Lowball offers...how realistic are they?

[Chloe]

I'm currently looking for a PPOR with a budget to spend of $390,000 in Melbourne's outer east.
Could be stretched a tiny bit but not my much.
I've been looking at place that are priced up to 390,000 so far but i haven't found anything suitable.

I've had friends suggest that I make lowball offers but haven't even tried as I just assume that it's unrealistic and won't ever get accepted, especially if it's a decent place with lots of interest.

Last night I started looking at some up to approx $410,000, some of these looked quite good.
What are your thoughts on lowballing? I know many people do it but not sure how many are successful.
I often wonder if the ones that get accepted do so because no one else wants them or because they've been on the market a long time.

Is offering approx $20-$25,000 less reasonable? If you were a vendor would you consider it?
I have finance approved, just needs to pass the bank valuation and that's it. Settlement can be whatever the vendor wants but I will have a building inspection.

Thanks

 

[locko24]

I'm currently looking for a PPOR with a budget to spend of $390,000 in Melbourne's outer east.
Could be stretched a tiny bit but not my much.
I've been looking at place that are priced up to 390,000 so far but i haven't found anything suitable.

I've had friends suggest that I make lowball offers but haven't even tried as I just assume that it's unrealistic and won't ever get accepted, especially if it's a decent place with lots of interest.

Last night I started looking at some up to approx $410,000, some of these looked quite good.
What are your thoughts on lowballing? I know many people do it but not sure how many are successful.
I often wonder if the ones that get accepted do so because no one else wants them or because they've been on the market a long time.

Is offering approx $20-$25,000 less reasonable? If you were a vendor would you consider it?
I have finance approved, just needs to pass the bank valuation and that's it. Settlement can be whatever the vendor wants but I will have a building inspection.

Thanks

Have a look in the back of a property magazine. You'll probably find that anywhere up to 10% discount is the norm, and not low balling at all!

 

[Peter_Tersteeg]

You may be in luck. Christmas/New Year is a great time for unrealistic low ball offers!

People put their houses on the market in spring, but if it doesn't sell by this time of year they don't expect to sell until about Febuary. There will be some that may need to sell and are willing to entertain low ball offers.

Keep in mind that you may be looking at the leftovers of the spring market. There's probably a reason why many of the properties didn't sell sooner. This could be because it's an awful property, or perhaps the vendor was unrealistic about the asking price. They may be having a reality check and be willing to come down, but if they don't need to sell, they could be willing to wait a few months.

Also remember that things can take a bit longer during the holiday season because everyone is on holidays! The challenge we're seeing with lowball offers right now is the vendor may accept the lowball offer, but they want a quick settlement. Last week I had to tell a client that settlement by the 21/12/12 was entirely unrealistic (plus the world is going to end). The renegotiated to 12/01/13, but even that is difficult.

 

[7smurfs]

haha PT your post just gave me an idea.... low ball with a note that the world is going to end on 21st Dec anyway to scare the believers

Back OT, don't be shy in lowballing - in fact, I would go lower to start the negotiation process going.

 

[Aaron_C]

Also bear in mind that if a property was attempted to be sold in Spring but is still on the market then there are several reasons for it:
a) Way overpriced; or
b) Something is wrong with it.

So putting in a low-ball offer doesn't always mean you get a bargain since when you look to sell you will also have the same issues. Think about it.

 

[Chloe]

Thanks Guys,

Aaron, there are properties on the market that have been sitting there for months....in fact there's one that would have been there for at least 6!!
I just skim over these.

I'm talking about ones that are coming up or have just been put on in the last couple of weeks.

I'm surprised that there are some still appearing now, don't know who's got time to clean and make their house look presentable for ofi's this time of year!

 

[MTR]

Thanks Guys,

Aaron, there are properties on the market that have been sitting there for months....in fact there's one that would have been there for at least 6!!
I just skim over these.

I'm talking about ones that are coming up or have just been put on in the last couple of weeks.

I'm surprised that there are some still appearing now, don't know who's got time to clean and make their house look presentable for ofi's this time of year!

Hi Chloe
I really don't see a problem low balling, especially as it is not a booming/rising market.
Think of it as a negotiating point, you must start somewhere, start low and see what happens.

You have some positives you have finance in place, you can accommodate the vendor and settle asap.

I also think if they are selling in December they got their timing wrong, wonder why?? Just develop some Dutch courage and give it a go.

Cheers, MTR

 

[Ed Barton]

I'm currently looking for a PPOR with a budget to spend of $390,000 in Melbourne's outer east.
Could be stretched a tiny bit but not my much.
I've been looking at place that are priced up to 390,000 so far but i haven't found anything suitable.

I've had friends suggest that I make lowball offers but haven't even tried as I just assume that it's unrealistic and won't ever get accepted, especially if it's a decent place with lots of interest.

Last night I started looking at some up to approx $410,000, some of these looked quite good.
What are your thoughts on lowballing? I know many people do it but not sure how many are successful.
I often wonder if the ones that get accepted do so because no one else wants them or because they've been on the market a long time.

Is offering approx $20-$25,000 less reasonable? If you were a vendor would you consider it?
I have finance approved, just needs to pass the bank valuation and that's it. Settlement can be whatever the vendor wants but I will have a building inspection.

