'Offers above' $X
- Thread starter jech
- Start date
I don't know where the 10% figure is coming from. IMO it all depends in which type of market you are and what's your goal. Different people has different goals and different motivations. At the same time, different markets stages require different strategies.
Before even thinking about putting an offer I'd suggest that one should be able to recognise value. The asking price per se is meaningless. It doesn't necessary reflect the value of the property as such but, a desire of the vendor or a starting point for negotiations.
Hope this answers your question.
I bought a unit last year that was advertised as "offers over $370k"
The agent told me that the vendor wanted a quick sale, and that prospective buyers would need to put in their "best offer" over $370k, and the highest would win the property, as long as they could sign the contract straight away.
I did my research and put the market value of the unit at $390k. So I was prepared to offer $391k, not a cent more.
The unit sold after the first open house. The best offer was $395k, but they couldn't sign the contract till the Monday.
I got the unit at $391k. Next best offer was $390k. So I think I did alright.
I think this method is used when a quick sale is needed, and it also forces buyers to do their homework and work out the true value of the property.
The agent told me that the vendor wanted a quick sale, and that prospective buyers would need to put in their "best offer" over $370k, and the highest would win the property, as long as they could sign the contract straight away.
I did my research and put the market value of the unit at $390k. So I was prepared to offer $391k, not a cent more.
The unit sold after the first open house. The best offer was $395k, but they couldn't sign the contract till the Monday.
I got the unit at $391k. Next best offer was $390k. So I think I did alright.
I think this method is used when a quick sale is needed, and it also forces buyers to do their homework and work out the true value of the property.
the offers from or price plus has changed in qld. it used to mean we don't know what it will go for because this place is unique or it's such a hot market we don't want to state a price. it now means we hope we can get the price plus figure.
Answer is... it depends
On which agent is selling, what the market is like in that particular area, what it's realistic value is likely to be, how long it's been on the market etc etc.
Too many variables but the key is knowing your market. A house priced Offers over $500K could be worth $550K or $460K. You need to do your DD and research. Remember that asking prices are just that.....
On which agent is selling, what the market is like in that particular area, what it's realistic value is likely to be, how long it's been on the market etc etc.
Too many variables but the key is knowing your market. A house priced Offers over $500K could be worth $550K or $460K. You need to do your DD and research. Remember that asking prices are just that.....
If you have many potential buys in the area I'd just be low balling all of them (20%+ of the asking price - provided you think the property is worth at least what they are asking.)
You are bound to get some agents that will tell you where to stick it; but if you can get past that and the vendor comes back to you with his offer, you can see where they are at and go from there.
The aim of the game imo is to find the best bargain; so by having different options (and not caring if you have to walk away) you can get a good deal eventually.
You are bound to get some agents that will tell you where to stick it; but if you can get past that and the vendor comes back to you with his offer, you can see where they are at and go from there.
The aim of the game imo is to find the best bargain; so by having different options (and not caring if you have to walk away) you can get a good deal eventually.
Exactly....and this is the reason why Buyers don't like this method.
They all much prefer the lazy method of simply lopping 10% off some plucked out of the air asking price. Although, having said that, many Sellers take the market price, add 10%, and then wait for the lazy Buyers to come along.
As a seller, I can see how it works in a hot market. But our experience is that people are offering really lowball offers..... way below the "offers over" price, and far far below market price in the area. I think alot of people are "fishing" and seeing if anyone takes a bite.
The agent wanted to put the "offers over" figure at around 25K below our "reserve" price, but then people were offering up to 100K lower than that! We have now exchanged one property at pretty much the "offers over" level. But I think we would have got a better price if we'd put a higher fixed price, (say 20K over our "reserve" that people could negotiate down from, rather than a lower "offers over" price that they still negotiated down from!
One the other property, we have changed our "offers over" to a fixed price, so people have a better idea of where to start negotiations.
The agent wanted to put the "offers over" figure at around 25K below our "reserve" price, but then people were offering up to 100K lower than that! We have now exchanged one property at pretty much the "offers over" level. But I think we would have got a better price if we'd put a higher fixed price, (say 20K over our "reserve" that people could negotiate down from, rather than a lower "offers over" price that they still negotiated down from!
