How much to offer?

[Vampii]

We have come across a property listed at $559K. We only want to pay a maximum of $535K. I say we start negotiations at $500K and try to end up at a happy medium. My partner says don’t muck them around and just offer them $530K, and tell them we are not that negotiable over $530K. What do you think?

 

[Lofty]

Hi Vampii

It seems to me that the more time a person commits to a negotiation for something, the more they want a positive resolution from that negotiation.

Based on this I'd start at your lower figure and move relatively slowly towards the figure you've set as your upper limit. Your ability to do this well depends on how emotional you are about this property. A good Agent will quickly pick up on your emotional commitment to the property and will normally play all their emotional cards, to the detriment of your hip pocket.

In some cases, it's good to get an independant third party to make the offers. Good luck.

Cheers, Paul

 

[wylie]

The risk with offering so low is that you can get the vendor's back up.

I wouldn't start so low, but that's just me.

 

[tobe]

What is the property worth? What sort of market are you negotiating in? What are your terms? settlement, finance and other clauses? If the property has been on the market a long time in a slow market a low ball offer might work, if its just listed and the markets hot, you'll have trouble convincing the agent your serious.

 

[Vampii]

Thank you all for your answers thus far. The property was originally listed at $579 and sat on the market for 5 weeks with no offers so they dropped it to $559. The prices in the area vary but in my opinion a final price of $530-$535K is quite reasonable, I just don't know the best way to get there. The market was slow in December but is picking up a little. Our terms are fairly standard and the owners are keen to sell.

 

[twobobsworth]

Bet you would pay $540.

 

[Jamie M]

Hi Vampii,

Is there any way you can sweeten the deal for the vendors that's not related to the price?

Try to find out their motivation for selling. Perhaps a quick settlement might be attractive (especially if they've purchased elsewhere or it's a distressed sale). On the flip side, maybe a long settlement might suit them. These are just a couple of ideas of the top of my head - there's plenty of creative ways you can reduce the price paid but still allow the vendors to benefit (win-win).

In regards to the offer, personally, I'd start of with a less round number - say $502,500 and try to base it on the research I've conducted (previous sales of similar properties within area, residex reports, etc). If you base your offer on supporting research, it will add to your credibility as a knowledgeable buyer and your remarks may be passed on to the vendors who might reassess their asking price (they might also tell you to get stuffed but it's worth a go).

I guess it goes without saying, each offer thereafter should be incrementally increased (don't reach your final price too quickly).

Anyways, these are just my thoughts....and best of luck with it - the negotiating is the funnest part

Is this purchase in Canberra?

Jamie

 

[schweedy]

I rang the Real Estate Agent with the last house, I was time poor and didnt have the time to play phone tag with the Agent that day or any time soon.
I just said to him, this is my top price, do what you have to, to get it for that price and you have a sale, I wont pay a penny more though.
He then asked if I was ok with him going in with a lower offer and 'pretending' we were negotiating and I told him to do whatever he had to, but XXX was my top dollar for that property.
I got a call that night that my offer had been accepted and the deal was done.

I had however looked at several properties with this agent this round and in the past, so he knew I wasn't mucking around.

 

[lizzie]

i'm with the "don't muck around" crowd. whether i'm buying or selling, i don't like fluffing back and forwards as it only irritates me.

this is the offer and conditions - take it or leave it.

 

[KateMelb]

i'm with the "don't muck around" crowd. whether i'm buying or selling, i don't like fluffing back and forwards as it only irritates me.

this is the offer and conditions - take it or leave it.

Couldn't agree more. I'd draw a cheque for 10% of your top price, go to the agent's office and sign the contract, dropping off the cheque. Say your offer is open for 48 hours and you won't pay a cent more - 'take it or leave it'. This shows you are serious and if the vendor has no other serious offer, they'll take it. Has worked for me in the past.

If they say no, move on. You'll find something else.

 

[5318008]

Hey guys, not trying to hijack this thread but I have a question related to the comment above.

If I make a pre-acution offer, write a formal letter and drop it off at the agent with a personal cheque for 10%... what should I do in regards to the cheque once the offer expires?

I mean, I've made a cheque out to Mr. So-and-so (the vendor) for 10% of my offer, only valid for 48 hours, the cheque's labelled as not negotiable etc, etc... Do I go back to the agent after the offer has expired to get the cheque back? Do I call the agent and ask him to rip it up?

Many thanks in advance,


A naïve and nervous newcomer.

 

[bespoke]

I mean, I've made a cheque out to Mr. So-and-so (the vendor) for 10% of my offer, only valid for 48 hours, the cheque's labelled as not negotiable etc, etc... Do I go back to the agent after the offer has expired to get the cheque back? Do I call the agent and ask him to rip it up?

When you submit a deposit cheque for a property listed with an agent, you always make it out to the agents trust account eg: XYZ real Estate Trust .

The agency will tell you who to make it out for, just ask the receptionist.

You can cancel the cheque with the bank (make sure you have a copy of it with all the cheque numbers etc). Although there is a fee involved with canceling cheques.

The REA shouldnt even put the cheque in their account until an offer has been accepted, but by all means if your offer isnt accepted, go in and ask for it back, you'll still have to cancel it with the bank though.