Negoitating a Private Sale - Seeking Advice

[JGM]

We have just inspected a family home we really like in Melbourne that is currently listed for 'Private Sale' but we are a little unsure how or when to proceed with making an offer.

Background Info:
1. Property has been listed for one week only.
2. The agent indicates offers will be considered between $1 and $1.1M however the "owner believes their property to be worth $1.3M".
3. The agent advises the owner is open to settlement periods as they havent found somewhere to move to yet themselves.
4. A thorough review of comparative sales indicates this property's upper value is more like $950K.

Any advice how to approach this one from a negoitations point of view is very much appreciated.

Many Thanks

 

[Rolf Latham]

Private sale with agent ?

ta
rolf

 

[JGM]

Yes with a real estate agent

 

[womble66]

maybe they mean "sale by private treaty" through a REA rather than "auction" or a "for sale by owner - REA need not apply".

 

[JGM]

Apologies for any confusion - you are correct - it is a 'sale by private treaty' via a REIV Agent. Any advice appreciated

 

[womble66]

always start low as you can always go up especially in a market that seems to be slowing in many areas. seems you have done some due diligence and if you are happy to start at your comparison range then there is no harm in trying.

the way offers need to be submitted vary from state to state so you will need to confirm the process. in NSW its simply a verbal offer to the REA the you go from there but in VIC you may need to put it in writing with a deposit.

 

[pennyk]

there is a big difference between your view of the properties value (950) and the owners view (1.3mill).. I think you'll have trouble negotiating. the owner will probably just take the house off the market if they dont need to sell.
But if think 950 is fair, I would offer 930K verbally and see what happens. Next up to 940K, then 945K... each time halving the amount you go up.
But I have a feeling its not going to have a happy ending... unless you are prepared to wait it out until the owner realises that the market isnt there.

 

[Propertunity]

^ ^ ^ what she said.

 

[Tillie]

If we take REAs words as a gospel, the price difference between vendors $1.3m and market value $950k is too big. If vendors have the figure of $1.3m in their heads they are unlikely to drop it only after 1 week on the market. You can put an offer in but be prepared for disappointment and start looking other properties...

 

[womble66]

If we take REAs words as a gospel

That's an issue!

 

[Ed Barton]

1. Property has been listed for one week only.
2. The agent indicates offers will be considered between $1 and $1.1M however the "owner believes their property to be worth $1.3M".
3. The agent advises the owner is open to settlement periods as they havent found somewhere to move to yet themselves.
4. A thorough review of comparative sales indicates this property's upper value is more like $950K.

1. as others have said you're not in much of position to talk down the property if it's only been listed for a week.
2. so i assume the agent thinks the property is worth what you think it is. (add agent market up for negotiation and you're about the same). the owner MAY adjust what they think it is worth when offers start rolling in, or this may be just bs to get you up in price.
3. this is your strong point if you don't care about settlement periods. you could get a lower price if your offer is subject to buying (of the vendor). an unusual clause and the reverse of the old subject to sale, but i'm sure your lawyer could work it out.

 

[wylie]

I'd wait it out.

We bought a house for $460K that was listed 18 months before at $650K.

It was simply not worth $650K but it took the owner 18 months to realise it. Even $460K seemed a little too much, but it was behind another of ours, so we really wanted to get it.

A developer had offered $460K, owner countersigned higher, and in the time between the developer making a decision as to whether he would pay more, we slipped in a clean $460K cash contract and got it.

Sit on your hands, wait for the low offers, and when (hopefully) they realise they are asking too much, then you have a better chance.

House in our street was listed for $770K about a year ago. I know of one offer of $600K that was not accepted. It was never worth $770K. If somebody doesn't NEED to sell they can try their luck at a really high price. Doesn't mean it will sell.

 

[Ed Barton]

I'd wait it out.

We bought a house for $460K that was listed 18 months before at $650K.

It was simply not worth $650K but it took the owner 18 months to realise it. Even $460K seemed a little too much, but it was behind another of ours, so we really wanted to get it.

A developer had offered $460K, owner countersigned higher, and in the time between the developer making a decision as to whether he would pay more, we slipped in a clean $460K cash contract and got it.

Sit on your hands, wait for the low offers, and when (hopefully) they realise they are asking too much, then you have a better chance.

House in our street was listed for $770K about a year ago. I know of one offer of $600K that was not accepted. It was never worth $770K. If somebody doesn't NEED to sell they can try their luck at a really high price. Doesn't mean it will sell.

good game plan, but i believe the op is after an ppor. different.

 

[The Y-man]

Any advice how to approach this one from a negoitations point of view is very much appreciated.

Many Thanks

Are they having open inspections? Go to them over a few weeks (the agents will notice you are seriously interested) - check out how many people are going through (look at the sign in book - if yours is the only name on it after week 1 (the neighbourhood rush) you're in with a good chance.

Do not fall for the agent ringing up saying they have had a firm offer at $1.x

How strong is your financial position?



The Y-man

 

[JGM]

They are having inspections twice weekly - Been to both to date (as much for us to do our own inspections of the property as well as see the level of interest of which there was five groups but none hung around too long).

Like your idea of attending a couple more to assess level of interest - wont be rushing to put in an offer.

Financial position healthy.

Thanks for your advice.

 

[JGM]

1. as others have said you're not in much of position to talk down the property if it's only been listed for a week.
2. so i assume the agent thinks the property is worth what you think it is. (add agent market up for negotiation and you're about the same). the owner MAY adjust what they think it is worth when offers start rolling in, or this may be just bs to get you up in price.
3. this is your strong point if you don't care about settlement periods. you could get a lower price if your offer is subject to buying (of the vendor). an unusual clause and the reverse of the old subject to sale, but i'm sure your lawyer could work it out.

Points 1 to 3 make complete sense.

The agent makes a point of highlighting what the vendor thinks of the value of their house is and his quoted range (not sure if he is trying to condition me or the vendor or both!).

Have bought fortunate enough to buy a number of IPs and in reality I wouldnt even be having a second look at this property if this was for another IP given the aforementioned circumstances.

Early stages yet, thanks everyone for your advice on how to approach this one....Interesting times ahead....

 

[The Y-man]

Financial position healthy.
.

Really, really healthy?

Because I am about to write something (brokers - please exit thread now ) that have brought many undone, BUT.... it can work very well (I know because I've been on the selling end):

How about going in with a $900k unconditional?

The Y-man

 

[motivated 5555]

I went to the property expo and one last very popular talk was from someone expert in negotiating . He often saves peoPle huge amounts much more than he charges and he knows alot of tricks to negotiate or bid at private sale or auction and to knock out tge competition . so that's one way to go .

The agents want to make a sale so will b telling tge owners they can buy much cheaper in this climate but also have to sell cheaper .

Give offers in writing with a 48 hour limit as only written offers will be passed to the owner
And then u know quickly where u stand .
And as others have said keep looking

 

[sammmeee]

Really, really healthy?

Because I am about to write something (brokers - please exit thread now ) that have brought many undone, BUT.... it can work very well (I know because I've been on the selling end):

How about going in with a $900k unconditional?

The Y-man

Haha...funny my broker nearly had a fit when I said I gave an unconditional offer. I threw it back at him and said ..you told me we could get a loan..."yes, but.." ha ha. Worked out but holy crap wasnt sure if I needed to get a defibulator for him. It shows they care/worry for their clients.

 

[Aaron_C]

Haha...funny my broker nearly had a fit when I said I gave an unconditional offer. I threw it back at him and said ..you told me we could get a loan..."yes, but.." ha ha. Worked out but holy crap wasnt sure if I needed to get a defibulator for him. It shows they care/worry for their clients.

It's just that banks can take their sweet time to do a deal, or can really stuff you around at the 11th hour. Even though we deal with them on a daily basis, no broker would truly trust a bank's credit team to get a deal done without a hitch.