herrchook

Guys, I have a few questions about bidding on property....

If a house is on at a certain price e.g. $350,000 or $500,000 etc. is that the price the want and nothing else - like a fixed price? Is it acceptable to offer less?

Also, when a house is on at a specific range e.g. $400,000 - $420,000 again, is it acceptable to offer less or does the ea just laugh it off.

Finally, what typically below the price is an acceptable offer - don't want to be offending vendors. This house buying mularky is great fun but we've always bought off plan in the past so buying established homes and bidding is all new to us.

asprilla

There are no hard&fast rules such as "offer 5% less than asking price". You have to do your research and determine what is a fair price for the property...then pay no more than that.

That could mean you offer 40% less than the asking price...or perhaps you have found a real bargain, so you offer 10% more!!

Just remember that the asking price, is merely the price that the estate agent believes it "might" be possible, to sell the property at. It is NOT the value of the property. Same story in the UK.

I've read dozens of threads here where people say things like "we've had our house on the market for 12months, its worth £300k, we're not accepting anything less". Problem is, if the market believes the house is only worth £250k, then you're in a spot of bother...

The Bloke

It's called "bargaining". You offer, they counter offer, you counter-counter offer etc etc, until you arrive at an argreeable price. Let the agent do the legwork, as they are the one's getting the commission from the sale. It all depends on how much they want to sell as to whether the budge from the price or how much you want to buy.

renth

It all depends on where you are in your particular city's market cycle.

If it's flat then you can offer well below the asking price, don't worry about "offending" the owners. You might not get it at that price but it marks your baseline for negotiations.

If, however your local market is in "boom" then you may well have to offer over the asking price to secure the property.

update - just cheking on the Jenman web site national property report is says Melbourne has never experienced a boom year (where prices rise 25-35%) so in Melbourne you might get away with offering the asking price or close to it if the market is rising.

asprilla

But also, it depends on the individual property. The majority of sellers put their properties up for sale at prices slightly above the market value, in the hope that they can get a slightly better sale price than average..... and that is the reason why most people put in lower bids (to bargain back towards market value)

renth

To a certain extent yes but, as always, it pays to really study the market in to which you are buying.

briwi

Don't forget the lovely trait that estate agents have here where if there are two people interested in a property, they will call the other party and suggest they put in an offer slightly higher than yours which then starts a mini auction! A house I looked at recently was listed at 710,000 - went for 770,000 as they did exactly that with five diferent buyers

Or the estate agent that tells you they've done this and have a higher offer - when they have no other offers at all. I hate the property system here - can you tell!!!!

Personally, I would start low and see what happens - the vendor can only say no, and if the EA is playing games at least you're not starting super high.

AndyR1976

Also, be aware that over the past decade there has been such a property boom that proices have been set at well over what they are worth because the market was moving so quickly....

Example:

Average 4 bed houses in a certain area are selling at, say $400,000, but they have increased from an average of $300,000 over the past 3-4 years.

An agent will list a propety at $450,000 (when he knows its only worth $400,000) because he knows that the market is moving so quickly that eventually someone will buy it at the asking (or hear to).

In my local area at the moment the house prices have done stagnant, people who have listing prices of $450,000 are now reducing them to $420,000.....

If I was buying (depending on the area) I would defo offer less than the asking - after all, you can INCREASE your offer later, you can't really reduce it!!

Also, when offering a lower price, do your research.....stand in front of the agent and when he says 'its worth $400K' (or whatever) be able to say....

"well, actually, the average 4 bed house in this suburb has been seling for aroun $375K, plus there are some that have better views, with larger garages and in better condition for less than $390,000"

Makje sure you let him know that you are not an idiot and have done your research - many agents think they know everything about hte property market - but when you hit them up with some facts and they realise you have done your research (and that they can't bullsh*t you) then it puts you in a better position.....

I used to work for local Council's as a senior planner......I'd wait until the agent gave me the speal about how good the area was, that the COuncil was proposing this that and the other etc etc....then present my business card with my contact details....some agents just BULL$HIT then you've got them on the backfoot when you can prove them wrong...

AndyR1976

I think you need to be willing to walk away....even if you think its that dream home....offer X amount......perhaps have up your sleeve that you will go to X + $10K.........after that say to the agent, thanks but no thanks........avoids their dirty games....just set what YOU are happy to pay and leave it up to them!

bridie

Offer what you think the house is worth (usually under the asking price) and work up from there - like someone else said, it's offer, counter offer and somewhere along the line hopefully you come to an agreement.

Good luck

@boy

Certainly depends on the city and the location and the current cycle in the market.
If you are looking at Melbourne, anywhere in the Eastern suburbs inside the 20-25km mark, then as a rule of thumb if you see the price range is from x to y, then add 10% to the upper (y) figure as a realistic figure of what you may have to pay, due to the demand of the area.

Don't know what it is like on the outer fringes or as you head more West, but that still seems to be the trend here (NE suburbs anyway).

You can always pitch something much lower. Can't hurt to try, but usually the agent will let you know if they feel it is a complete waste of time, although if you know for a fact that the market is in your favour in a particular area then they are obliged by law to pass on your offer to the seller.

herrchook

Thanks for all the advice everyone. Will take it all on board and hopefully have something to call our own soon (well, within a few months lol).

Gill

renth

You can also buy a report from the www.realestate.com.au web site of actual prices paid for houses in the area in the past few months.

Vanessa

You are more likely to be able to barter on a house that is up for Private Sale ie a fixed price than you are a property that is due to go to Auction. As far as I am aware the price range the agents quote on auction properties can only have a 10% margin between the two prices (here in Victoria).

renth

You mean swap something other than money for the house?

Sorry, a pet hate of mine is people who don't know what barter means :curse:

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