MeinMel

I admit this is probably silly question however as this is the first time I am looking into buying a property I just want to ensure I cover everything I can and get the best deal I can.

My question is how do you estimate value of the property in this sellers market?

I found a 2 bedroom unit in a complex of 31 mostly 2 bedroom single level units relatively close to Perth CBD. The property is advertised for $430k and similar property in same complex was advertised in May for $448k and sold for $425k( this property seemed to have had a bamboo flooring and outside covered patio) so I'd assume slightly more value.

How do I approach the offer, do I go with advertised price - 5% as it seemed to have been the case with the other property? This would mean an offer of $409k.

There are potentially other 3 parties that were viewing the property so really not sure how this works. Do I just offer $409k and see if anyone offered more and take it from there or should I offer straightaway $429k?

I'd be interested to hear from others how did you negotiate and secured a property.

Thanks

coldbeer

Depending on the market start low, you say its a sellers market, still 5% under asking sounds a little high to me. Once offered 20% below ask, which was rejected, we moved on and it eventually sold for what we offered. We ended up buying a different place for 15% below ask. THAT was a buyers market though, I'd have no problem starting 10% below. Asking prices alone are no real guide to value.

What makes a big difference is the strength of your contract, are you subject to finance? Can you offer to settle quickly, both these have a big impact on your bargaining power, also be very careful with building inspectors, not all are thorough (to say the least).

In terms of the other parties, its entirely up to the seller, do you know the other parties are in a position to buy without big finance requirements?

Jilliebee

A house is worth what someone is prepared to pay for it. Would you be happy paying the full asking price?

In saying that I'd always go in low. You can always come up. Once an offer is in, the estate agent might also,give you some indication of where that offer sits in the vendor's expectations. Good luck x

KJCherokee

When buying a unit, make sure you know what the strata corporation rules and fees are.

As coldbeer said, if you are a cash buyer and can sign an unconditional contract (except for the building and pest inspection condition) you are in a better negotiating position. But don't let your heart rule your head unless you plan to stay there for the next 10-20 years - and bear in mind that it is very difficult if not impossible to add value to a unit by extensions and major renovations.

Any property is only worth what someone is prepared to pay for it. If you are prepared to pay $400k and no-one offers more, then that is what the unit is worth.

spottydog

You need to research what similar properties in the area have sold for and base your decision on that. It could be that the seller is trying their luck and its worth 20% less, it could be that they are right on the mark or it could be they are under quoting and will receive offers over this amount, only your investigations and local market knowledge can help you assess this.

If you are in a position to offer unconditionally that will always put you in a stronger position than someone who needs finance or any inspections done.

KJCherokee

Don't ever consider buying a house in Australia without having at least a pest inspection report done - termites are a problem everywhere. Signing a contract conditional on pest and building inspection isn't a problem - after all the vendor presumably knows that it should be OK! It's finance conditions that vendors don't like.

spottydog

Agree about the inspection but putting a pest inspection in means it isn't an unconditional contract. In the current market as a vendor I would probably say fully unconditional or it's not unconditional (especially given how vague pest inspections are if they don't find any).

phat-dave

i'd be starting negotiations at $380

MeinMel

Cheers, appreciate all the info. We said we were going to offer 399k and we were told they only accept offers over 429k. Well, I decided it is not worth the money at this point so we stopped there. We are still waiting for minutes of strata meeting we requested.