The Ad says "offers over 299k"... Should I offer less?

[Mike8t1]

Hello forumites
I have used a buyers agent to purchase my last 4 properties and have decided to put my big boy pants on and have a crack myself. I have found a house which seems good for the price when compared to the other stock, so I want to put in an offer but don't want to ruin my chances. The vendor is selling to pay off poor debt. What would you offer to negotiate a good price?
Thanks for any info you might share
Michael

 

[vaughan]

Well, if there are no other offers, then ANY offer you put in will be their highest. If there are other offers, then your offer had better be over theirs.

Depends on how much of a sellers market is it. In most of Sydney at the moment, offers below the asking price have little chance of success. Many houses are selling for above the asking price, and often before or very soon after the first open house.

So, how much do you want this house? What will your budget extend to?

 

[techie]

Check how long its been on the market for. If its not been on sale for that long, then chances are that your lower offer won't cut it.
With an ad like offers over $299k, they're basically looking for 300k to sell.

 

[Mike8t1]

Thanks for that guys.
The property is about 20km outside of brissy. I know these areas are popular with investors atm so i was asking to see how other investors may approach the situation. Does it matter that the property sold for $269k in 09? Can i use that in negotiations?

Do i have to ask the agent gow long it has been on the market or can i find the info online?

Cheers
Michael

 

[A Jeremy]

http://somersoft.com/forums/showthread.php?t=102292

Negotiation tactics aside, give them a number along with some contract conditions and if they like it they might accept or if they want to start talking you've begun a dialogue.

If they don't want to know about it you can offer them a higher number and/or more favourable contract conditions or move onto the next opportunity. Someday someone will say 'yes' and you'll land the deal.

 

[Mike8t1]

http://somersoft.com/forums/showthread.php?t=102292

Negotiation tactics aside, give them a number along with some contract conditions and if they like it they might accept or if they want to start talking you've begun a dialogue.

If they don't want to know about it you can offer them a higher number and/or more favourable contract conditions or move onto the next opportunity. Someday someone will say 'yes' and you'll land the deal.

Thanks for that link A Jeremy. I had a good read and think that i might be able to back up a lower iffer with comparables.
When you refer to conditions do you mean settlement times and so on. What other conditions are used regularly? Im sorry for such basic questions but i guess its the only way to learn
cheers
Michael

 

[A Jeremy]

Yeah, don't be sorry for asking questions. I've asked thousands myself and peppered both my bank manager and accountant with questions for years before I started.

Quite literally, you can put anything in a contract as a condition but the common ones I play with are:

- deposit amount
- settlement length (I like time to get my ducks in a row)
- early access
- sunset clause
- finance clause

When purchasing I usually offer to negate the finance clause as I know what I can borrow and it's a huge bargaining chip for the seller as they know I won't use it to bail although they shouldn't be so naive to think that I wouldn't give myself an out. I'm not crazy and I'm not yet rich enough to be eccentric. I absolutely do not recommend this but I'm letting you know what I do.

 

[Big Will]

Thanks for that guys.
The property is about 20km outside of brissy. I know these areas are popular with investors atm so i was asking to see how other investors may approach the situation. Does it matter that the property sold for $269k in 09? Can i use that in negotiations?

At 2% growth year on year (which is crap) that would mean the value would be $296,997.70

At 5% growth year on year means it would be worth $343,3193.70.

I would think 5% wouldn't be to far off where the price would need to be for Brisbane, saw this article from a google search which says Brisbane grew by 6.9% in the last 12 months.

http://www.propertyobserver.com.au/...sbane-house-prices-reach-record-high-apm.html

My guess you would probably need to be 320-330k to be around where the vendor is. However have a look at comparable prices to get a better indication.

 

[chindonly]

At 2% growth year on year (which is crap) that would mean the value would be $296,997.70

At 5% growth year on year means it would be worth $343,3193.70.

I would think 5% wouldn't be to far off where the price would need to be for Brisbane, saw this article from a google search which says Brisbane grew by 6.9% in the last 12 months.

http://www.propertyobserver.com.au/...sbane-house-prices-reach-record-high-apm.html

My guess you would probably need to be 320-330k to be around where the vendor is. However have a look at comparable prices to get a better indication.

20k out probably isn't still in Brissy. Where is the property?

 

[Jamie_]

At 2% growth year on year (which is crap) that would mean the value would be $296,997.70

At 5% growth year on year means it would be worth $343,3193.70.

I would think 5% wouldn't be to far off where the price would need to be for Brisbane, saw this article from a google search which says Brisbane grew by 6.9% in the last 12 months.

http://www.propertyobserver.com.au/...sbane-house-prices-reach-record-high-apm.html

My guess you would probably need to be 320-330k to be around where the vendor is. However have a look at comparable prices to get a better indication.

But what if the previous owner bought higher than it should have been

 

[Mike8t1]

20k out probably isn't still in Brissy. Where is the property?

