Getting a discount

[mandimoo]

Hi Guys,

A property that we have our eyes on has been on the market for a month at $850,000. We would like to buy it but we want as much off as possible. The property is on one of the most expensive streets in our suburb which is difficult to sell on (our current PPOR is also on the same street!) as there are many cheaper options available just further away from the beach.
The property itself if a huge home, but is decorated very interestingly... and by interestingly I mean badly and probably most people would throw up in their mouth looking at the photos, and it also lacks air conditioning which is kind of a must-have these days. I know that the owners paid 565k for it in 2005. Given these factors what kind of offer do you think we should be making? We would try to come through as subject to finance buyers and sell our own house after purchasing to hopefully give us a better position when it comes to negotiating the price.

Thanks in advance

 

[thatbum]

Most important factor will be comparative sales - are there any?

 

[mandimoo]

Well the houses on this street dont get sold very often and when they do it seems that they are initially listed at very high prices and then completely bomb out. For example the previous owners paid $630,000 for our house, and then I paid 550 for it 4 years later. At the time I bought this house I looked at another one two houses up but it was less suitable for our family than the one I chose, AND was more expensive - they were asking 595-620 for it and I just looked it up on onthehouse.com.au to find out it ended up selling a whole year later for $515,000.... I would have bought it if it had been cheaper than mine to start with! So I guess I will just wait til the one I want bombs on the market too given that ours probably will also

 

[westminster]

Hi Guys,

A property that we have our eyes on has been on the market for a month at $850,000. We would like to buy it but we want as much off as possible. The property is on one of the most expensive streets in our suburb which is difficult to sell on (our current PPOR is also on the same street!) as there are many cheaper options available just further away from the beach.
The property itself if a huge home, but is decorated very interestingly... and by interestingly I mean badly and probably most people would throw up in their mouth looking at the photos, and it also lacks air conditioning which is kind of a must-have these days. I know that the owners paid 565k for it in 2005. Given these factors what kind of offer do you think we should be making? We would try to come through as subject to finance buyers and sell our own house after purchasing to hopefully give us a better position when it comes to negotiating the price.

Thanks in advance

Hmm tough one. You could ring the REA and say that you want to offer but the price is too high and for him/her to let you know when the price drops. That gets in their head that the price is too high.

How much discount do you actually want? If it's $50k then just offer $800.

I'm soo curious where it is

The $800k + range in our area is moving but the $1m + is stagnant. The Sub $800 is just flying out the door.

 

[Jake D]

I'm soo curious where it is

A quick browse through Mandimoo's previous posts will give you the suburb...

Edit: Oh, and there's only one house in that suburb for sale for $850k on realestate.com.au. Nice looking place!

 

[Jake D]

...but is decorated very interestingly... and by interestingly I mean badly and probably most people would throw up in their mouth looking at the photos...

Hahaha. I was thinking similar things.

 

[mandimoo]

Hahaha oh my god that is entirely sneaky! Yes it is in Port Kennedy haha, it needs a bit of changing including probably 10-20,000 on air conditioning , but the home itself is very spacious and we have 3 children so the more space to hide their **** away the better! I am so scared of the owners finding my post on here through chance and then being offended that I hate their decorating. I would need to get it for 800 or less ideally as we need to spend some money on it and I would want to buy without doing a subject sale offer as I don't want to deal with that kind of pressure (3 little kids, uni and our 2 rentals are enough for me!)

 

[DaveM]

If its the house I think it is, then I see a tree trunk that can be donated to lizzie to replace her stolen firewood

 

[mandimoo]

lol I love that tree trunk!

 

[Jake Milne]

Taken from another thread along the same lines:

I recently entered negotiations for another somersoftian who was experiencing the same delays in purchasing.

The house in question is in Coburg and it passed in at auction. Post auction negotiations failed and for more than two weeks there was no deal in sight.

I came on board to help last Friday and did the following:

1. Establish the vendor's situation:

Why are they selling?
How many parties have interest in the property?
Have they bought another property yet?
Is the property currently tenanted, vacant or owner occupied?
What settlement are they looking for?
What price do they expect to sell for?
​

After understanding the situation a purchaser can make a list of the items they wish to negotiate on or comply with. The more terms you give to the vendor the more attractive the offer will be so it's best to prioritize your wants and negotiate from the least important up.

For example in the above case the vendor wanted a 90 day settlement, where my purchaser wanted 30 days. The vendor wanted $660,000; the purchaser wanted $615,000. The vendor wanted an unconditional offer (no building or finance clauses), our purchaser wanted to get in to do renovations.

