Negotiating tactic, advice appreciated

[Tillie]

Finally we found the house that we are interested in as PPOR. It is going against our original house searching criteria of downsizing but we fall in love with the place and now it is difficult not to loose our heads over it... It is so much easier to buy Ips without emotional attachment. So all negotiation hints are more than welcomed.

The house was originally listed over a month ago with the price range $1.6m - $1.85m. We told the agent that the price is too high compared that the neighbouring property that sold $1.35m a year ago and we are not interested in the house with the price. The property has about same size block of land but much better quality and larger house, garaging and another capital improvements than the neighbour.

Over the last month agent requested, almost begged us to put the offer on the table and he is happy to submit any offer to the vendors. This week they dropped the price range on the ad and it is now $1.45-$1.75m and there was no-one in the inspection, except we.

It is really hard to value the place. It is unique and as mentioned we are in the risk loosing our heads over it. CIV on the rate notice is $1.28m (from 2012) and value on commonwealth 'my wealth' site is $1.55m, 'on the house' web- site range is $1.25m -$1.55m (over a year old) But a month ago an acreage on the same suburb a couple km away sold $1.8m and the similar size houses with same capital improvements but without land sells $1.25m - $1.4m.

What would you do in my shoes? How would you conduct negotiations? All help is highly appreciated as I am so emotionally involved and not thinking clearly...

 

[Spades]

Hi Tillie,
If you are prepared to pay eg:1.35$,put in a lowball offer eg:1.1$.
See if they accept or counter offer etc.
Have you asked why the vendor is selling?
Imo i think there's more scope for discounting at the higher end.
Cheers Spades.

 

[Tillie]

Thanks Spades for the quick respond.

The vendors are downsizing. We have established that they do not have financial pressure to sell. According to the agent in the addition to the property they has a flat that they use in the city and the beach house in Mornington peninsula.

 

[Spades]

How have you established they are not in financial pressure?
I presume your going by the agents fluff?They may own those properties BUT mortgaged to the hills.Or they may not own them.There maybe other reasons why they need to sell sooner rather than later.

3 things in your favor,price dropped in over a month since listing,not much interest,if any at opens and a jkeen agent wanting you to put in a offer.

Cheers Spades.

 

[Tillie]

Hi Spades,

you are absolutely right. Our only information about the vendors financial situation comes from the agent. According to sec 32 house there is mortgage against the property, taken in 2004. But that does not necessary mean anything. We have mortgage of $200,- against our PPOR so that we can access cash if required.

Is there any cons. against the lowball offer, let's say $1.1m? I suppose they can only say no and counteroffer...

 

[Spades]

Is there any cons. against the lowball offer, let's say $1.1m? I suppose they can only say no and counteroffer...

Correct,what have you got to lose?

Also before you make an offer,try and find out what they paid for the prop in 2004(if available)and what additions,if any,have been added since 2004.

Maybe you could do some more digging on the owners?

Cheers Spades.

 

[Spades]

You could also go to a couple more opens and hang down the street to see if there's any interest.

Go to an open thereafter and be real picky with any minor repairs need doing with camera in hand and seem disinterested.

Maybe get a friend to inspect the prop and get friend to offer lower than you eg:1mill before you make a offer.

Anyhow good luck,hope you get it at a good price.

Cheers Spades.

 

[Tillie]

Correct,what have you got to lose?

Also before you make an offer,try and find out what they paid for the prop in 2004(if available)and what additions,if any,have been added since 2004.

Maybe you could do some more digging on the owners?

Cheers Spades.

How can I found out how much the vendors paid? Only records that I have managed to get my hands on are for the last couple of years?

 

[Tillie]

You could also go to a couple more opens and hang down the street to see if there's any interest.

Go to an open thereafter and be real picky with any minor repairs need doing with camera in hand and seem disinterested.

Maybe get a friend to inspect the prop and get friend to offer lower than you eg:1mill before you make a offer.

Anyhow good luck,hope you get it at a good price.

Cheers Spades.

The agent knows already that we like the house, so no point to pretend to be picky. But the friend is a good idea. I'll ask my friend to attend next sat. The agent has reduced the number of openings to one a week. Probably due to the lack of interest.

 

[Spades]

How can I found out how much the vendors paid? Only records that I have managed to get my hands on are for the last couple of years?

Maybe you could try searching for the old listing and ringing the agent who sold it.

The agent knows already that we like the house, so no point to pretend to be picky.

Maybe after sussing out the opens after 2 weeks from down the road and after a friend has put a lower offer in than yours,you have a second look and tell the agent your just comparing this prop to an other that your really keen on,don't disclose where it is.Say to the agent for eg:that the prop your more keen on and has more appeal and at a good price eg:1.1mil and ask if the vendor would be willing to match the asking price if not lower on the other prop your keen on.

Just a suggestion.

Cheers Spades.

 

[Spades]

Don't know if you've already done this on last sale price but you could try go0glin address.
Also try ksou,on the house and oldlistings etc.

 

[Tillie]

Don't know if you've already done this on last sale price but you could try go0glin address.
Also try ksou,on the house and oldlistings etc.

Done all this without luck. I did the google search of using vendors the details (from sec 32), no results. According to the agent vendors has owned the property over 12 years and all records I can find are not going back that far.

 

[Spades]

Ok,maybe look at comparable properties and look at previous sales to todays results.

 

[Spades]

Tillie,you could also ask a couple of brokers on here for a free report.
PT_Bear springs to mind for resi dex and FMS for rp d ata.

 

[westminster]

The higher end of Melbourne, depending on the suburb, is still struggling and worth less than many people paid back in 2000-2009

For that reason alone they may be baulking at the price as they want to sell for more than they paid.

An RPData report will tell you what they paid and also get a suburb report for houses with similar criteria in 1km ring around it for comparables. Work out the increase or decrease the suburb has had since they bought and try and work out price from that.

Good luck with it. Go low in my opinion as you can always offer again if they say no.

 

[andrew_de_a]

The higher end of Melb is most definitely not struggling.

 

[Ace in the Hole]

Let it sit on the market a bit longer, the price will go down.
Really depends how bad you want it and if you would be really disappointed if you missed out.

For our recent PPOR purchase, we exchanged almost 6 months after our first inspection, with a long settlement too.
We were just looking with no intentions of buying at that time.
It was already on the market for some time before that too.
So we got about 30% off the original asking price because it was on the market so long and prospective buyers lose interest when that happens.

A too high starting price can backfire against vendors.

 

[Tillie]

Thanks a lot for all the good advice.

The agent sent an follow up e-mail instead of the phone call He sent us the the copy of the 'intent to buy letter' with the message that just in case that we would like to make an offer...

We decided not to response and we will send our friends to the house inspection on Sat.

RDdata report is a good idea. I have never seen one, but previously I have managed to value the property by myself using comparatives etc. But this place is unique and not a lot of data comparative data available for me. Could someone please doe me a huge favor and run me one?

 

[Colin Rice]

RDdata report is a good idea. I have never seen one, but previously I have managed to value the property by myself using comparatives etc. But this place is unique and not a lot of data comparative data available for me. Could someone please doe me a huge favor and run me one?

Hi Tillie,

Send me the address and I will run one for you. PM your email address as well.

 

[Tillie]

Thanks FMS for running APM report for me.

Update: the report stated the following: 'Statistically reliable Price Estimate Range is not available for this property.'

As I said to FMS privately I do not feel so bad that I am struggling to determine the value for the property if even the professional organisation struggles to find comparative sales prices