desperatehousewife

We are hoping to be in a position to make an offer on a house, being new to the market over here I was hoping for some advice.

The area we are hoping to buy in is the Gold Coast Hinterland around Mudgeeraba, the thing is if a property is on for a set price am I right in thinking that it would be usual to offer below the asking price and if so is there a kind of unofficial acceptable percentage less than the asking price that the vendor is likely to accept? For example would offers around 10% less than the asking price be common.

Obviously I realise that this would be very dependent on the area and property as well as the specific market conditions at the time but I'm just looking for an idea as I can't find any reliable sites online that show what houses have sold for like you get in the UK so if anyone could recommend any sites that would also be a great help.

The Flintstones

Sometimes the estate agents will say no to low offers, then you say "do it anyway" and then its accepted.. Property managers will break any rule to make an extra buck, so don't see why you should be go by any of their terms they make up.

Obviously its a gamble, depends on the situation and personality of the seller and the buyer, and the economy. Is this only house you've liked in the area? too low an offer may insult the owner, then put bad light on higher offers, especially if someone ends up bidding against you OR it could be accepted OR it could make higher offers more glamorous.

Whats the market data since the stimulus has been reduced? If its a big drop, you could offer 25% less and not seem so cheeky. Personally I think -15% is fine in a stagnant economy, buts this is a personal choice you must make. Unemployment is still rising and I'm sure the stimulus handouts won't last forever, but these are lagging indicators, so who knows which way the market is going, stocks are on a nice rise and these usually forecast the future but they could drop just as quick, so still limited visibility but far from the doom and gloom we had.

ABCDiamond

In my suburb, in Feb 2009, the average discounting from asking price was 8%
But now, Aug 2009 it has dropped to 5%.

In the last suburb I lived in, in NSW, it has gone from 6% to 4% in the same period.

I also looked at Double Bay in NSW, expecting their figures to be higher, being a more expensive area, and it was 15% down to 8%.

Being the average, some will be higher and some lower, but this shows the direction the market is going.

What suburb are you interested in ?

ABCDiamond

The average number of days on the market is another indicator.

The longer that properties are on the market, before sale, will indicate the chances of getting discounts.

My area has gone from 107 days to just 77.

My old NSW area has changed from 97 to 63 days.

louH

My tactic has always been to go in very very low and make it clear this is the point at which your starting your negotiations. It signals an intent and if the buyer finds that insulting well tough to be honest - its a transaction like any other. A good agent will recognize the low offer for what it is and start working with you.

If the agent messes you around or the vendor starts getting neurotic walk away. Your going to be the one lumbered with the higher mortgage if you allow them to talk you into a higher price than you need to pay.

I read a great bit of advice the other day (I think it was in the SMH) - when you start negotiations have 3 prices in mind, the lowest will be the one you would be delighted to buy at, the 2nd is the price you really belive to be market value (and you will know this from your own research) finally the last price is the premium you are willing to pay over and above your market price to secure the property. Put your offer in at price 1 (I always say the offer is on the table for 24 hours to keep the momentum going and ensure no one else skips in while I'm waiting for a reply) keep communicating with the agent and above all else remember if this one does not work out something else will turn up!

Good luck

Tooterelli

You might want to ask advice on the following website http://forum.globalhousepricecrash.com/

There is a large section about Australian housing etc and a lot of knowledge on board.

ABCDiamond

Things like this... 4 years ago.

• Sept 19, 2005 - HOUSE prices will likely stagmnate for "many years,"
• Sept 5, 2005 - THOUSANDS of home owners trapped with mortgages higher than the value of their properties.
• Aug 12, 2005 - Property boom now over

The price of salt is now 64 cents per kg. Not sure how many pinches per kg.

Tooterelli

I could pick three up to date quotes from the website - but I won't. Its a forum with lots of different views, intelligence and data which might be useful to the OP.

PS Re your second quote...there are thousands of home owners trapped with mortgages higher than the value of their properties. I'm living in one (renting it)

nigel and wendy

so am i !! .........apparently its called "negative gearing" its the "in" thing over here

ABCDiamond

The problem is that I believed them at one stage ! Sold a house, and saw it rise, as these house price crash experts got it wrong !

They have one agenda, to try to talk the market down, so they can be proved right eventually ! If I had trusted my own instincts, and not the "houseprice crash experts" I would have been better off. But then, they probably all sold also, and now need prices to come down, so they don't feel to bad.

The three "up to date quotes" that you mention will be of no use until a period of time has gone by, to prove them right or wrong.

Here are three 3009 ones:

• Sept 19, 2009 - HOUSE prices will likely stagmnate for "many years,"
• Sept 5, 2009 - THOUSANDS of home owners trapped with mortgages higher than the value of their properties.
• Aug 12, 2009 - Property boom now over

Or something similar

That was in 2005. What are there properties worth now ? have prices gone up are have they already dropped ?

In the last 4 years, since those 'experts' said the "boom is over"

Melbourne has risen 25%
Brisbane 30%
Adelaide 35%
Perth 57%
Hobart 30%
Darwin 77%
Canberra 27%

Anyone with a house back then, should have had a rise sufficient to cover a mortgage, unless they were absolutely silly with the price they paid.

So much for their "expertise"

PS: I am not saying prices will go up or down. I don't really know, unlike these "experts" who like to say that they know it all, even if they do get it wrong.

Tooterelli

1) House prices stagnating for "many years" is the absolute best outcome that can be expected (although highly improbable).
The more probable one is a huge crash. Kev has managed to stall this for the moment.

2) Thousands of home owners are trapped with mortgages higher than the value of their properties - I've just told you...I'm renting one. Nigel and Wendy (above) also are - along with thousands of other renters living relatively cheaply in overpriced property which cannot sell.

3) The property boom is over. The only people who tell you it's not are those with vested interests eg slimey estate agents.

Hoist by your own petard I think is the phrase that comes to mind.

You are the weakest link - goodbye!

ABCDiamond

Negative gearing is not where the Mortgage exceeds the property value.

Negative gearing is where the income is not sufficient to cover the mortgage repayments, rates, insurance etc and the paper losses that can be claimed to reduce tax.

eg:

$35,000 rental income
less
$25,000 Mortgage repayments
$ 2,000 other expenses

Net CASH income $8,000

less
$10,000 depreciation
leaving a tax loss of $2,000
tax rebate = $600

therefore net positive cash income = $8,600 per year, from a negatively geared property

ABCDiamond

You are conveniently forgetting the fact that they said exactly that in 2005 and it NEVER happened

You see, what you are saying is that this time it will come true, even though we wont know until later, but if it is said every year, then of course, one day it will come true.

A broken watch is dead accurate..... twice a day.

My view is that I am happy to say that I don't know what will happen, and your reaction is that I am the weakest link

But you, of course, know exactly what the future holds... with your crystal ball. I hope for your sake it works better than it did in 2005

ABCDiamond

Do you both, and all the other thousands of renters, read your landlords mail then to see what size mortgage they have ? or do your landlords happily share this info with you ?

Tooterelli

Personally, the neighbours told us. It is widely known. There are many in our "tower" who saw $$$$ before their eyes and leapt into borrowing huge amounts from the bank in order to become " a house OWNER" The reality is the bank owns the property and the couple who have the mortgage around their neck have left what was their temporary posting in Oz.: