Please suggest a reasonable offer

[Sootygirl]

Hi all, I would like some input from experienced buyers as to what I should offer for a property I am interested in. I dont want my offer laughed at, yet I dont want to pay more than I have to.

I know the property was bought 3 years ago {at the peak?} for 265k {I know the previous owners}. The property has been rented out by the owner during the past 3 years and has had nothing done to improve it....on the contrary. The place is so unkept on the outside it almost looks unlived in {dont know about the inside but I can imagine}. It is for sale for 252k, a drop of about 5%
from his purchase price. If Im not mistaken, the local market in this area has dropped closer to 10% in the last 3 years.
A comparible house, but on a block much larger, in the same neighbourhood, went for 234k at auction last month with only 2 bidders.
Even though the house Im interested in is currently tenanted, the owner has made no effort to make it look more attractive to potential buyers. This alone, makes me wonder how serious he is about getting the best price possible.
The house has not been on the market for long.
My dilema is this: I want that particular house, {for personal reasons} dont want to pay more than its worth, or I have to, but dont want to miss out if someone offers him the asking price tomorrow.
Can anyone give me advice on what to offer, what to say to the agent {to make me sound like I know what Im talking about when I make my offer} and not let on just how keen I am to get it {in which case he'll hold out}.
Thanks for any help.

 

[The Y-man]

I dont want my offer laughed at, yet I dont want to pay more than I have to.

Thanks for any help.

Getting laughed at is heaps better than paying more than necessary You can get laughed at many times, but you only get to pay once.

Cheers,

The Y-man

 

[sailor]

Sootygirl there are a couple of things I have used in the past to reckon the value of a property. These have included:

Sales of recent comparable houses in the area...which you have done.

The cost of fixing/repairing/replacing any essential items on the house. (Then deduct this from the asking price, and go in with a lower offer.)

The rent currently received for the property. (There is a formula for estimating value of property based on rent...can't think of it right now. Someone else on SS will know.)

That gives you 3 methods for reckoning the value. Then perhaps go in at 10-20% lower than your reckoning...and bargain from there.

I also recollect Brenda...or was it Lizzie...saying they offered half the asking price on a property once...and got it. So there's no telling what a seller will accept.

Perhaps you could also ask the REA why they are selling. This might give you an idea of whether or not they want a quick sale. Maybe they have to move elsewhere for work, maybe they can't afford the loan repayments and need to pull their money out, maybe it's a couple who are separating and are doing a property settlement, etc. It pays to find out.

 

[GIDDO]

Maybe the best thing is to start a dialogue with the agent.

Sometimes the best way the get a dialogue going is to make an offer on paper.

Once you are in negotiating phase, the agent is unlikely (and shouldn't) to take offers from others.

I wouldn't worry about making a reasonable offer too much.
After all - what right has the vendor got to make a capital gain in a declining market?

 

[lizzie]

i think you'll find they'll be wanting enough to cover their mortgage and costs. i know of no way you can find this out, but if they only put in 10% that would be around what they are asking now.

personally, i'd go in at aroung $210k and see what the reaction is - you can always come up a little.

rest assured - we have all paid to much at one time or another.

 

[skater]

I would be doing similar to what Lizzie suggests. The only problem I can see is that you said you know the owner. If it is a friend & they aren't all that "investment savvy" they may take offense to you trying to go so low. This wouldn't bother me as I could move on to the next place, but you did say there was a reason for wanting this particular property, so watch your step. It's not worth losing a friend over.

 

[caramellokoala]

Sootygirl

Have you inspected the property?

I like to talk with the agent face to face to see why they are selling, what the comparable sales figures are for that area, ask the agent how they arrived at the selling price. Make an offer and have your cheque ready so they know you mean business.

I usually knock 10-15% off straight away unless I am able to work out from what the agent doesn't say that they may be eager to sell. Develop your listening skills.

We recently purchased a property for $100k less than the original listing price.

At the end of the day, if you really want it, you will make a decision with your heart and not your head so be careful.

Good luck.

Cheers.

CK

 

[Sootygirl]

Thanks to all of you for your valued advice. I am sure I will come across as being much more 'informed' when I make an offer.
Skater, no its not the current owner that I know, I was friendly with the people that he bought the house from 3 years ago.
My understanding is that the current owner is a young guy who bought it for an investment {perhaps he got in over his head?} I haven't inspected the property yet. I rang the agent this week and have to wait until an inspection is convenient to the tenants. {agent said they arn't too co-operative}.
I shall get the agent to show me other properties so he doesnt know that Im only interested in this one.

Thanks again.

 

[Sootygirl]

Just an update: I inspected the property and was surprised that the inside was much better {and bigger} than I had remembered from my brief visit 3 years ago. I contained my excitement and offered 20k under the asking price and ended up getting it for 15k under. Without the advice from you guys, I probably wouldnt have had the 'b*lls to make the offer I did. Thanks!

 

[The Y-man]

Well done!

Cheers,

The Y-man

 

[sailor]

Good on yer. Go Girl!

 

[David E-Noosa]

get a dialogue going is to make an offer on paper.

Once you are in negotiating phase, the agent is unlikely (and shouldn't) to take offers from others.

Point for onlookers, this is quite incorrect. The duty of the agent is to get the seller the best price. Until all parties have signed the contract (Qld here not the same elsewhere) its still an offer and any and all offers must be presented.

ps well done Sootygirl on your purchase !! you did good.

 

[caramellokoala]

Well done!! Doesn't it feel good!!

Cheers

CK

 

[tigerGT]

I want that feeling!!