What's a good starting offer if I know my max price?

For example, if a property is advertised at $280,000 and you've decided it's worth $260,000, what would you offer to start with?

Obviously if you start with your maximum you've got nowhere left to go, but if your offer is ridiculously low you will probably not get taken seriously.
(I know it depends how motivated the sellers are but lets just say in this example you can't find out why they are selling and the property has been on the market for whatever the average time is).

Without getting too hung up on the details, what would you offer?
 
Without getting too hung up on the details, what would you offer?

Nothing yet. The offer comes LAST after you know everything about the situation.
1. Vendor motivation for selling
2. Price is only ONE thing. Do they want a delayed settlement? or a quick settlement? i.e. they may take a lower price if you can get them their money quickly.
3. Do they want to rent-back? At below market rates?
etc. etc.

You are only thinking one dimensionally. You need to consider ALL the other stuff - once you can satisfy that, then you are in a much better position to formulate an offer.;)
 
Hmm, valid points certainly, but let me ask a different question:

Say the vendor had bought elsewhere and was very motivated to sell, they want a quick sale which you can offer them. In other words you think you can get them to discount their price a lot. Using the above example if you like, where might you start with an offer?

Or can someone share a real life example? That would be really useful.
 
a property is advertised at $280,000 and you've decided it's worth $260,000

Depends on how you derived the 260K figure. If you've done no DD and just lopped 7% off their asking price like most buyers do, then your radar and target are stuffed to begin with

Without getting too hung up on the details

In negotiating property deals, there is no such thing. The details is all there is. If you ignore the detail, you've got nothing left. Big picture people get eaten alive when it comes to property contracts, IME at least.
 
I love this....

Someone once wrote (can't recall if it was on this or another property forum) if you're not embarrassed by your offer, then it's too high!!! ;)
 
>> if you're not embarrassed by your offer, then it's too high!!!
Monopoly, that tactic would work in the buyers market but in the current climate - I find it would not be a wise thing to do.

From personal experience (looking in Northern Suburbs, Melb) I would say that agent might not take you seriously if you go that low. just my 2c. :)
 
For example, if a property is advertised at $280,000 and you've decided it's worth $260,000, what would you offer to start with?

Obviously if you start with your maximum you've got nowhere left to go, but if your offer is ridiculously low you will probably not get taken seriously.
(I know it depends how motivated the sellers are but lets just say in this example you can't find out why they are selling and the property has been on the market for whatever the average time is).

Without getting too hung up on the details, what would you offer?

That's the funny part about value,and value is what people perceive it too
be and nothing more,offer what you think is value,and don't worry what the agent thinks,her or his name is never on the "Title",the only person that knows the price is the title holder noone else,if the property is up in Cairns then they may well take your price with the way sales volumes,compared with listing and time in the market are,just learn to ask the question,and never worry what anyone thinks:) ..willair..
 
Depends on how badly you want the property :)

>> if you're not embarrassed by your offer, then it's too high!!!
Monopoly, that tactic would work in the buyers market but in the current climate - I find it would not be a wise thing to do.

From personal experience (looking in Northern Suburbs, Melb) I would say that agent might not take you seriously if you go that low. just my 2c. :)
Yes I understand what you're saying but....

It can (and does) work in ANY market, IF (and here's the key) you are prepared to walk away from the deal. If you're not, as with any haggling exercise, you better be prepared to raise the stakes.

I can (and only) do this when I don't care if I get the property. If I really want it, and am aware that there is strong competition/demand for what I have my sights set on, I will negotiate a more respectable price.

One perhaps a little less embarrassing!! :eek: ;)
 
Thanks for all the advice. I'd still really like to see some examples though! What was the asking price of your last purchase, and what did you buy it for? Feel free to add all the detail you like Props...!
 
Also, I'm just curious, will a real estate agent tell you the price a property sold for? (for example, one that you looked at a few weeks ago at an open home)

That would seem pretty good, because then I could just make phone calls and find out what prices local properties are actually selling for.
 
