We are in market currently looking for 2nd property buy and use current property as IP.
but after discussion with few estate agents during property appraisal, what i found that they are basically trying to start pricing bit higher than expected price. for example, if they reckon my current property is around 450K, so they will advertise it in market for 480K. OK, now this sounds good when you are going to sell, but it made me realy confused how to make an offer on property to purchase.
is this a normal practice these days by estate agents? i liked couple of properties, but when i tried to negotiate price with estate agents, they are absolutly not ready to reduce anything at all. what exactly i'm missing here, please help, thanks.
btw current and prospective properties are in melbourne northern suburbs.
Hi Orica,
I've found real estate agents in different states have subtle differences in culture and practise.
I'm also based in Melbourne.Historically, Melbourne R/E agents tend to underquote for auction houses by as much as 20-25%. Personally, I think some agents are worse than the others. I won’t name names, but think YELLOW! The main reason is, they would like to attract as many potential buyers as possible, which is always beneficial to the vendor in a competitive bidding situation.However, my experience is, real estate will overquote in a private sales listing. They expect buyers to negotiate and haggle. However, please keep in mind that we’re in a seller’s market at the moment in Melbourne (personal opinion) . There is a shortage of supply, which is explained by the high auction clearance rate week after week (over 80%). The high demand can influence Real Estate Agent’s expectation of reasonable pricing.
Is it just me?! But I find that there’s always a “magical” interest party popping up as soon as you put in a private bid?!?
I’m not sure if you are aware, but recently real estate agents have been under investigation regarding their dishonest and unconscionable underquoting conduct.
Related article can be found:
http://www.news.com.au/business/money/story/0,,25851463-5013951,00.htmlSince the investigation, a lot of real estate agents are reluctant in putting up or discussing prices anymore, especially for auction listings. To be fair, however, the current climate (demand outstrips supply) makes price estimate a little bit more difficult. (But still no excuse for experience RE – sorry if i’ve offended any RE agent out there
)I know it doesn’t really help you when you are getting frustrated negotiating with the RE agent, but my advice is, don’t over stretch!! The interest rate is at historical low, RBA has already indicated with the currently steady unemployment rate, the only way IR can go, is north. But you probably already know that.
There are still attractive properties in the North and West, but quickly catching up with the first home buyers driving up demands. (not implying you should rush though)
Good luck – let us know how you go!
KennyThere are many different thoughts here: firstly – offers over means just that $X+, some agents try to get increased interest advertising the price a little lower than the owners expectation
Secondly – $X means $X-, ie start high and negotiate (downwards) on the belief that you can't drag the buyer up past the offering figure.You would expect to pick a place up within 10-20% of the stated amount however at auction it may be wildly more as FHB may be more competitive than normal
thanks guys for your feedback on this topic.
Kennyjaiz, totaly agree with you, it still seems like seller's market in melbourne. and on top of that S/E are so unpredictable. i called same guy for same property 3 times on different days to find out asking price, and everytime he quotes me totally different range.
Call 1: 460-490
Call 2: 440-450
Call 3: 450-460how about that, same guy, same property.
in my area most of properties below 380K are very hot at the moment, but everything above 420 mark is sitting there now for more than 3 months. which means FHO are not able to target that range or something else……
IP Freely: i'm only focusing private sales, and trying to avoid auctions and SEALED BIDS (i hate most). and so far i reckon if i make offer 20k below asking price S/E is not actualy taking my offer to vendor and just making up stories that vendor has rejected my offer. any other tips………..
Orica, the agent is obliged to advise the client of any bid unless they have been given specific direction with regards to bids below $X. Put the offer in writing, put an expiry date/time and any conditions you are making the offer conditional upon. This will show you are more than on a fishing trip.
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