One the other property, we have changed our "offers over" to a fixed price, so people have a better idea of where to start negotiations.
I agree with you pennyk.
Cater for the lazy buyer, ignore the lowball fishing, don't sell if you don't have to.
Hi jech
My approach to this is that a ‘market’ is similar to a beach which is made up of trillions of individual grains of sand – a market is made up of millions of sales of unique, individual properties.
You are out and about looking to buy a property, and the person in front of you and the person behind you at the Open House may all give the same reason ‘looking for an investment property’ or ‘looking for our first home’ but what they are saying means something completely different to what you are saying, even if you all say exactly the same thing.
Few markets are stable. Markets rise or fall and the variations can happen from the Friday to the Monday. Markets can get spooked and markets can be on fire: Even if you form part of that market it is hard to know which way the tide is running.
At the moment, if you are a vendor you would like to believe that the market is holding up well ie that there is competition between buyers for a limited supply of housing stock, and if you are a buyer you hope that everyone else is holding off until the Reserve Bank drops interest rates by 1% - in which case, the market would (in theory) suddenly become a frenzy of anxious buyers trying to beat off other anxious buyers for the remaining stock.
Every property is sold by offer simply because that is the legal description of what happens.
The property is put on the market with an ‘invitation to treat’ – meaning, that the property is ‘for sale’ and that any ready, willing and capable purchaser is welcome to offer to buy it.
Making an offer has nothing to do with price, per se, it is simply the process of offering to buy. This is distinct from if the Vendor had contacted you and offered to sell it to you – and yes, this does happen and a lot more frequently than you may think (relatives, neighbours, friends, workmates, landlords etc)
OK, so the property you are interested in is advertised as ‘For Sale’ with an ‘Offers Above’ guide.
This method of marketing simply positions the property in the market range. If there was no price guide many people would waste a lot of time.
So if the property guide was ‘Offers Above $1,500,000’ would you go and look at it?
Offers ‘Above $500,000’ – or ‘Above $350,000’ – etc, gives you an idea of which market is relevant to this particular property.
So now you get to work. First up, you completely forget about the $x in the advertisement and go and look at similar 3 Bedroom, Brick Veneer, Tile Roof, DLUG, within the same immediate neighbourhood eg a 300 metre radius from the property you like. Pay for a Market Report if need be to get the most up to date information you can. Go and drive past the recent sales to make sure that they really are comparable properties.
Good, so now you figure that the property you are interested in will probably sell for $350,000 - $365,000 provided that the vendors are ’prepared to meet the market’.
And now you figure out your own buy figure, and you also figure out what Terms & Conditions you are going to offer, including any Finance Clause if applicable. Remember that each State has different legislative requirement, different commercial attitudes and different Cooling Off Periods. This is particularly important if eg you live in NSW and want to buy in Tasmania – you may need to ask an Agent for a Contract or two and study up on what a Contract of Sale looks like in Tasmania and what type of variations you can negotiate to that contract. Do not assume anything at this point as that assumption is likely to be the exploding cigar.
Remember the Price is only part of the purchase. And most importantly, that property will forgive you anything but not buying it.
If you pay $10,000 too much that is easily forgiven, but not buying at all will never be forgiven, so pay attention to the more subtle aspect of what buying property really means and what it means for you with this transaction
Only then will you know what will be a fair price for you to pay
Be prepared to walk away or otherwise lose out on the first few properties. No, this doesn’t contradict the forgiveness comments above.
When I was doing the Estate Agent’s licensing course and the conversation turned to ‘making offers’, some agents from one part of Melbourne mentioned a group of people who had all gone out and bought houses and had paid full asking price for all of them. Another agent shouted out ‘Me! Me! I sold them those houses!’ This group apparently felt that the house was the Vendor’s sacred property and that it would be insulting to haggle about the price. Apparently they bought some twenty properties (over time) all within walking distance of each other in the new area and they paid full asking price every time.
You will only pay what it means to you. The last property I bought was at auction and although I paid more than anyone else I still paid under what I had been prepared to pay for the place.
