I'm ready to make an offer guys - how much??

[mandimoo]

Looked at a property twice now and have been considering it since boxing day. The listing price is $849,000, I am not really sure what my budget is finance wise because we just asked our loan guy to give us a yes or no for $800,000 so I am thinking that is my maximum that I COULD pay for the house. I am not sure how it works with higher priced homes as have only bought cheaper ones before. My brother in law's home was on the market for 550,000 and he said 500k take it or Ill just find something else and they took it, so thats why I am thinking its not farfetched to get 50,000 off a more expensive home. Also I got 40,000 off my apartment but that one was probably asking a bit much in the first place.
I would be THRILLED if I could get it for 775 - especially given that we will need some cash for adding security, air conditioning and redecorating - but I am not sure if offering this much under the price is appropriate. Any advice for offering on higher value homes? Our current home was 550 and I offered 550 because the agent BS'd me and told me there was another offer and I wanted this place so badly I wasnt willing to risk losing it for the sake of bargaining haha.

Thank you

 

[sanj]

Looked at a property twice now and have been considering it since boxing day. The listing price is $849,000, I am not really sure what my budget is finance wise because we just asked our loan guy to give us a yes or no for $800,000 so I am thinking that is my maximum that I COULD pay for the house. I am not sure how it works with higher priced homes as have only bought cheaper ones before. My brother in law's home was on the market for 550,000 and he said 500k take it or Ill just find something else and they took it, so thats why I am thinking its not farfetched to get 50,000 off a more expensive home. Also I got 40,000 off my apartment but that one was probably asking a bit much in the first place.
I would be THRILLED if I could get it for 775 - especially given that we will need some cash for adding security, air conditioning and redecorating - but I am not sure if offering this much under the price is appropriate. Any advice for offering on higher value homes? Our current home was 550 and I offered 550 because the agent BS'd me and told me there was another offer and I wanted this place so badly I wasnt willing to risk losing it for the sake of bargaining haha.

Thank you

With all due respect, if you dont even know your budget/what you can afford (which is an entirely different thing to what the bank will lend you) then i believe you are not ready to make an offer. You are talking about an extremely expensive purchase, more than 10 times what the average family in WA makes in a year. It is not something you want to get wrong.


That aside though, there is no hard and fast rule re what sort of "discount" you should get. Some properties are way overpriced and end up selling a fair bit cheapert than listed, others sell closer to asking price.

If you are so unsure of what to do, how much to offer etc is it an option to pay someone like Kent Cliffe (a buyers agent who posts on this forum) to handle some DD and negotiations for you?

 

[mandimoo]

Hi there,
Sorry I phrased that wrong, I know what we can afford, but I have not asked what is the maximum that we can afford because I dont really want to push it to the limit. I know at this point that to buy this house we need to reduce our debt as we have three properties and I know that I am able to sell off the cheapest one to do this which is the most practical option as it will be the most easiest to offload and is also our best property which will have earned us the most money. Basically that was all I felt I needed to know, can it be done and how I hadnt considered going over $800,000 because we will not go over it, if they say no we stay where we are for a few more years which is a hell of a lot easier than if they say yes! I just want to know if it is okay to offer almost 10% off the purchase price, as it apparently is on the lower priced homes. I love the house and dont want to insult them its just that as you said, its a lot of money!

 

[sanj]

Hi there,
Sorry I phrased that wrong, I know what we can afford, but I have not asked what is the maximum that we can afford because I dont really want to push it to the limit. I know at this point that to buy this house we need to reduce our debt as we have three properties and I know that I am able to sell off the cheapest one to do this which is the most practical option as it will be the most easiest to offload and is also our best property which will have earned us the most money. Basically that was all I felt I needed to know, can it be done and how I hadnt considered going over $800,000 because we will not go over it, if they say no we stay where we are for a few more years which is a hell of a lot easier than if they say yes! I just want to know if it is okay to offer almost 10% off the purchase price, as it apparently is on the lower priced homes. I love the house and dont want to insult them its just that as you said, its a lot of money!