2. Make an offer

After establishing what the vendor wants make your offer. Start off with an offer you believe to be fair, with some compromises but leave yourself a nice buffer on each item so they can be leveraged later. You can get verbal agreeance from the REA before offering if you want but most often documenting a contract with a deposit cheque attached is much more powerful.​

3. Push for a response

Show interest, get a counter offer or an indication from the agent as to what's going on. Don't be surprised if they take a while to respond as they'll use your offer to shop around the other buyers. The way you minimize this is to put tight deadlines on your offer such as a 4 hour window.

Make sure you're confident and very firm with the agent. Use lines such as "This is my first, best and last offer. I need you to come back to me by xxxxx with an answer. I'm interested in another property and want to put an offer on that one but I like this one a little bit more, however I can't afford to muck around with time and if I don't have an answer by xxxx we won't be doing business.​

4. Walk away

If you don't get a response or they're mucking you about on price call the agent and let them know "out of respect I want you to know that because your vendor has not given a response or a clear indication of where we can do business I will now be pursuing the alternate property. Please do not call me unless the vendor is prepared to sell.​

5. Be Cool

Leave it for a day or two.​

6. Go back in and negotiate.

Once again, be strong, tell the agent that you want a deal but need the vendor to show that their willing to get there. Get them down in price or terms.​

7. Push, push, push

Keep pushing and negotiating. Stay on the agents heels and explain that you're being pushy as the other property you like is going to auction or has another offer on it. Don't be emotional about it and make it seem like you are happy to walk away. Agree on price, time and terms.​

8. Do the deal

Get your signed 32, or agreeance from the agent and then finish documenting.​

Long story short. After two-three weeks of the agent faffing around directly with my purchaser. I entered in and made an offer for this property in Coburg on Saturday morning. We agreed on a price and the vendor had dropped by $36,000 and we'd gone up $9,000. Settlement date was met in the middle and we included some conditions so the buyer could get quotes beforehand. By Monday night 10:30pm the deal was done.

 

[gnome]

Very good tips Jake!! It does sound little pushy, I suppose with your approach you should be prepared to walk away in a competitive market...

 

[westminster]

Hahaha oh my god that is entirely sneaky! Yes it is in Port Kennedy haha, it needs a bit of changing including probably 10-20,000 on air conditioning , but the home itself is very spacious and we have 3 children so the more space to hide their **** away the better! I am so scared of the owners finding my post on here through chance and then being offended that I hate their decorating. I would need to get it for 800 or less ideally as we need to spend some money on it and I would want to buy without doing a subject sale offer as I don't want to deal with that kind of pressure (3 little kids, uni and our 2 rentals are enough for me!)

I'm completely freaked out by the scary doll by the door. I've seen those 'naughty dolls' before and they just make me think of Chuckie

 

[rowena]

Im assuming its no 26...
Did you see the same address but no 17? It is a forsale by owner by looks of it, nearly 200K less... and this might be a prime bargaining chip, because this one has got air con...

I'd start by offering 680 -700K... and say that you had a look at 17, and what no 17 had over 26.. like the ducted air con go from there...

 

[mandimoo]

Thank you for the long list of tips Yes Rowena I have seen that one, has been for sale for over a year, I was thinking the same too as it is almost in the same position as the other one, the one I want just has a bit more space and a bigger block with a pool, not sure that those things add up to 200k, also the fact that that one hasn't sold might show that it is overpriced.
I think that down this way there aren't as many people with that kinda money, the people who do have it probably buy closer to the city. There is a bus stop 50m from our house and my hubby catches the bus and train to work in the CBD every day so it is still convenient but takes him an hour to get to work ... I used to work in Osborne Park in 2011, people thought I was insane.

We have found out from the bank now that to buy it we will need to sell one of our properties The one we are living in I think would be too difficult a sale particularly while we are living in it and so may need to sell our best IP, also our cheapest property. It's a shame as in the year we have had it it has increased in value nicely and we have gorgeous tenants in there paying 350 a week, they invited us for lunch today - we try not to get too involved with our tenants but my husband stayed for a bit and they sent him home with cake! I really am not sure what to do ... Is anybody interested in buying our IP?? haha

 

[mandimoo]

Yes that doll is creepy, there is actually a male one on the other side of the entry doors

 

[DaveM]

Is anybody interested in buying our IP?? haha

Post it up on the Caveat Emptor forum, you never know, and it may work out better for parties involved due to no agency fees or inspections for tenants and they can get an investor.

 

[mandimoo]

I'm excited now actually, my hubby was at our IP today (at a luncheon of all things - the tenants pressured him into attending - they are lovely) and was talking to another lady in the complex who recently had her property on the market but then freaked out and decided to sell. She got an offer of $15,000 more than we would have expected to get and her unit is exactly the same as ours although ours has a better courtyard. So our returns for our 1 year investment might not be bad after all, we were planning to hold onto the place for 5 years minimum which would have been great but things come up I suppose.