Well its seems like my distance guessing skills are not very good haha. The property is on the redcliffe peninsula which google maps tells me is 35km from the CBD.

The property has been on the market since 17/9 so I doubt the vendor is desperate just yet.

I will be reviewing comparibles on price finder tomorrow which will give me some more insight

Cheers guys
Michael

 

[chindonly]

Well its seems like my distance guessing skills are not very good haha. The property is on the redcliffe peninsula which google maps tells me is 35km from the CBD.

The property has been on the market since 17/9 so I doubt the vendor is desperate just yet.

I will be reviewing comparibles on price finder tomorrow which will give me some more insight

Cheers guys
Michael

OK - Redcliffe is Moreton Bay Council. I grew up there, so know the area well.

There is a thread on SS about Kippa Ring, which is a suburb of the Redcliffe peninsula, and talks about the new train line being built right now. May be of interest to you.

 

[wategos]

Don't offer more than 90% of asking, that's what I do usually. Last place I bought wanted 1 Mil they eventually dropped 30% to under 700. Just make an offer and be patient, if they need to sell eventually they'll come around, don't jump at sellers expectations, bide your time.
So offer 270.

 

[Mike8t1]

Thanks for the feedback folks. Much appreciated! More questions are to come im sure haha
cheers
Michael

 

[danwatto]

At 2% growth year on year (which is crap) that would mean the value would be $296,997.70

At 5% growth year on year means it would be worth $343,3193.70.

I would think 5% wouldn't be to far off where the price would need to be for Brisbane, saw this article from a google search which says Brisbane grew by 6.9% in the last 12 months.

http://www.propertyobserver.com.au/...sbane-house-prices-reach-record-high-apm.html

My guess you would probably need to be 320-330k to be around where the vendor is. However have a look at comparable prices to get a better indication.

I wouldn't do this.. every area grows differently and in cycles, some areas of Brisbane grew from 10 years ago until 5 years ago - then were flat for 5 years. Any growth for those suburbs is due in the future, not to be calculated into current prices.

Also a historical value from 5 years ago is not useful in valuing on it's own, look at comparable sales to find out whats realistic

 

[danwatto]

Don't offer more than 90% of asking, that's what I do usually. Last place I bought wanted 1 Mil they eventually dropped 30% to under 700. Just make an offer and be patient, if they need to sell eventually they'll come around, don't jump at sellers expectations, bide your time.
So offer 270.

Asking price I think is useful during search, but I would be careful using it during the offer process as it could be totally wrong..

Why not do your own valuation, and base your offers off 90% of your opinion on "market value". Then regardless of the agents sales tactics when deciding his asking price, you can still buy well.

Sometimes agents even underquote (to attract interest), and you have to pay more although it still could be good value and below market (sales prices). Sometimes they ask way too much because the vendor says they won't give the listing if they can't get that price, then the agent spends months conditioning them to lower the price.

By do your own valuation I mean using RP Data and/or pricefinder and never paying more than similar properties actually sold for, i.e. same land size, no bedrooms, bathrooms, type, quality, etc.

 

[Big Will]

some areas of Brisbane grew from 10 years ago until 5 years ago - then were flat for 5 years.

I would be keen to know which suburb you are talking about... 5 years of non growth in a capital city I would be all over that suburb.

I also did mention to look at comparable sales to verify this as with everything it is your own DD but even with comparable sales it doesn't give you a value as the value is what someone else is willing to pay and the other person is willing to accept.

If I and the vendor were the two last people left on the planet their property wouldn't be worth jack (same with mine) however if all of a sudden the government said we are going to pay everyone triple what they are getting paid now to keep working it would mean property prices could triple or more!

 

[Dbz_Vic]

Thanks for that guys.
The property is about 20km outside of brissy. I know these areas are popular with investors atm so i was asking to see how other investors may approach the situation. Does it matter that the property sold for $269k in 09? Can i use that in negotiations?

Do i have to ask the agent gow long it has been on the market or can i find the info online?

Cheers
Michael

Michael I think previous sale price doesn't have too much of a bearing on how much you should pay, it's more determined by the market and how much people are willing to pay.

You can find how long the property has been for sale online, I wouldn't trust the agent.

 

[Mike8t1]

Thanks everyone for the great feedback. I will take it all on board and update this thread with the goings on
Cheers guys
Michael

 

[Mike8t1]

OK so after doing some research on price finder it seems that the past 4 sales of properties with the same land size and 3/1 configuration have been between $270k and $295k, all of which have been in the past 2mths

1 has 2 car garage
All have poorer finishes as the house I am looking at has had a cosmetic reno recently I.e floors, kitchen, bathroom tidy up etc. Nothing extravagant but neat nonetheless.
2 are high set with functional spaces downstairs

Would I be out of line asking $280k

Thanks guys
Michael