Thanks

If you've got thick skin, and can handle rejection then low ball. I wouldn't say 5% off a reasonable asking low ball either.

For no apparent reason a sub-market can be quite for a few months, then busy, then... supply can spike and demand drop for a few months in burb for no apparent reason.

Long time on market can be explained by other posters theories, or it might just be an anomaly and buying op.

 

[jmillar]

Go for it - put in low offers.. it won't cost you anything and you've got nothing to lose. If you put in 20 low offers and only one accepts, well then you just bought a property for a good price!

Same concept as picking up women - talk to as many as you can, and eventually one will be drunk enough to go home with you! (sorry for the lousy comparison)

 

[westminster]

I'm currently looking for a PPOR with a budget to spend of $390,000 in Melbourne's outer east.
Could be stretched a tiny bit but not my much.
I've been looking at place that are priced up to 390,000 so far but i haven't found anything suitable.

I've had friends suggest that I make lowball offers but haven't even tried as I just assume that it's unrealistic and won't ever get accepted, especially if it's a decent place with lots of interest.

Last night I started looking at some up to approx $410,000, some of these looked quite good.
What are your thoughts on lowballing? I know many people do it but not sure how many are successful.
I often wonder if the ones that get accepted do so because no one else wants them or because they've been on the market a long time.

Is offering approx $20-$25,000 less reasonable? If you were a vendor would you consider it?
I have finance approved, just needs to pass the bank valuation and that's it. Settlement can be whatever the vendor wants but I will have a building inspection.

Thanks

It is definitely reasonable - in fact not even low balling. In WA the average property is sold at 8% less than asking price. You can find out the stats for your area and base you decision on that.
It won't always work and it's easier to be unemotional if it's not your PPOR but go for it.
If your budget is $390 then I would go up to $440k properties.
You will get a lot of rejections but it's worth a try.

 

[china]

For 410,000 property I would consider 340k or below low balling. There are many, many example of properties which end up selling for only 50-60% of their original asking price. You have to be in it to win it. If you are looking to buy within an area, some agents will give you a disgusted look with low ball offers. Some may not take you seriously. My technique is to make offers at auctions so that the agents in an area know that you have the finances to back it up. As you know, auction offers are legally binding.

Lets say that I go to an auction for a house worth about 2 mil. I will often make offers of 1 mil or 1.3 mil and then stop. This lets local agents know that I have at least 1.3 mil available to me. Then I will negotiate with these same agents regarding houses worth 1.5mil and make low ball offers of 900k but they know that I have the cash and therefore take me as a serious contender.

I must add a disclaimer that I have never bought a property other than my PPOR but certainly have had low ball offers accepted and then I got cold feet and ran away.

 

[Zipper]

I just settled my first property today!! My PPOR was originally on RE.com.au for $475k, after a month was dropped to $460. We offered $430 and after some back and forth, got it for $445k. The place was only on the market seven weeks, but the owners wanted it gone as they were living with their parents and wanting cash to start building. We offered them a shortened settlement as we had finance and they were more than happy to settle before Chrissy.

Don't be scared to offer, they can only say no!!

 

[Rolf Latham]

For 410,000 property I would consider 340k or below low balling. There are many, many example of properties which end up selling for only 50-60% of their original asking price.

Call and raise you on that

In that price range, if the asking price is set anywhere near sensible to start with, no place for 410 will sell for 205...............

Sure in the much more elastic 7 figure premium market, or mega oversupplied OTP sometimes, but in the real world ??

ta
rolf

 

[china]

Call and raise you on that

In that price range, if the asking price is set anywhere near sensible to start with, no place for 410 will sell for 205...............

Sure in the much more elastic 7 figure premium market, or mega oversupplied OTP sometimes, but in the real world ??

ta
rolf

Agreed, much more common in higher end of market but never say never even for the lower end, just much rarer.

 

[BayView]

Agreed, much more common in higher end of market but never say never even for the lower end, just much rarer.

50-60% - Try; never. Unless the house has been condemned and it's land value only.

Why? 'cause at the lower end is the biggest pool of buyers, and there's always someone who can afford a cheap house who will pay nearer to asking price unless it is a ridiculous asking price...smack agent in head if this is the case.

At the other end of price range.......

 

[Chloe]

In this lower end price range i would never consider asking for too much of a discount but for something with an asking price of $390 then maybe $360 is where i'd offer.

 

[sanj]

In this lower end price range i would never consider asking for too much of a discount but for something with an asking price of $390 then maybe $360 is where i'd offer.

What if the property was only worth $320 in your eyes? Would you still offer $360k?

It is impossible to arbitrarily state how low an offer might be because it assumes the asking price is accurate.

 

[Chloe]

No sanj, of course i would never offer more than what i think a home is worth.

Where i'm looking most things are priced ok with always a bit of room to move depending on the property.

 

[nhg]

Same concept as picking up women - talk to as many as you can, and eventually one will be drunk enough to go home with you! (sorry for the lousy comparison)

Haha!

Though unlike property, you can work on yourself and your approach, increasing your succes rate to almost 10/10

 

[locko24]

Haha!

Though unlike property, you can work on yourself and your approach, increasing your succes rate to almost 10/10

Thanks Brad Pitt.