You can get a rp data or similar report to find recent sold properties. That's not the problem. The issue is whether, in a hot market, the 'market' price is moving so fast that people so that people are offering more because they think the market has gone up. Or vice versa.
 
I agree with alex... stuff we've been looking at is on the market for maybe a week and then gone at full price or not far off.

So going around, doing inspections, finance ready to go, having all that DD done is essential right now... so when you find the place you can go bam.

(actually its essential all the time really isnt it)
 
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Don't be (seem) desparate!

I think there are lots of things to consider.

First and foremost, DD DD DD DD!
By now you know what it means, but what does it involve, that's the question.
If you want I can send you a list of things to research and check, before you want to buy a property.

Secondly, never ever show anyone, mainly not the agent or the vendor, that you desparately want the property! ... and be prepared to walk away!
The only way to let them know thaat you are serious, you know what you are talking about (well I hope), and they can't manipulate you.
You are the one who should manipulate them!
When you walk away, you will realise that the market is full of the same properties and all of them are waiting for you.

Thirdly, there is no such thing as ridiculous offer! Yes, the agent will make you feel like it is. But, who is paying for the property and who want's to sell it?
If you do your homework, you will know what you should offer, and still go under. You loose out, so what? Next, move on.

Once I went to an open house in my neighbourhood. The agent had not even a faintest idea about any details about the property, so what do you expect he will know about the market. The prop was for auction, accorsing to the agent it will surely be sold for $ 300 - 330,000. I thought: good luck, because in the last 2 years similar properties in the area went for $ 230 - 260,000. Out of curiosity I went to the Auction. There were 5-6 couples, only 3 registered for bidding and guess what? Only one offer: $ 200,000 and that was it. The property was passed in.
About 2-3 months later it was sold on the market for ....


...... $ 243,000.

After all the $200,000 offer wasn't that ridiculous, was it?
And the same guy bought it at the end.

So just go and do your best, don't worry, be happy.

Good Luck!

Tamira


Whether you think you Can or Can't, it's always true! ;)
 
Hiya Marmalade,

I've been looking for 12 months, and unfortunately here in canberra once a place is listed it's under offer/ sold a few days later. Not a buyers market. I'm very familiar with what the market is doing, what's a fair price what isn't.

But as someone said in this thread is that it's all about value and perceived value. And as someone else said, be prepared to walk from the deal. To take the emotion out of the process.

I'm a greenie (ie officially own my first ever ppor yesterday (yay adios to renting). Have also spent 12 months becoming interested in property- reading, researching, spreadsheets etc and can't wait to start buying IPs- lots of catching up to do), but I decided to have a strategy and put it into practise.

a) We foudn a house within our budget and that we particularly liked. Out of town (ok not in the inner north we're i've spent the last 20 years)
b) called the agent at the end of COB that day after we had inspected it, went to the local council to look at files on the place. He'd left by the time I called. Left a mssage to call me back the next morning.
c) timing of calling him so late in the day was intentional. This gave me time that night to ensure he knew that we-d like to get a "conversation" going, and to strategise with my husband our approach. What do we really think the price is worth? What's the most we're prepared to go? What's the value prop? What is it about this property that we like/ don't like?
It's interesting in think-tanking these ideas aloud. We also had to shut out what OTHER people are doing (ie oh no you can't offer less than what's advertised, everyone else is offering 20k more for their properties!), and what the market is doing.
d)So we set a maximum that we were prepared to accept if it got to that case.

Place was advertised for 460k, we thought if we get it for 460k we'd be very happy, if we got it for 450k we'd be stoked. We spoke to other friends about it that night who told us we were dreaming, you can't do that, no one offers less! So my husband and I agreed that we'd enter at 440k to get the ball going ie a lipnes test of sorts to guage more info about teh vendors- worst case would be that the r/e would tell us to sod off). If we entered at 460k, then they would assume that we had an extra 20k-30k to play with.
e)We also decided to sleep on it, our strategy and how we felt about the place and see how we felt the next morning.

f) Of course the agent called me back first thing the next morning. So I put my sales startegy into practise. I can tell you that I was very nervous about this call when we first made the offer. But had nothing to loose.

