"Offers over..." How do I negotiate price??

[Lou300]

Im just curious....

I just picked up a townhouse which was advertised as "Offers over $X". I offered marginally over the amount and got the place on that price. I just dont feel like it was a true negotiation though - dont get me wrong, Im happy with what I paid...

Im just wondering, what is the negotiating technique for a property listed as "Offers over.."?

 

[tristo]

No idea, I saw a good place the other week that was offers over $400k, and it sold for $420k. Would've thought a sensible offer would be $400,001.

 

[twobobsworth]

Was it offers over $248 buy any chance.

 

[buzzlightyear]

Do your due diligence, understand the prices being paid, make an assessmet on what you think a fair and reasonable price you would want to pay for the property, make an offer below that. How much below? Well you decide, but not too low, so the agent doesnt take you seriously.

When the REA comes back and says the vendor rejects your offer, ask them at what price would the vendor be willing to sell. The agent will generally give you some guidance from there.

 

[xcesiv]

I have had a few friends recently buy there first homes... and this is where the investors have to compete.

Someone i know went to buy a place advertised 440+. they offered 441k thinking they were getting a bargin. The agent declined the offer and knowing they were new to property game said over 440k means well over 440k. My friend then re offered them an over over 465k which was instantly accepted

I think when your putting an offer in its not just a number. If your discounting below the asking price, you have to justify your offer. You also have to make it look appealing, but tending to other needs of the agent of vendor. EG. short settlement, etc.

 

[Tony3008]

I bought a property in Frankston before Christmas which was advertised at offers in excess of $300K. There were two of us interested, and the agent said that he would be looking for best and final offers from each of us, and he would not run a pseudo auction between us: the two offers would be presented to the vendor without further negotiation. When I said that I proposed to offer $320K he said something like "you're going to feel disappointed if I tell you tomorrow that it sold for $321K". Whether that was a clue or mind bending, I don't know: for better or worse, I offered $325K which was accepted. Very hard to know whether I overpaid.

Back in June I was looking at a town house in Mitcham which was OIEO $355K. At a crowded viewing the agent told me that if I wasn't prepared to offer >$400K then not to bother. I didn't.

 

[Jacque]

Offers Over is a commonly used listing technique usually used by particular agents who:

1. Believe they can easily achieve over this amount and so use it as a carrot to entice a wider range of buyers in and create competition, as most of the buyers believe they only have to just offer this amount to secure the property

2. Have tried to already sell at a set price eg $439K and, when unsuccessful, change it to "Offer over $415K+" or similar

3. Use it as an auction guide, with the + representing a widely variable figure, sometimes way above the 10% range that they're supposed to use as an estimation

4. Have a particular vendor who has asked for this technique

5. Are a little unsure on what the market value is (eg unique property) and so use it as a guide to garner market feedback from buyers

However, do not fall into the trap of thinking that the property must be therefore worth Offers Over $X. Do your DD and decide on a fair price - this may well be under the amount but let's not forget that many vendors "try it on" when initially listing with price. Be sure you know your market.

 

[xcesiv]

This brings up a question i have been curious about.

When using the $XXXk+ marketing Option. Is there a maximum margins, or rules, they are allowed to advertise in.

As in, if they advertise the price as $400k+, and the max was 10% margin. then they cant decline an offer of $440 or above.

sorry if i confuse ppl with the question

 

[Property Meister]

yeah, I think that too whenever I see offers above $X

to me that I see that as a little arrogant, almost like saying, well we know that we are going to get more so don't even bother below that price,

and my next chain of thought is that the above $X must be close or be the minimum selling price that they are happy with, and they are hoping/bluffing into making people offer well above this figure so they can get higher.

just my opinion

 

[bespoke]

"Offers over X" is the system used to sell property in Scotland and usually indicates the vendors are looking for a price around 20% over the X amount listed.

Good for vendors I suppose, not so good for buyers who are unsure of the value.

 

[CG++]

Hi Lou,

I'm not comfortable with this sort of advertising either.
I would do your research and offer what you think it is worth. The agent will submit all offers.

 

[buzzlightyear]

Advertised price is irrelevant

I have never understood why sophisticated purchasers rely on the agent to give an estimation of the price. Or look at the advertised price - it often bears no resemblence to what is 'fair value'. I can understand the mum & dad ppor purchasers who may only do this a few times in their lifetime.

Don't abdicate your DD to someone who has a vested interest in maximising the price for someone else. Sure, play the game, but be informed.

I would envisage that if you are looking at say for example 2 different localities in a capital city for example and each locality might encompass 3 suburbs, it would not take long, for your specified property type(s), to get a very good indication of selling prices. I would argue 4 weeks, if you do it diligently. Then the agent can advertise any price, in any format, wrap & tie a ribbon around it, have a girl jump out of cake, and it would make no difference. You will know a fair market price range.

The rest of the how or why advertised prices came to be like they are, can then be left to those inclined to debate these things. Its merely "embriodery on the fabric"

 

[Property Meister]

I agree, a property is only worth how much someone is willing to pay,

eg. Im in a bit of a pickle about this one.

Most properties have been selling for between $400-$450k, the odd one sneaking in at $385k

however, there is one, that is advertised, it has a slight neg of being a bit close to the freeway, but anyway, my belief is that its worth about $400-$405k,

however price is Offers above $370k,

so if I were to offer, should I offer say $370k, or $365k or $395k?

 

[Player]

I have never understood why sophisticated purchasers rely on the agent to give an estimation of the price. Or look at the advertised price - it often bears no resemblence to what is 'fair value'. I can understand the mum & dad ppor purchasers who may only do this a few times in their lifetime.

Don't abdicate your DD to someone who has a vested interest in maximising the price for someone else. Sure, play the game, but be informed. ......................... Its merely "embriodery on the fabric"

I like that metaphor...........embroidery on the fabric

With your permission I shall use that one with rea's in the appropriate circumstances.

Good post BLY

 

[brrmm]

I bought a property a few years ago that was advertised as Offers above $230,000.
My initial offer was around $216,000. Agent (bless him!!) thankfully didn't flinch or question the offer but took it to vendor who asked for more $$.
No prob.....upped it to around $218. Vendor then stated wouldn't accept anything less than $220........so we split the difference and bought it for $219.

When an agent puts a number in print, even if it is ">$400" they know they run the risk of buyers seeing just the $400 number.

 

[Perp]

should I offer say $370k, or $365k or $395k?

It's worth $400-405K, in your estimation.

Obviously you still don't want to pay any more than you can get it for, but neither do you want to risk alienating the vendor with a cheeky bid. It's possible that a vendor who'd accept, say, $395K bid if it were a first offer (and somewhat reasonable), wouldn't accept $395K from somebody who started at $375K and worked their way up to that same figure. It's human nature - p*** them off and many will "cut off their noses to spite their face".

So I think you want to offer enough below your target that you have room to negotiate, but not so far below that you get the vendors thinking they'd not sell to you at any price.

Where is that figure? Presuming the market is warm (neither hot nor cold), I'd say somewhere around $390-395K, because I don't see the need to buy at rock bottom; anything below your estimated value you should be happy with. But others no doubt would go lower to start with in order to try and secure a bargain, particularly if it's been on the market a while. On the other hand, if there are lots of potential buyers, you may need to go higher.

If they take your first offer, that doesn't necessarily mean that you've paid too much - it may simply mean that the vendors were prepared to accept a reasonable offer without mucking around. But if you're the kind who'd be annoyed if your first offer is accepted - even when it's below your estimate of the property's value - then perhaps you need to start lower.