Good luck but remember that the advertised price is there to simply position the property in the market. It is not a ‘price sticker’ and there are no rules about it.
Cheers
Kristine
My approach to this is that a ‘market’ is similar to a beach which is made up of trillions of individual grains of sand – a market is made up of millions of sales of unique, individual properties.
You are out and about looking to buy a property, and the person in front of you and the person behind you at the Open House may all give the same reason ‘looking for an investment property’ or ‘looking for our first home’ but what they are saying means something completely different to what you are saying, even if you all say exactly the same thing.
Few markets are stable. Markets rise or fall and the variations can happen from the Friday to the Monday. Markets can get spooked and markets can be on fire: Even if you form part of that market it is hard to know which way the tide is running.
At the moment, if you are a vendor you would like to believe that the market is holding up well ie that there is competition between buyers for a limited supply of housing stock, and if you are a buyer you hope that everyone else is holding off until the Reserve Bank drops interest rates by 1% - in which case, the market would (in theory) suddenly become a frenzy of anxious buyers trying to beat off other anxious buyers for the remaining stock.
Every property is sold by offer simply because that is the legal description of what happens.
The property is put on the market with an ‘invitation to treat’ – meaning, that the property is ‘for sale’ and that any ready, willing and capable purchaser is welcome to offer to buy it.
Making an offer has nothing to do with price, per se, it is simply the process of offering to buy. This is distinct from if the Vendor had contacted you and offered to sell it to you – and yes, this does happen and a lot more frequently than you may think (relatives, neighbours, friends, workmates, landlords etc)
OK, so the property you are interested in is advertised as ‘For Sale’ with an ‘Offers Above’ guide.
This method of marketing simply positions the property in the market range. If there was no price guide many people would waste a lot of time.
So if the property guide was ‘Offers Above $1,500,000’ would you go and look at it?
Offers ‘Above $500,000’ – or ‘Above $350,000’ – etc, gives you an idea of which market is relevant to this particular property.
So now you get to work. First up, you completely forget about the $x in the advertisement and go and look at similar 3 Bedroom, Brick Veneer, Tile Roof, DLUG, within the same immediate neighbourhood eg a 300 metre radius from the property you like. Pay for a Market Report if need be to get the most up to date information you can. Go and drive past the recent sales to make sure that they really are comparable properties.
Good, so now you figure that the property you are interested in will probably sell for $350,000 - $365,000 provided that the vendors are ’prepared to meet the market’.
And now you figure out your own buy figure, and you also figure out what Terms & Conditions you are going to offer, including any Finance Clause if applicable. Remember that each State has different legislative requirement, different commercial attitudes and different Cooling Off Periods. This is particularly important if eg you live in NSW and want to buy in Tasmania – you may need to ask an Agent for a Contract or two and study up on what a Contract of Sale looks like in Tasmania and what type of variations you can negotiate to that contract. Do not assume anything at this point as that assumption is likely to be the exploding cigar.
Remember the Price is only part of the purchase. And most importantly, that property will forgive you anything but not buying it.
If you pay $10,000 too much that is easily forgiven, but not buying at all will never be forgiven, so pay attention to the more subtle aspect of what buying property really means and what it means for you with this transaction
Only then will you know what will be a fair price for you to pay
Be prepared to walk away or otherwise lose out on the first few properties. No, this doesn’t contradict the forgiveness comments above.
When I was doing the Estate Agent’s licensing course and the conversation turned to ‘making offers’, some agents from one part of Melbourne mentioned a group of people who had all gone out and bought houses and had paid full asking price for all of them. Another agent shouted out ‘Me! Me! I sold them those houses!’ This group apparently felt that the house was the Vendor’s sacred property and that it would be insulting to haggle about the price. Apparently they bought some twenty properties (over time) all within walking distance of each other in the new area and they paid full asking price every time.
You will only pay what it means to you. The last property I bought was at auction and although I paid more than anyone else I still paid under what I had been prepared to pay for the place.
Good luck but remember that the advertised price is there to simply position the property in the market. It is not a ‘price sticker’ and there are no rules about it.
Cheers
Kristine
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