There is no set rule on what sort of discount you can offer. Wht they are asking is kinda irrelevant (to a point)

 

[mandimoo]

I just spoke to the RE and she asked me how much would we offer, I told her under 800 and she asked if she can speak to them first then to find out if it is worth putting that on paper, she didnt sound like the situation was entirely hopeless to me. Also I know that they have not found a house to downsize to as yet which might work against me as they are not desperate for a sale but I can offer them settlement flexibility given that we are not selling our PPOR until after we move out of it (we have 3 small and messy children) which I am hoping might be attractive to them as it means that neither party will be pressured by dates and temporary homelessness.

 

[Rixter]

Mandimoo, its not a matter of asking us how much we think you should offer.. We dont know anything about the property, haven't inspected the property, or done any due diligence work on the property or area etc etc. Ultimately you as the purchaser its your responsibility to conduct the required due diligence.

Its your due diligence that will allow you to determine what you think the property is worth in relation to other current & recent comparative sales.

When it comes to having offers accepted and conducting successful negotiations you must also find out why the vendors are selling, how long its been on the market, conditions of sale and then pitch your offer to hit those hot buttons. Its not all about just the price to offer.

I hope this provides some food for thought. Good luck on the potential purchase.

 

[mandimoo]

To be honest I think it is worth what they are asking for it given the comparable properties on the market in the area at the moment. I just think that it is going to take a long time to sell as in this area the higher priced houses seem to because you can get a nice home down here for half of that price. I just want to be able to buy it, and I don't think that I can go that extra $50,000.
The block is over 800sqm, the house is over 350sqm, the yard is nice and easy and the pool is great and it's in a great location just 3 houses from the beach. The only negatives really are that it is not air conditioned which is a huge problem for my husband and the decorating is quite antiquated and not our style. If we bought it at the full asking price we would not be able to afford air conditioning and I also worry that the market will continue to fall further and we will end up with a mortgage bigger than the property is worth.

So from these responses I am gathering that you guys dont always offer below the asking price of a property - I thought it was common practice to do this which is why I was asking if I was trying for too much below. We usually haggle with sellers, unless the RE pressures me with fake "other offers" I'm always gonna give it a go as I don't stand to lose anything.

 

[mandimoo]

Vendors are selling to downsize as their kids have grown up, they purchased the house 10 years ago for 565k, there are no conditions of sale that I am aware of and house has been on the market for a month, has never had a home open and I do not believe there has been much interest as I have been taking my time with this one and the RE has not mentioned any other interested parties or viewings at all.

 

[westminster]

As long as they take the scary doll with them

I don't think 10% less is out of the ballpark but it would be nice if first they had voluntarily dropped the price. As it's a PPOR it's bound to be more emotional a decision for you.

As they haven't found another property it's costing them nothing to keep it on the market at that price.

Perhaps they'd like to buy your house

 

[mandimoo]

Haha I did suggest that to the agent actually! My house is pretty much like theirs except smaller and more modern!

Yeah I know with the no pressure to sell for them thing, thats a bit of a crapper, as I have said in other posts the houses on this street usually take a very long time to sell so I am guessing thats why they havent gone and made a subject sale elsewhere as they probably expect to be on the market for 6 months to a year. If they hold out that's okay. My husband will sure be relieved he is of the attitude if it aint broke dont fix it and likes our house just fine.

 

[sanj]

So from these responses I am gathering that you guys dont always offer below the asking price of a property - I thought it was common practice to do this which is why I was asking if I was trying for too much below. We usually haggle with sellers, unless the RE pressures me with fake "other offers" I'm always gonna give it a go as I don't stand to lose anything.

You are still missing the point.

There is no set rule when it comes to what you offer. Look at it this way, 2 comparable properties are brought onto the market at the same time, both worth 500k

PRoperty 1 - Asking $475k, owner needs a quick sale. Bought at full price of $475k

Property 2 - Asking $550k, owner willing to wait longer etc. Eventually sells for $500k.

