low ball offer rejected any chance of a deal

[warek]

Hi there

Thought I would ask the collective wisdom of the group on my attempt to purchase a lifestyle country block of land. It is a low demand market and land is a 1.6 hectare block 10 km out of the town in a good area and about 15 minutes from excellent beaches. Asking price 265000 and the price is similar or slightly less than some other lifestyle blocks, that are also slow to sell. It been advertised for 2 years with no reductions. Seller is now more flexible according to RE agent. I offered 175000 unconditional with 60 days settlement, and my limit is 200000, which would be a good buy.

Message from RE agent that the seller to quote "it is no where near where he may contemplate a reduction". He made it clear that he is willing to negotiate but said past sales alone in that area dictate that he would always be thinking around the mid 200's. "

What should be my next move? Wait, make another offer or walk away?

Thanks

Kevin

 

[HotRod]

Hi there

Thought I would ask the collective wisdom of the group on my attempt to purchase a lifestyle country block of land. It is a Low demand market and land is a 1.6 heactare block 10 km out of the town in a good area and about 15 minutes from excellent beaches. Asking price 265000 and the price is similar or slightly less than some other lifestyle blocks, that are also slow to sell. it been advertised for 2 years with no reductions. Seller is now more flexible according to RE agent. I offered 175000 unconditional with 60 days settlement, and my limit is 20000, which would be a good buy.

Message from RE agent that the seller to quote "it is no where near where he may contemplate a reduction". He made it clear that he is willing to negotiate but said past sales alone in that area dictate that he would always be thinking around the mid 200's. "

What should be my next move? Wait, make another offer or walk away?

Thanks

Kevin

If you want it for no more than 200K offer 200K with no conditions (even offer to settle in 7 days if you have the cash and all your ducks are lined up) with a 24hr clause, after that you walk away.

I was once told that it's either your price and no conditions or their price and your conditions.

 

[saiman]

low balls rarely work...if anything it just makes you look like a waste of time and make the agent and vendor dislike you (not that it matters, but it kinda does when they are giving what you want)...plus it puts you in a weak position when you increase your offers

try and find out what the vendor wants and more importantly, how you and the agent can BOTH work the vendor to get what you want (we all know what the agent wants!)

IMO negotiating in real estate is about getting the agent on your side so they can sell your price or your conditions to the vendor (who is usually just thinking about highest price possible)

I know if I had a house on the market for 2 years costing me money, I may fold with a little sweet talking and a reality check just to get rid of it

 

[D.T.]

I recently bought 2 properties by putting lowballs out on about 20 places.
Some ignored me
Some told be to F off.
Some entertained my offer but subsequently got better offers that i wasnt prepared to compete with
One turned out to be worse condition than i thought so handballed it to someone who suited it better.
One counter offered with a higher amount that i accepted, so i purchased.
One counter offered but i stayed firm, they end up meeting my price so i purchase.

 

[warek]

Find out what the Vendor wants?

How to find out what else the Vendor wants except via asking the RE agent. What more can they want than an unconditional offer, the next best thing I could do is to make it 30 day terms. I could offer to increase my deposit to 10% or 20000, and release it to the seller before settlement, but not sure if this would entice seller to drop 40000+ off his asking price. They appear to be in no hurry for a sale at less than their price, unless they are just a better bluffer than I am?

Cheers

Kevin

low balls rarely work...if anything it just makes you look like a waste of time and make the agent and vendor dislike you (not that it matters, but it kinda does when they are giving what you want)...plus it puts you in a weak position when you increase your offers

try and find out what the vendor wants and more importantly, how you and the agent can BOTH work the vendor to get what you want (we all know what the agent wants!)

IMO negotiating in real estate is about getting the agent on your side so they can sell your price or your conditions to the vendor (who is usually just thinking about highest price possible)

I know if I had a house on the market for 2 years costing me money, I may fold with a little sweet talking and a reality check just to get rid of it

 

[DoAndroidsDream]

Hi Kevin,

I don't think there's anything wrong with your low ball offer, particularly in low demand areas. The worst they can do is say "No", which they did in your case. The important thing is that the REA has indicated the price that he is after (mid 200s). Of course, he'll be looking for a good price for the vendor and himself. Doesn't mean you have to give it to him the price he wants though and why should you. The property has been on the market for 2 years, the vendor is extremely stubborn and the asking price is obviously beyond what anyone is willing to pay. That says a lot.. the property isn't worth $265k.

What you need to think about is your next step. You've said your max is $200k but I wouldn't jump that high just yet. Perhaps offer $190k in a week (or longer if you want) and then through negotiation, let the agent "talk" you up to $200k. At that point, tell him you've increased your offer by 25k, that's your budget, you're a serious buyer and want a sale. Give him a timeline and then suggest you're looking at other properties (and do it). Tell the REA it might be a very, very long time before he receives another offer close to what you're offering. If he won't budge, walk away. There'll always be another sale.

All the best!

 

[Mick C]

60 days settlement is a very long settlement term...if your going to low ball you have to at least provide a fast settlement term.

66w ( unconditional) + 30-35 days settlement ( lower if you can afford to or have the financial ability)

 

[see_change]

low balls rarely work...if anything it just makes you look like a waste of time and make the agent and vendor dislike you (not that it matters, but it kinda does when they are giving what you want)...plus it puts you in a weak position when you increase your offers

try and find out what the vendor wants and more importantly, how you and the agent can BOTH work the vendor to get what you want (we all know what the agent wants!)

IMO negotiating in real estate is about getting the agent on your side so they can sell your price or your conditions to the vendor (who is usually just thinking about highest price possible)

I know if I had a house on the market for 2 years costing me money, I may fold with a little sweet talking and a reality check just to get rid of it

Low balls can work , sometimes and in the scenario stated I think it's a perfectly good option .

