Am looking at some guidance on tactics and strategies for purchasing properties. I have very little experience in the process of negotiation and would like to bounce some ideas off forum members to give me a sanity check that I’m not living in la la land.
I have a property that I am considering making an offer on. It is currently advertised as ” offers above $x”.
In a brief conversation with the agent at the open house last weekend, when I asked “what does offers above $x actually mean?” he said “the vendor wants a number with an “x” in front of it. last week we received an offer of mid $”y” and this was rejected by the vendor. if you gave me something to work with in region of “x-20k” there could be some room to move. “
This property has been on the market for the 4 weeks I have been looking in this suburb. I think it may have been on the market longer. It is currently tenanted and the agent told me the lease ends shortly. On the basis of my research, “mid y” is about the value I think it is currently worth. But I think the lower end of the “mid y” range.
I think the supposed rejected mid y offer is a fallacy with a view to building the expectation in my head that I would have to make an offer higher than that to get the vendor interested.
The strategy I am considering is as follows:
1. Press the agent to “name the asking price” as opposed to tell me the bull<edited> “offers above x” line.
2. Dependent upon the response, make an offer in the low range of “mid y”. I have a series of justifications based on comparable prices in the same and surrounding streets. Even if he laughs at me, I intend to insist that he put the offer to the vendor. Is the agent obliged to do this?
3. Await the vendor’s response and possible counter offer.
4. I am prepared to increase by offer by 5-10K. If this counter-counter offer is not accepted, I will tell the agent I am walking away.
Is pressing the agent to nominate the asking price in this manner a usual tactic. The way I look at it is, they are the ones selling, they should name their price!Any links to websites with helpful tips for buyers would be appreciated!
Hi Da Man,
Stick to your guns – it soounds as if you have done your research. Step 2 is very solid – and submit your offer and include a ‘time clause’ on your offer. That is the offer expires in XX hours or at 4 pm on May 6th (whatever) – you may also want to include a final comment along the lines that this is an absolute deadline as I am looking at another property elsewhere.
This way you put pressure back onto the agent (and the vendor) who have to sell this property in order to get their windfall. On the other hand you have the capacity to ‘walk’ and buy something else.
You may also want to read this thread
https://www.propertyinvesting.com/forum/topic/23464.htmlI also suggest a search of the forum. The search button is located under the forums tag at the top of the page.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113I love those offers over “X” listings!
What they mean is the Vendor is willing to accept “X” and has asked the agent to list it for “X”. The agent duly does so and then runs with it listed in this manner in the hope of overachieving for the Vendor. This boosts their egos, the prices in the area, their commission and sometimes the Vendors Referrals.
Ignore that, offer the amount you believe the property is really worth. Does it need – New Kitchen, Bathroom(s), Floor Coverings, Paint, Fencing, Guttering etc???
Now the hard part – Put your offer in writing. Ensure you also MAIL a copy of your written offer to the Vendor. You can decide wether or not to inform the agent you have done this. Just don’t take at face value the rejection. It may well be the agent rejecting the offer.
Oh and to answer your other question: YES!!! That is exactly what the agent is hoping to achieve by doing this. It ups your offer price and increases his chances of earning more commission. IGNORE IT!
Good Luck…
Stuart Milne
Non-Conforming Specialist
READY Mortgages
http://www.readymortgages.com.au
[email protected]
Mob: 0404 056 055Hi,
Information is power. I recommend to run through the set of questions in the “agent conversation record” template in Folder 3. I did this before making an offer last Friday on a property. I probed for info from the agent using the questions, and based on the answers ended up saving $8k on what I was willing to pay without low-balling the vendor.
The property was on for $273k , with an orignal listing of $299k. It had been on for a while. What I found from running through these questions was:
– the property was listed for $25k less than another in the same street in worse condition becasue the vendor was wanting to move to Coffs Harbour to be with family
– the vendor rejected an offer above $273k because the terms were for a long settlement
– the vendor had previously accepted an offer at $265k with standard settlement, but finance fell through.Based on this info I offered $265k with 6 week settlement to meet the vendor’s needs. When the vendor countered with $269k, I stood firm and told the agent this was a win for the vendor only, as he got his terms and a higher price than previously accepted. My counter offer was again $265k with 6 week settlement OR $269k with 4 month settlement. $265k was accpeted the next day.
If you can gather information about the vendor’s situation and other similar properties in the area, you will be in abetter position to evaluate what is going on. It could be that the vendor is just testing the market, and if they happen to get a great offer they will sell.
Regards, Andrew.
Hi again,
My apologies. I thought I was in a RESULTS forum. Essentially, the set of questions I referred to are aimed at gathering information as to why the vendor is selling, how they came up with the listing price, what are the vendors needs (eg quick settlement, a specific price, quick cash and hence large deposit, etc).
The aim is to gather enough information to allow you to make an educate decision as to whether to persue the deal, and if so try and tailor you offer to the needs of the vendor.
Regards, Andrew.
An update!
Same agent calls me to change the booking time for another property he is showing me later this week.
He then talks about the one I’m interested in (with no prompting from me). I feigned to forget which property it was as I have seen so many. [biggrin] Anyways, so he tells me that there has ben “an update on that one”. He said “the tenants have given their notice to vacate and will be out of there by June. No would be a good time to make an offer if you want to move in now, otherwise we are going to have to put it up for rent soon.” he then said we have had a few offers “In the low y’s” – when last week he told me there was an offer in the mid y’s which was rejected.
The way I read this – the owner is committed elsewhere and needs to sell by 30 June ideally. The mid “y” offers are a nonsense.
I am going to get a copy of the contract and a building inspection report and then likely make an offer of low y.
Would be grateful for any tips on what I can read into this or possibel tactics.
One strategy (as against a tactic) is to remain in constant discussion with the agent.
A major item for action at all times is to be known by the agents where you want to invest. Maybe they will call you when something is about to be listed, rather than after it is listed.Being a nuisance, but a NICE nuisance is a major negotiating tool. It builds credibility, trust, and even desparation for the agent if the week has not been very good.
Staying in constant communication is VITAL.
I run a new car dealership, and if a customer comes back more than 3 times, he will buy something – my goal is to have him buy from me. Same applies to any negotiated del, real estate included.Make the agent Want To Help You.
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