The buyer for property 2 has bought at around 10% discount and buyer 1 has paid full asking price yet has received a better deal.

Asking price is often irrelevant, asking how much of a discount you should offer is even more irrelevant as there could be 10 different things affecting the property.

Is it priced correctly to begin with? How desperate are they to sell? What are the comparables? Stock levels in the area? How desirable or rare is it?

No one here will be able to tell you what to offer as no one here knows the property or has done the DD on it.

 

[mandimoo]

Okay thanks, I get the point now, I give up

 

[rowena]

start your offer at 775K with a 3 month settlement. It means they have less pressure to find another place immedialtely.. and sometimes 60 days is not enough, means they would have to find something in 4 weeks and have that accepted... give them 8 weeks will take the pressure off (8 weeks plus 4 for settlement to give you 3 months) and say settlment period is neg,

tell r.e that it does need air con, and modernisation basically down sell the prop. dont tell them u have pre approval to 800k. good luck.

otherwise if no go, leave it a month or two and perhaps they might drop their price,, u never know.

 

[DaveM]

From what I recall from your other thread there was a similar property for $650k a few houses down the road? How much would it cost to do the updates to it to get it to the level of the one you like? Make that your offer.

If there was a somewhat lesser comparable at 650k, they want 850k, I would open at 725k and guage the reaction.

 

[RightValue]

It sounds like you have no idea what this property is worth.

Get some professional help from a Valuer or use a Buyers Agent.

Asking prices are not often related to the value of the property, more so to the ego of the vendor.

People usually pay a couple of hundred $$ to get a $10k car checked out before buying but go in blindly and buy a house where they have no idea of the real value/price point without getting some professional help for a few hundred $$$ which could save them multiple tens of thousands of $$$

 

[sanj]

It sounds like you have no idea what this property is worth.

Get some professional help from a Valuer or use a Buyers Agent.

Asking prices are not often related to the value of the property, more so to the ego of the vendor.

People usually pay a couple of hundred $$ to get a $10k car checked out before buying but go in blindly and buy a house where they have no idea of the real value/price point without getting some professional help for a few hundred $$$ which could save them multiple tens of thousands of $$$

Could not agree more

 

[MTR]

To be honest I think it is worth what they are asking for it given the comparable properties on the market in the area at the moment. I just think that it is going to take a long time to sell as in this area the higher priced houses seem to because you can get a nice home down here for half of that price. I just want to be able to buy it, and I don't think that I can go that extra $50,000.
The block is over 800sqm, the house is over 350sqm, the yard is nice and easy and the pool is great and it's in a great location just 3 houses from the beach. The only negatives really are that it is not air conditioned which is a huge problem for my husband and the decorating is quite antiquated and not our style. If we bought it at the full asking price we would not be able to afford air conditioning and I also worry that the market will continue to fall further and we will end up with a mortgage bigger than the property is worth.

So from these responses I am gathering that you guys dont always offer below the asking price of a property - I thought it was common practice to do this which is why I was asking if I was trying for too much below. We usually haggle with sellers, unless the RE pressures me with fake "other offers" I'm always gonna give it a go as I don't stand to lose anything.

OK you can afford $800k, you believe it is actually worth asking price but this property will be hard to sell in this market, so just place your offer of $800k, if they don't accept you walk. This proprrty price range in Perth is not walking out the door, am sure there will be another deal around the corner if this does not work for u.

Mtr

 

[Jenko]

How about paying a valuer to value the property cheap then a buyers agent.

 

[lizzie]

... or look at a few recent sales in the area, and see what they actually sold for.

Asking price is just the price the vendors would like - actual sale price is the market value of the property. The two can be vastly different.

 

[westminster]

Oooh did you put an offer on? The house is now under offer

And it looks like a house has popped up for sale on your street which I'm hoping is yours as it's showing Under Offer too.

If you got the house - congrats!