I'd walk away for a while , check out every other property in the market and if there are any other properties you think are worthwhile make low ball offers on those..

My motto in this situation is make an offer you can afford on a property you can't . you will be surprised how often people blink.

You are also conditioning the agent into the fact that you make an offer and don't follow up with a higher offer .

Two years on the market ....

Cliff

 

[saiman]

Low balls can work , sometimes and in the scenario stated I think it's a perfectly good option .

I'd walk away for a while , check out every other property in the market and if there are any other properties you think are worthwhile make low ball offers on those..

My motto in this situation is make an offer you can afford on a property you can't . you will be surprised how often people blink.

You are also conditioning the agent into the fact that you make an offer and don't follow up with a higher offer .

Two years on the market ....

Cliff

exactly...2 years on the market....I'm sure the vendor has seen many low ball offers during that time, and for some reason (stubbornness?) have turned them all down.

as mentioned before, low ball offers might work if you're smashing 20 properties, happy to be rejected by all of them and hoping to snag 1 if you're lucky.
But if you're looking at 1 or 2 - particularly as a PPOR, I think you need to be a bit more strategic with your offers

even if OP goes back now with a higher offer and/or favorable conditions, he's going to come across pretty desperate imo

 

[Spades]

Hi warek,

Seeing you've offered 175k and prepared to go to 200k,why not get a mate on board and play ping pong

You'll know where your at then and whether it's worth holding out for.

Cheers Spades.

 

[warek]

Thanks for the suggestions

Thanks to those who offered advice, I am currently thinking I will wait a week and hope RE calls me back, my plan is then to offer 190000 with 30 day unconditional settlement.

Not sure about the ping pong suggestion,as offers are few and far between, it may see a bit too obvious.

Meanwhile I have made a low ball offer on something no where near as good, but it has also been on the market for a long time.

Have a good day
Kevin

 

[Scott No Mates]

The issues:
* The vendor is not committed to a sale at any price
* Can hang out out for his price
* The property owes him more than your offer/capacity to pay
* Has to save face
* The agent has told him that it is worth $x & making the agent work for their commission.

 

[HotRod]

Thanks to those who offered advice, I am currently thinking I will wait a week and hope RE calls me back, my plan is then to offer 190000 with 30 day unconditional settlement.

Not sure about the ping pong suggestion,as offers are few and far between, it may see a bit too obvious.

Meanwhile I have made a low ball offer on something no where near as good, but it has also been on the market for a long time.

Have a good day
Kevin

Why 30 days?? If it's unconditional and you have the cash and see no issues, do the deal in 7 days (or however short period it takes to get all the stamping done). Even pay them 100% up front if you are than keen and have the cash. The money should be held in trust until settlement so no chance of them doing a runner.

 

[warek]

Why 30 days settlement and not 7?

I have no experience in the time taken to process real estate transactions, and would probably use a conveyancing business. Not sure what happens if you ring up and say I bought a place and settlement is in 7 days, what sort of timeline do they need?

I have been to the council to check on overlays and the procedure for building permits needed and have a section 32 from the agent. What else should I be doing in the meantime?

Secondly I have money in superannuation that I can back but it takes up to a week, and as it has earnt 8.79% for the last 3 years, my mortgage broker thinks it is a better option to borrow money against the equity in our home and it will be cheaper than using my own superannuation savings. I think this would take more than 7 days?

As we will be 40000+ apart from my maximum offer and his current price it pretty unlikely we can reach an agreement but time will tell.

Have a good day

Kevin

 

[DoAndroidsDream]

Given how long the property has been on the market and the lack of interest, you might have enough time to save up the extra $40, 000 if you really want this property

 

[nhg]

I recently bought 2 properties by putting lowballs out on about 20 places.
Some ignored me
Some told be to F off.
Some entertained my offer but subsequently got better offers that i wasnt prepared to compete with
One turned out to be worse condition than i thought so handballed it to someone who suited it better.
One counter offered with a higher amount that i accepted, so i purchased.
One counter offered but i stayed firm, they end up meeting my price so i purchase.

Over what time period? I'm curious to know how you worded the offer without being stuck committed to a handful if they all said yes.

Would be keen to use it to smash out another 3 properties this coming financial year.

 

[nhg]

Offer what you think it is worth and/or what you can afford.

If you want it why play games.

 

[RyanMcHarg]

Have a good chat with the real estate agent about what is motivating the vendors of the property. At the end of they day, it might be more important for them to be given a flexible settlement date as they haven't found another house yet, which may be worth more to them than the price they are looking to achieve. You offered 60 days but does that suit the vendor?

Ask the agent what is motivating them. If they require a certain figure to move into their next property, can he get them to speak with a good mortgage broker who can show them some other options where their next home isn't costing them as much as they thought in repayments to secure? 3 Key things in buying and selling are the obvious $$$ but also important are contract terms and time....

 

[warek]

No success on making a deal

Thanks to the people who made suggestions, my second offer was unsuccessful and the seller is fixed on a price of 240000 so I have given up on this property. He is in no hurry to sell, and is prepared to wait until Spring season for some more offers.

It has probably saved me money, because it would cost 10000 a year to sit idle as a possible future home site in 5 years and then if our circumstances changed and we decided not to build the chance of selling the block for 300000+ seems unlikely.

Kevin

 

[Adrian Cahill]

Talking with Agents on my last property hunts, they said they are really annoyed at people putting in Low Ball offers. Sometimes they may work. I imagine and as someone said before, they may be rejected rudely. What a lot of people before commented on was pretty on the mark though. Great feed back here for you to move forward.