Help with Negotiating

[Malu]

Hi,

I am a first home buyer extremelly unexperienced
Please help!

We have found a property that we realy like although it requires a little bit of work.
It is a single storey (2bed) terrace and the asking price is 680k however I did some research in the area and found that other similar properties within 2 blocks of distance are asking around 600k. And a couple wich have 3 bed (no parking) for also around 600k.

In addition another one on the same street, but two storey (similar land size)that needs a lot of work sold for $555.

So I feel that we are being ripped off. But then I haven't seen the conditions of the other 2 beds as they have now sold....

What I want is some advice on how to approach the agent and make an offer. I don't want to offer too high and still be ripped off neither to offer to low and not be taken seriously.

Is there a guide of a percentage that we can take off the asking price when making an offer, eg. 15% of 680k = offer of 558k

Any advice will be greatly appreciated.

Thanks
Malu

 

[depreciator]

You're not being 'ripped off'. The seller wants as much as they can for the property, and buyers want to pay as little as possible.
The value of the property is whatever the market i.e. you and other buyers, is prepared to pay for it right now. There is no magic formula.
You've been looking around, so you would have some idea of what you are prepared to pay for it. You just have to put in an offer - a bit below what you think it's worth. An offer in writing probably carries more weight than one over the phone. If you have the agent's email address, send him an email (and call him to say you have done so as many agents aren't great emailers).
The agent should put the offer to the vendor. If the agent thinks it's a silly offer, he will just say so.
The worst that can happen is that the owner rejects the offer out of hand. It's no big deal. Most of us here have put in crazy offers on things just to see what might happen.
The vendor (via the agent) might come back with another price.
And so the game goes.
But at least by putting in an offer you are showing the agent that you are genuinely interested in the property.
Scott

 

[Propertunity]

What I want is some advice on how to approach the agent and make an offer. I don't want to offer too high and still be ripped off neither to offer to low and not be taken seriously.

Malu, at the risk of being seen to be shamelessly self-promoting; most Buyers Agents (BA) have as a service, an option that invloves you as the buyer finding your ideal property. The BA then will do a property report along with comparable sales and will advise on the worth of the property you are intested in and help negotiate the sale for you.

Is there a guide of a percentage that we can take off the asking price when making an offer, eg. 15% of 680k = offer of 558k

Yes - see here: http://www.somersoft.com/forums/showthread.php?p=510316#post510316

Regards,

 

[Rob Williams]

Scott makes an interesting and very valid point. House prices are quite subjective. Bill Zheng wrote an article some time ago in which he uses an example of a house that sells for $500,000.
At that particular time, the $500,000 was worth more to the seller than the house. Also, at that same time, that house was worth more to the buyer than the $500,000. Each is willing to exchange one for the other at that point in time.
On another day it could be a different story. Other interested buyers may not be willing to give up their $500,000 for that house. To them, as individuals, it may only be "worth" $450,000 at that point in time.
Nobody is getting ripped off. It's just market forces at work.

 

[Propertunity]

Is there a guide of a percentage that we can take off the asking price when making an offer, eg. 15% of 680k = offer of 558k

Apart from not being a good strategy Malu, as mentioned above, if this is an example of your maths skills I'd definitely let someone else do the negotiating (even if it wasn't a BA)

15% off $680K = $578K but at least you erred in your own favour

 

[Malu]

if this is an example of your maths skills I'd definitely let someone else do the negotiating (even if it wasn't a BA)
15% off $680K = $578K but at least you erred in your own favour

Ooops...Maths skills are fine ....This was a Typo....

Thank you so much for all your input. You are all very helpful.

They are asking for 680k, but if the other similar properties in the region are selling for much less (555k to 600k), I think it is fair that we try an offer for a similar price to the other properties.
Make sense?

 

[Propertunity]

Ooops...Maths skills are fine ....This was a Typo....

You lie

if the other similar properties in the region are selling for much less (555k to 600k), I think it is fair that we try an offer for a similar price to the other properties. Make sense?

Makes perfect sense. One of the key ways to value property is by comparable sales. They have to be comparable by: sale date being close (not 6+ months apart), property size, land size & zoning, views, outlook, condition, not a distressed sale etc. etc. If you have evidence of this then you are better placed to make your offer

 

[Jamie_D]

If you are falling in love with the property then you might have to pay the price, but maybe not the full price - we're in a buyers market

Do your research
work out affordability
ask yourself questions like:
are you happy with suburb, surroundings, infastructure, potential for growth and the house itself

compare other properties in the same price range
speak to as many people as possible and seek advice
then act and be cool but strong
you get my drift

good luck