Freaking out about making an offer... opinions and advice needed!

[theycallmeloz]

Hi guys

I am totally new to this forum, so forgive me if I make a few obviously silly comments. I was trying to read as much advice last night at 1am but now I just need some opinions.

We are putting an offer on a place today. It is listed as 'From xxx'. Note, this is a place that we want to live, renovate, and then move on. It is in a fantastic suburb, but on the border, and the road is a main thoroughfare, but it is not the busiest road in the suburb.

One of my friends is a valuer, and she reccomended around 30-50k lower is what it is worth. It's a hard one, as there is not a lot of comparable sales in the last six months. One place to compare against that recently sold was about 20k, more than this property but fully renovated and the house is 45% bigger. Block is slightly smaller and not on a main road.

We are wanting to make an offer of 50k lower to get the ball rolling. Yesterday when my husband spoke to the REA, she was basically saying "you know it's on as 'From xxx' the owners are wanting above that..' and it kind of freaked us out. I have read a bit of research and most people say that they have it listed for at least 5% more than what they are prepared to take, so always go in with a lower offer. I just don't know what to do. I won't pay what they are asking, it's not worth that to us. About 50k lower is a good starting point, as it gives us somewhere to move.

I know there are probably many variables that you don't have the information to make a comment, so I am really just looking for opinions now - should i just stick with what my gut is saying and go in at say 45k lower, and see if they bite? Or go in with a better offer that we are prepared to pay, but doesn't leave much room to move?

 

[nhg]

Great to see your taking the first steps,

Well my advice, here goes. Property Investing is about making money. If you won't make money from the deal, they can ask from as little as they want, I won't pay it.

Just cause they ask doesn't mean you have to offer that, I've offered up to 100k less on a property than their 'lowest', no I didn't get it, but that's how much it was worth for me to make money. I moved on and made my money elsewhere.

On another note, do not underestimate the cost of renovations. I don't know what you have planned, but $50k under for a smaller house unrenovated doesn't sound like a great deal of moving room.

 

[jrc]

It sounds to me like you're already bidding against yourself. If you think the value is 30-50K less and you decided to offer $50K less why are you suddenly deciding to offer $45K less. Offer the $50K less and then if that is not accepted don't go above what your figures show works for you.

 

[Rolf Latham]

One of my friends is a valuer, and she reccomended around 30-50k lower is what it is worth.

then it will probably sell for 30 to50 more than she thinks : )


Most valuers are behnd the 8 ball in rising markets because they must rely on what happened 90 to 120 days ago............

ta
rolf

 

[Jake Milne]

If you make an offer the worst that can happen is that it is rejected... So just make it and see how you go. You can always resubmit another offer.

Be sure to have legal check over it so your covered...

 

[Logica]

then it will probably sell for 30 to50 more than she thinks : )


Most valuers are behnd the 8 ball in rising markets because they must rely on what happened 90 to 120 days ago............

ta
rolf

Not necessarily.It depends on the valuation brief. If they work for a bank and the purpose is mortgage security then the above is often true. But if they work for a private client and the brief is current market value then the valuer will make necessary adjustments for rising / falling markets.

Consider the conditions in your offer. Try and find out what conditions would appeal to the owner. Good luck!

 

[Aaron_C]

Only pay what it's worth. If you get it for less by screwing them, that's a bonus. However, just don't try to get bargains by chiseling people down - everyone hates that and it's a bad way to do business.

 

[theycallmeloz]

Thanks so much for your opinions and advice everyone... will see how we go!

 

[lizzie]

Have to develop a thick skin in this industry and not fear rejection.

A property is only worth what someone is prepared to pay with cold hard cash - not what the owners "want".

Recent example - we offered $400k less on a property than the "offers over" price. The property had been on the market 6 months and the owners were desperate to move to their new PPOR. Was rejected. 4 months later (after we had bought elsewhere - again for $400k under asking price) the property is now advertised at offers over $XXX, which was what we had offered.

Bet they're kicking themselves. Granted these are mil+ properties - but even on a previous PPOR we offered $150k under asking price - this was the third offer they'd received at this price and realised that was all it was worth so accepted.

Went on to reno and make net profit 18mths later of three digits.

Anyhow - time and again it is shown that you make your money when you buy. If you pay to much when you buy then that only eats into your profits at the end.

Granted, when young and stupid I did offer to much on some properties because I was scared of offending the vendor - or missing out - and it cost me dearly in the long run. Some were even properties I regret buying, so perhaps the universe was trying to tell me something - like - DON'T BUY.

Do not fear missing out - there is always another property waiting for you.

 

[HotRod]

Do not fear missing out - there is always another property waiting for you.

How's that old saying go?

The opportunity of a life-time comes along every day.

If this one falls over, so what, the next one is just waiting to be found and might be even better.

 

[vaughan]

We are putting an offer on a place today. It is listed as 'From xxx'...

One of my friends is a valuer, and she reccomended around 30-50k lower is what it is worth....

We are wanting to make an offer of 50k lower to get the ball rolling. Yesterday when my husband spoke to the REA, she was basically saying "you know it's on as 'From xxx' the owners are wanting above that..' and it kind of freaked us out.

You need to be aware of how the general market is moving at the time of your offer. The period of time that properties are listed for sale is a good yardstick: if the listing time is short then properties are selling fast, and it's likely that they are going for around the asking price.

If it's a "sellers market" then low-ball offers are unlikely to be successful, because somebody else will pay closer to or above the asking price.

By all reports, right now many parts of Sydney and Newcastle are a seller's market.