Making a "low ball" offer

[Jacque]

Well I just read the RPData report and the lowest price was 340k BUT there were some for $0. I'm assuming that these may be recent sales for which the figures aren't yet available.

I appreciate that I need to be going with the "market value" but as much as I do like it, it doesn't feel worth more than about 320k to me in terms of rental return in the future and also holding costs.

RPData reports are ok for providing an overall picture but by knowing the market, I mean getting out there by foot and physically inspecting and knowing why one property sold for more/less than another. When a sale is $0 or very low it's usually an unreported agent sale or a family transfer.

As for "feeling that it's not worth more" you are letting emotion cloud your decision, not the numbers. However if $320K is your cutoff for your purposes and cash-flow position then you have your answer as to your maximum price. Best of luck with the negotiations

 

[lizzie]

have a look on onethehouse.com.au ... some of the data is a little old, but it tells you the actual price things sold for property by property ... and it's free.

 

[JWR]

I guarantee you can do better - just let me know the suburb and I will help - PM me if you want (unless you really care about the lifestyle factor and become quite emotional in the process!)

 

[Andrew_A]

As Jacque says the value of the property could be a lot different to what the list price strategy might indicate, sometimes sellers are dreaming and sometimes they have priced it to sell in half an hour! Buyer's can get stuck on the 'discount to list' number and miss out on a good buy because of that.

If the property is the one you want and your maximum is reasonably under what it could sell for then a quick first and final offer could be one strategy, politely explaining why this is just your highest possible bid.

Otherwise do your comparison homework, look at yields, floor sizes, condition, for a property in this price range there should generally be less fat in any asking price to discount and you should also be able to find plenty of comparables.

 

[wobbycarly]

*snip*
PM me the property if you like and I will tell you what I think after researching the property (and I won't steal your property as its too expensive for me)

What suburb is it - I will find you a better one.

Does it have to be an apartment - you could probably buy a house for that price and have no strata fees and more space/freedom.

I guarantee you can do better - just let me know the suburb and I will help - PM me if you want (unless you really care about the lifestyle factor and become quite emotional in the process!)

While I can appreciate we often want to assist others on here where we can, I'd be concerned about this triple offer in the space of one thread, if it was me! If you are really just being altruistic, I apologise - just seems strange. These posts sort of come across as the little kid trying out for the team; "Pick me, pick me!"

So I should put my current offer in writing now or wait a few days and put the new one in writing?

You could try putting it in an email to the agent. It's in writing, and also gives you the opportunity to explain/justify your offer amount, if you wish.

 

[JWR]

Haha no Wobblycarly only trying to help as I hate to see people paying more than they should/have to if I can do a 5 min search and find something cheaper and better... and I like finding bargains and ******* agents off when I don't get my way.

And I am still a little kid so thanks for exposing

 

[quoll]

Just offering a figure that is 10% lower than the asking price makes no sense...it doesn't matter what the seller wants, all that matters is what it's worth.

Spot on Aaron, buyers need to work out what they think it's worth and offer what they think. Very subjective numbers. That's why REAs use comparative sales. Sales being the key word.

Put an offer in at a price you can afford and you think is reasonable.

Cheers
Graeme.

 

[cimbom]

JWR, thanks for the offer of help but I'm pretty set on the location and there isn't anything significantly cheaper available there.

I'm pretty convinced the REA is pulling my leg with the whole "urgency" aspect and I am pretty sure the other offers do not exist. I will be waiting a few days and then making my counter offer. I am thinking about offering about 315-318k. I don't think the price is at the right level if other similar properties have been on the market for half a year and haven't sold.

 

[Melbournian]

My solicitor advised against making an offer in writing. He said it is safer to go with a verbal offer

what is the point of making a offer only to change your mind? You're consuming the agent, vendor, yours and the lawyers time.

if you're scared, just make a conditional offer

 

[BMan]

Well I just read the RPData report and the lowest price was 340k BUT there were some for $0. I'm assuming that these may be recent sales for which the figures aren't yet available.

