first property

[JBY]

Im looking at buying my first property and just want some clarity on the process, timescales, and any tips you think I might benefit from with regards to negotiation.

1. Is there a general rule of thumb on what % below the purchase price I should start negotiating? What % below the purchase price should I pay? I am assuming that I can negotiate significantly below an asking price given the economic times we are in. I am looking at properties below $500K on the sunshine coast. Any other useful tips from people who have recently purchased in this area or experienced buyers would be much appreciated.

2. I am going to make sure that the contract is subject to finance, and building and pest inspections........OK, so I find a property, make an offer, and inform the REA of the above......Please walk me through the next steps - What are the usual timescales from when I make an offer, to final settlement? I know that the bank will say subject to 14 days finance approval(but 14 days from what point exactly?). What are the timescales for getting the building and pest inspections, as I guess that could take a little time if you have to find and book someone (presumably this is something that the buyer arranges rather than the REA?).

Cheers.

 

[Propertunity]

1. Is there a general rule of thumb on what % below the purchase price I should start negotiating?

No.

Here's a bit of blurb I use to help my clients re prices:

A council land valuation (or Valuer General’s) is in no way, shape or form an indication of likely sale price. It is calculated very conservatively, only refers to the land component and is very often out of date by some years.

A Bank’s or Sworn valuation often ends up being the same as the contract price you pay (what a surprise). However it can be less than what you are offering to pay in some circumstances. This may be of some concern if you are borrowing very heavily against the bank’s valuation. For example, you offer to pay $800,000 for a property and the bank values it at $700,000. They may only lend you up to 80% (this figure depends on the lender’s internal rules) of the $700,000.

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.

What % below the purchase price should I pay?

huh? you are paying th purchase price. Maybe you mean listing price?

I am assuming that I can negotiate significantly below an asking price given the economic times we are in. I am looking at properties below $500K on the sunshine coast.

You assume too much my friend. Under $500K in a lot of areas (and I'm not sure what it is on the Sunshine Coast) is smack bang in the middle of FHB territory. Lots of competition there and inexperienced FHBs throwing money at vendors and in many cases buying above list price. Someone from the sunny coast will be able to tell you the price range they are in there - i.e. it could be under $400K.

Since I operate in NSW, I'm sorry I can't help with the Qld buy process.

All the best with your purchase and welcome to the forum

 

[joanmc]

Hi JBY, what part of the sunshine coast are you looking?

I would get at least 21 days for finance and pest and building (it is from the date that both you and the vendor sign the contract, well it was when I last bought). If you are really keen start ringing around for quotes on pest and building now to find who you are happy with. there are a couple around up there.

Also decide on who you are going to use as a solicitor. do a lot of inspections in the area you have chosen and you will soon get to know what is a good price and what isn't. Before we bought our first IP I would get every Realtor magazine for months, spent time looking in windows, asking agents what they would consider a good investment and why ( which is REALLY an eye-opener as most agents DON'T actually invest in RE)

Are you looking for something you can add value to down the track?

Good luck
Joan

 

[JBY]

Thanks for your replies.

I meant % below listing price as a starting point.

I am aware that the price range Im looking at on the SC is FHB territory.

I dont have a specific area in mind, but probably somewhere in the hinterland.

On the one hand, I hear from REAs that there is a rush of FHB out there on the SC. On the other hand, I have also heard from non-REAs that there has been some significant negotiations going on here as well. Would like to hear other peoples opinions on all of this. Preferably, from those who have recently invested on the SC.

Any more concrete tips on negotiation tactics/approach would be appreciated.

Thanks.

 

[battler]

Any more concrete tips on negotiation tactics/approach would be appreciated.

You need to find out what the vendor wont sell for, when your at that point your very close to what he will sell for, and that is the price. Keep in mind that TIME is also part of the negiotations.