Need help with bargaining

[Mrman]

I have found a house for sale right in the middle of a development. The whole area which was mainly goverment housing trust homes has been sold off so this house is almost surrounded by empty blocks which are being sold with house and land packages.

The sale is private and is asking $220,000 neg. By talking to the owners they have told me that they were offered $205,000 which they accepted but the finance fell through and if i was to offer $201,000 they would accept. This was after I offered $180,000. Pretty sure they need to sell as they need the money. Its a large block and blocks half its size across the road are selling for $90,000+

What's the next step that I should take in this bargaining game? Do I go up to 190,000? Do I say $180,000 + $5000 cash? I'm thinking they wan't 201,000 so if I say 190,000 then its meeting them halfway but they have already gone down from 220,000.

Any advice welcome

Cheers
George

 

[ozi]

Hi George,

You could offer $190k - they will either say yes or no. No harm in trying. Work out how much the property is really worth and if it is a good deal at $201k I would just pay it. I've missed out on a few good deals while trying to low-ball with my offers. If I could go back now, I wouldn't hesitate offering full asking price if I knew it was a good deal.

Another thing you could do is play around with the terms. Either offer low price with quick settlement, or pay full price and ask for a long settlement. The long settlement could work in your favour if its a rising market.

Good luck.

Ozi

 

[Property Meister]

I am not too sure if this will work but can't you say offer $190k, and then if they say no, call them up or the agent up, and give them a "you are broke" type of spiel and then offer them $195k..... as your final offer....

 

[willair]

What's the next step that I should take in this bargaining game? Do I go up to 190,000? Do I say $180,000 + $5000 cash? I'm thinking they wan't 201,000 so if I say 190,000 then its meeting them halfway but they have already gone down from 220,000.

Any advice welcome
George

The next step is work out what you can afford,and don't go over that offer
who cares less if they want 201k,next week your offer might might be the
only one they have to work with,if they wanted 220k and they will take
200k plus then your offer is still in the ballpark,you can only ask the question..
..never ever offer cash..willair..

 

[TheBacon]

Blocks 1/2 the size going for $90k doesnt necessarily mean that land value is $180k. There can be a discount in the price of larger blocks as there is often a significant cost to subdivide a block into two. So it often happens that a suburb can have 500m2 vacant blocks for $100,000, and also have old houses on 1,000m2 blocks for less than $200,000. Depends on the area and the quality of the house on the block.

Some questions:

• Is the block easily subdividable?
• What are the costs of subdividing?
• Is that your goal?
• The previous offer fell over on financing. Why was that? What did the banks value the property at?

Not sure what you mean by offering cash?

You have in your favour the fact that the vendors have said $201k. That means you dont need to pay any more than that. Everything you can negotiate lower is a bonus.

Nothing to lose in trying a lowish offer. You can always come back to $201 if it doesnt work out.

Good luck