gandeandboys

Hi All.

Has been a while since I have posted here. But really glad this community is still going strong.

So after 2 years in NZ we have decided to commit and buy a property. We put in a offer today that was 10% less then the asking price and the estate agent told me that it was an insulting offer.

I am interested in hearing others experiences on buying a property and how the negotiation's went

To me this would be a standard starting position to negotiate from but it seems here they are not used to agressive negotiations. But in the same way are not forth coming with guidance on what they would accept.....

any thoughts?

Robbie2010

Doesn't matter what the agent thinks ... you offer what its worth to you and can afford.
10% below asking price is not insulting and as far as I remember all offers have to be passed to the vendor.
Whatever happens do not trust the agent and take whatever they say with a pinch of salt.

bearskin

This, absolutely.
They are only in it for themselves. Higher the selling price, higher their own pay-out.

MrsFychan

not exactly true as you are unaware of the contract that the seller has with the agent, it could well be a fixed fee.

MrsFychan

ok, negotiations over here a different from the UK. It may not lead you into a to and fro negotiation as the agent may not see your offer as genuine and may advise the seller of that. Also dependant on where you are looking and the circumstances of the sale (how long on market, what other conditions you put in etc) it may well be insulting to the seller, but as said the agent has to put it through and you should receive feedback. As a previous seller who got ridiculous offers I told the agents I would not sell to them even if that offered the asking price as I did not believe that they had the capability of completing the sale, so counter offered 20K above the asking price just to show them how ridiculous their offer was.

Can I ask on what grounds you offer price came from?, had you looked at other sales in the area and priced accordingly?, did you give reasons for your offer?

bearskin

True.
But if they had a fixed fee arrangement the agent might not be so sniffy about the offer?

MrsFychan

yes but its not the agent that agrees to the offer its the sellers and as already stated they have to submit offers for consideration

chc4me

Those are sensible comments right there! Property agents can be helpful to both the purchaser and the seller, so try to work with them (they can make or break a deal). Hope it works out for you.

mikemike

Must admit I have found the real estate sales process a minefield. very few vendors seem to want to price their asset . Yet they get sniffy if a potential buyer does just that. !!

Negotiation
Tender
Deadline sale
Auction
Asking price....last on the list.

There is nothing to stop you cutting out an agent by going direct to the vendor?? or is that illegal as opposed to agents just not liking it. Cutting out the agents saves the vendor, so a 10% reduced offer is not way out of line. Unless of course you are an agent.

gandeandboys

Thank you for all your reply's. All very halpful. to respond to a few questions:

My offer was based on the market conditions and other comparable properties in the market. I did explain how I came up with the offer to the agent.

I agree with the comment around vendors not wanting to price there assets. I also mentioned this to the agent saying that how am I supposed to know where the vendors are at and putting in thus offer will let me gauge that.

anyway let's see. I m about to sit down with the agent now. Will keep you posted on what happens

MrsFychan

If a seller takes on an agent they cannot simply "cut out the agent". You will see that at open homes the agent will obtain viewers names and addresses, this stops anyone bypassing the signed agreement and make a private offer. If someone does goes direct to the seller and a agent can prove that they buyer viewed whilst under the agents contract the seller will still be liable to pay the commission, so really not in the seller interest to do so

escapedtonz

Ah don't listen to the agents whining. They're greedy bar stewards.
An offer of 10% below the asking price is perfectly sensible and a good starting point for negotiations. Under the terms of the contract between the agent and the vendor, the vendor cannot quietly sell behind the agents back. That would be a breach of contract and once the agent becomes aware (and they most certainly would) you'd be stung for the sellers fee plus a penalty most likely.
We did very similar when we offered on a property a few years ago. 10% off the asking price and gave a number of credible reasons why, which were all accepted by the agent and the vendor at the time. In the end we couldn't come to an agreement on price. Simple as that. The vendor had lived there years, spent a lot on refurbishment, had a lot of time and money invested but not they type of investment that lifted it's value above the market value and our offer. Glad to say it took them months and months to sell it after we walked away.
Remember, an agent works for the vendor and themselves.....period!!! You will be very hard pressed to get any advice or assistance in the process from the vendors agent. It is their job to get the best price possible for the property within the constraints placed on them by the vendor. Unlikely to be a fixed fee sale as selling at a % commission is just too lucrative these days.
All offers must be made in writing on a Sale & Purchase Agreement document which includes the list of conditions of sale (e.g. subject to a satisfactory home inspection, subject to finance, subject to getting property insurance...whatever you want in there basically, however the more conditions the less likely the vendor will agree the sale). Once you have completed this document, dated/signed and each page initialled and handed to the agent, they MUST present it to the vendor. If that Sale & Purchase Agreement is accepted by the vendor then it becomes a legally binding contract subject to the agreed conditions....this is where you become conditional. Once the conditions are met then this is when you become unconditional.
If the Sale & Purchase Agreement is not accepted you can then enter in to negotiations or the vendor could make a counter offer etc and as such the Sale & Purchase Agreement just gets altered as you go through the process and after each alteration is presented to the vendor again and hopefully at some point you come to an agreement and the contract becomes conditional.
Just because of the process there should never be any feeling from the agent or vendor that the potential buyer isn't being serious no matter what the Sale & Purchase Agreement states. The buyer is completing a potentially legally binding contract to part with hundreds of thousands of $$$$....of course they're gonna be serious. That Sale & Purchase Agreement should also be completed by the potential buyer in conjunction with their own solicitor as they know the correct legal terms to use to cover all bases so to speak and ensure there's a legal loophole or two for the buyer to get out of the contract fast should they need to....we've done a few on property and land here.

Good luck.

Baz036

I would say it is a good starting point so not a problem.

One point that has served me well in the past, when we put in a 'cheeky' offer as it was described, was to wait and see if the vendors counter offered.

You see where they came in at showing their thoughts on where they put the value of their property. Once this has been tabled we were advised there is nothing wrong with just re-tendering our original offer. It was described to us as keeping the contract 'alive' and showing that you are still interested but not anywhere near their counter. We ended up offering the same offer four times as the vendor came down 120K in stages, with us finally upping our offer by 5k which was accepted. Obviously depends on many variables but worth considering.

Justcol

I got my first house for and my current house for around 80% of the asking price

Regardless of how friendly an agent may seem, they are always going for the most they can get for the seller....not the buyer.

My response to your agents comment would have been, ok then, goodbye !!

gandeandboys

So....second day of negotiations and the vendors have dropped a small amount but seems that they are not willing to engage in a negotiation. Looks like we will be passing on this one but has been good practice and really appreciate all your comments.