We offered 440k. They came back with 450k (i couldn't believe it), we offered 445k, they insisted on 450k. We accepted at 450k. It's one thing in sales when you are dealing with other people's money (IT vendors on my end) but very nerve racking when you are doing this for the very first time and it's your money and it's about your personal life.

I accepted that I would not be going over my perceived value of the place. That business is business, and you can't be emotional about money, even if it's a home. Too many people have been entering the market and bidding 50-60k more than they intended because they didn't just stop and try to be rational. You need to have a sales strategy. So obvious, but easy to forget. All that sales training for a major corporation was completely right- PREPARE (research etc), PLAN, EXECUTE...
 
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With us, a lot of our offer depends on the conditions.
One place we offered 50 % of the price. They countered at 66%.
For the places we want Vendor Finance, we usually offer full price.

With regular finance, we know what we want to pay, so offer twice the difference and close in the middle.Example:property $130K.Offer $120K and they counter with $125K Everyone is happy.
 
Okay, sorry you wanted an example:

Property asking price: $585,000
My offer: $485,000

Outcome: rejected

3 weeks later, readvertised asking price: $569,000
My offer: $469,000

Outcome (you guessed it): rejected

6 weeks later, new readvertised asking price: $540,000
My offer (agents expected me to come in at $440,000) : $400,000

Negotiated for 3 days, finally agreed on $430,000.

Footnote: Personally, I didn't care if I got the property or not. It was very much on the smallish side, in fact, it was probably closer to a 3 bedroom unit than a house, which is why there was no way I was going to pay full price. So if they rejected it yet again, I wouldn't have cared and walked away without any regret. But they didn't, and it's now a new addition to the Monopoly family!!! :D
 
Heres my example I am hoping to nail the finance on next week:

Brisbane 3 bed on 640m sq 12 k from city centre with 2 bed granny flat built on the end.
As prop says first I found out some things:
Agent thought it was just under 600sq m
They had previously had a contract crashed at just under 450k.
They were waiting to move out into a nursing home.
House over the road similar but fully renovated went Dec 09 for 520
Rental appraisal was 460 - 490 with some point etc
RP data estimate was 476 (432 - 520)
Had a look through told the agent I could take it or leave it :p
We had a look through then waited (its true that he who rings first loses, in a quiet market anyway)
He contacted me 2 days later
First offer 405k agent would not even pass it on and told me I would get it for 435k
I told him 425k with a full 10% deposit and he wont hear from me again as that was stretching the finance (true)
Vendors refused to sign for a couple of days and then it was a done deal.
Hope this helps (although this strategy only worked because the market seems pretty flat in Brisvegas at present).
 
Heres my example I am hoping to nail the finance on next week:

Brisbane 3 bed on 640m sq 12 k from city centre with 2 bed granny flat built on the end.
As prop says first I found out some things:
Agent thought it was just under 600sq m
They had previously had a contract crashed at just under 450k.
They were waiting to move out into a nursing home.
House over the road similar but fully renovated went Dec 09 for 520
Rental appraisal was 460 - 490 with some point etc
RP data estimate was 476 (432 - 520)
Had a look through told the agent I could take it or leave it :p
We had a look through then waited (its true that he who rings first loses, in a quiet market anyway)
He contacted me 2 days later
First offer 405k agent would not even pass it on and told me I would get it for 435k
I told him 425k with a full 10% deposit and he wont hear from me again as that was stretching the finance (true)
Vendors refused to sign for a couple of days and then it was a done deal.
Hope this helps (although this strategy only worked because the market seems pretty flat in Brisvegas at present).

Well done,good size block,very good area,i just hope you made sure that all the work was passed by the BCC on the extra flat,at least if you start low you work your way up,but if you come in high you have nowhere to go but up,funny how the re did not even know the block size..good luck willair.
 
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