I appreciate that I need to be going with the "market value" but as much as I do like it, it doesn't feel worth more than about 320k to me in terms of rental return in the future and also holding costs.

ok so we have just worked out you wont pay more than 320k since any more and you either cant afford it or the figures dont stack up

so your choices are
put an offer in writing at 308k so the REA has to give it to the vendor
and even try and speak to the vendor if you dont trust the REA

wait for a while and counter at 318 or whatever you want to

or walk away
if they dont want to play the game and its a reasonable offer cut your losses and find something better

 

[JWR]

Or make low offers on all the properties you like in that price range and see who bites...

 

[Wise1InOz]

If I really liked (basically ticks ALL my boxes) the property and if I were buying it as a PPOR with a very long term view then I'd try to meet the vendor's price or offer close to what the vendor wants provided (a) it is not over 5%* what similar properties are selling for and (b) I know for certain there is at least one other interested party. In our case we knew roughly what our competitor was offering as I knew what price it got passed in at the auction (we missed the auction luckily).

We verbally offered around 20k more than the passed in price with a very short settlement period as a carrot (date kept vague - we said 30-45 days) which was accepted. Then haggled very hard on the special conditions - all accepted.

Signed the contract 2 weeks after verbal offer and on contract made settlement as 75 days from thereon (or 90 days from verbal offer), which basically brought down my cost close to the passed-in price.

* In our case it was 30% lower than what the property 4 houses down the road sold for in Aug 2011.

 

[Whataslowrider]

308 vs 339 - in today's market that's not so much a lowball, unless you are serious I am with your solicitor - verbal offer only.

I recently made an offer of 620 for a ppt listed for 710+, I'd call that was a lowball, of cause i didn't get it, nothing to lose any way.

 

[BMan]

what percentage under do you class a lowball offer?

 

[Nemo30]

Cimbom - Allhomes has past sales data. If you click on the 'Research' button up the top and then on 'Property and Past Sales Information' you can search any address in Canberra.

 

[BuyProperty]

Then the first thing you should do, before making any offer, is to do your research! Find out how much other apartments have sold in the building, get a strata report etc etc.

Some sound advice here Aaron, the listing price is irrelevant in comparison with the numbers.

 

[JWR]

Low ball to me means 30% under the value (not listing price) for me. That's in the sub-200k range though - and would expect to come up to 15% below true value or more when I reach a final price.

 

[see_change]

First thing , as Jaques said , you need to know your market and that does mean getting out there and looking at as many properties as you can find and after a while you will know what is a reasonable price .

Unfortunatly that doesn't help you here and now....

My understanding is that agents have a legal obligation to pass all offers on unless they've had specific instruction not to do so from the vendor. We've told agents that on several occasions.

The strongest negotiating position to be in is one where you're happy to walk away.

If you don't get this one , it's an interesting exercise to look at properties above what you can afford and make offers you can afford. We did this were we bought our last PPOR and while we didn't buy any of them , we were suprised and how low some of the counter offers were . It's also good practice from the point of negotiating on things where you don't care what the outcome is. It also can help if you do that with agents who you subsequentally want to buy something off . They then know that you are prepared to walk away and they will tell the vendor that .... sort of reverse conditioning.

It really helps if you can get the agent on your side , though that usually happens by accident and usually because the vendor stuffs the agent around or you make multiple buys throught the same agent

Cliff

 

[Swannies]

Hello,

My husband and I inspected a property on the weekend that we both liked. I was just wondering what timing you all generally use when making a low ball offer. It was listed for $339k and we want to offer 308k as our first offer. I'm prepared to go up higher but not sure how long to wait after they say our offer is rejected to make a new offer? I think we gave away that we liked the property so the agent may try to get more out of us. We don't want to seem too keen.

Thanks for your help

Do you know why they are selling?

If you are going to make what is considered a low offer you may want to consider altering the contract with favourable conditions for the vendor to create more of a win - win situation.

 

[quoll]

what percentage under do you class a lowball offer?

10% is just margin for error, 20% is lowball, based on market value of comparitive properties that sold in last 6mths