buy through?

in this market I would suggest that you could have pushed for more than 10% discount.

 

[MCS_80]

G’day Jodie701.

Sorry to hear you feel you got "stiffed" on the OTP deal.

As being very new to IP but being an ex Door Salesman (Yep, I actually sold Doors), the key in selling or buying anything is to not give up. If you get a "NO" first, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again, ask again, and again, and again, and again.............

Well, you get the idea

Be prepared to walk away from the deal if you feel you are not getting a fair deal. In the end, your the one with the money, and any company who isn’t willing to bargain down to get a sale must be crazy.

Another tip when asking for a discount is to ask, "Why not?". If somebody knocked an offer back, ask them why they knocked it back. Get them to go into detail about why they don’t offer discounts etc. You will soon see in their face if they are pulling your leg or not. Just be open and honest, and make sure you FEEL comfortable before signing anything in future.

Well done on the IP purchase though.

Hope this helps with future buying opportunities.

(P.S. : There is always the chance you got their bargain price to start with, do your homework and compare, if you missed out on a discount, learn from it and dont miss out next time)

Cheers

Mick

 

[depreciator]

From memory it's in Sydney - Parramatta.
Jodie did make a post before she signed up and people cautioned her.
Sydney property would look pretty cheap to you Perth people, but I think it's wise to be cautious when developers head across to the other side of the country to flog OTP property.
Scott

 

[MCS_80]

Just a psychology observation here to see if invetors/developers with experience agree.

Would OTP deal's seem better as the buyers imagination runs wild with how great the IP will look and be built with only seeing floor plans and with an artist's impressions of what the property will look like once complete?

I worked as a house painter for a few months and the drawing that the developer was showing potential buyers looked nothing like the finished product. The houses where the right size and colors etc, though the fancy looking plants and beautifully manicured gardens in the artists impression certainly didn’t look the same as the finished gardens.

Just ideas.

Cheers

Mick

 

[depreciator]

Oh, and Jodie, you'd be feeling the 'post purchase dissonance' many people feel when we buy anything. And I don't just mean when people buy property. I often buy things and the next day think to myself: 'I really shouldn't have bought that...' I always think it on the odd occasion I succumb and buy a Big Mac. If you did plenty of research and made an informed decision on that apartment and that area, don't listen to the little voices in your head - or the little voices coming out of other people's heads.
Scott

 

[Buzz]

I see this happen occasionally and I think Lizzie is right. Most small to medium developments have to sell a certain percentage before they can even get finance to go ahead. Hence if they need to forward sell 20 and they are at number 18 just to get the thing off the ground they may finish.

Alternately right at the end of the project when the developer is looking at the next project and needs new funds and needs this project off his books the last few may be discounted. Or he may bring in external real estate agents to sell these - at a higher price ( to include the new commission agreement) to get them sold.

So as most have told you - talk is cheap ask specifically what price they paid - they may have got it cheaper or not ( including the discount). Maybe a more important question to ask if you are considering buying off the plan is how many have been sold as a percentage of the entire project and is funding available to start construction soon? I doubt they will tell you about funding but construction start dates may give you an idea...

My concern is always with these things the valuation - obviously the discounted prices get recorded and if you are looking at revaluing the valuer may include these lower priced properties in his/her comparisons. A more likely scenario is that the valuer will use properties outside the development ( if it is not a block of units ) for a true and fair valuation or the property in the area. I have had clients who have faced this issue. Maybe a valuer on the forum has some thoughts on this for those looking at future OTP purchases.

Jane

 

[depreciator]

Jane, this is what Jodie said:

In the past few months, I've since heard from others who have bought OTP in the past that say they got a 10% discount on the asking price.

Maybe I'm wrong, but I don't think she means that people buying into HER development got a 10% discount. It's just that people she has spoken to who have bought OTP previously would have said to her: 'Surely you didn't pay full price? I got a 10% discount when I did it blah blah blah.'
Jodie may well have got a good deal.

 

[nomadic]

It sounds like you have a case of buyers remorse now that you've got a thought in your head that you may have overpaid by $41k.

I imagine these people who got the 10% discount purchased after you when the market was not so hot and the developer was discounting stock.
Perhaps they actively promoted a "10%" discount... it seems odd that everyone got the exact same discount unless sales staff were instructed to offer it to potential buyers.

As shady said, you probably wouldn't have got a discount if you asked "Would it be possible for me to get a discount?" You should have said "How much of a discount are you going to give me?"