Hi All,
I'm a 24 year old guy about to submit an offer for my first investment property.
The relevant facts are as follows: The advertised price was between 185 – 200k. The property goes to auction on 9/2/2008 (this coming Saturday). The agent has indicated that the property will most likely sell before auction as he received an offer of $210k.
Now my question is what should I do in this situation? The suburb is Footscray and the market has been pretty hot. What sort of counter offer should I make? I have requested from the agent to send me a scanned copy of the offer.
Any help would be most appreciated.
Thanks in advance
Kris.
Is the $210 offer unconditional?
If it isn't then you could make an unconditional offer of $205k, and maybe a shorter settlement – 30 or 60 days.
Of course; you would want to make sure you CAN go unconditional when you offer.
But as this is an IP, there should be no emotion involved in your offers; the numbers need to work for YOU, and if the offer you need to make goes higher than that, then no deal.
The other problem is that in a hot market, a lot of auctions will go higher that the asking price as the emotional owner/occupiers fight over the properties. Don't get caught up in all that. Make a profit when you buy.
Do your research, know your values, stick to the numbers.
Thanks for your response Marc.
I have just spoken with the agent who does not want to send me a copy of his offer of $210k. This is making wonder if it actually exists, particularly because he was stuttering and coughing…Of course he is not obligated to send it..
What would you make of this (if anything)?
Kris,
I would make an offer that you feel you can make money on and not regret. If the figures say you will make money at 215 and you offer 205, are you going to regret it if you don't get it. If the figures say you will make money at a max of 195, then offer 195 and you have lost nothing if you don;t get it. Good luck.
JLI smell a rat.
If it is an Auction, why does it have an advertised price or range ($185 – $200)? In Queensland this type of advertising is illegal and called baiting.
If he is telling you that he has an offer of $210K, whats to stop him going back to the first offerer and telling them what you offer? You are heading for a Dutch Auction and my advice is to keep away.On the other hand, if you really want the property and have done enough research to feel comfortable with the price that you are paying. then make that offer. Just because someone else is prepared to offer $210K, it does not mean that the property is necessarily worth that amount – it would have to be viewed along with all conditions on the contract.
Is the property a studio or one bedroom unit?
Jon
Jon is correct.
As well as this, the problem now is, there is a bit of interest between you and the (supposed) other purchaser.
If this is true, then the Vendor is possibly thinking; "gee; with all this interest, I would be mad to accept an offer before the auction".
So, are you gunna spend more valuable time working on a property that may go way higher than you want to spend, or look elsewhere?
I agree with Jon
When advertising auctions, in Queensland, it is illegal to have any monetary indication of price… About the only thing that and agent can do to indicate price is to provide a current market analysis (CMA) to prospective Buyers…
We often sell prior to auction, but many Sellers will stick to the auction if there is lots of interest as they will get better terms.
Have you done a B&P on the property? If so, make your offer cash unconditional if possible… Shorter settlement would probably help.
Most agents should suggest that the Seller take the $205 cash unconditional over an offer of $210 with conditions…
My 2c
Matt
Thanks for your responses guys. It was great to hear other peoples points of views on the matter.
Just answering some of the above questions:
Jon: The property is a 2 bedroom unit located 7km from Melbourne CBDI've been looking at 3 other properties so this is just one of a handful that I've short listed. Although its the one that I believe will have the greatest capital growth as its close schools, shopping centres, transport etc etc…
What would be the best way to get the agent to validate that the offers on the property are true?
I have since made an offer of $191,000 on the property. He has advised me that he has received another offer of $213,000 and is trying the threaten that the property will sell for that amount.
Kris07.
If I put a two bedroom unit up for sale 7klm from Brisbane CBD with a list price of $200K, I would literally be killed in the rush. There is no such animal up here. I recently sold a two bedroom unit in Toowong for $260,000 and had over 400 enquiries of the internet.
All that doesn't help you, but it sure blows me away. Now as to your situation. You say that this unit is only one of a handful that you have short listed, however the fact that you have placed an offer on this one tells me that this is the one that you like for one reason or another. My question to you is. How much better than the next best is this one? How much more are you prepared to pay for it? Unlike many on this site, I don't believe that the profit is necessarily made in the purchase but more in the sale after the purchase. The fact is if you are still looking for a property in 6 months and property is going up at 10% year, you have just lost $10,000 – is $5,000 too much now, too much then?
Good luck
Jon2 bedroom apartments in Footscray for around $200k are a dime a dozen-still a very low socio economic area-though if you are happy to sit on it for a while would be o.k
I say put in your offer what you think is reasonable / good price and if it doesn't get accepted move on.
Don't get emotionally attached man…
Thanks for the responses guys. The property sold yesterday for $215,000 so the offers were real.
Unfortunately I'll have to deal with the same agent again as my second prefered property is with the same agent!
Sorry to hear that you missed out Kris as you obviously liked this property. The question is, in hindsight, was it worth $215K? would you have been prepared to pay that amount? If the truthfull answer to both questions is yes, then learn from the experience. Perhaps not all agents are full of s!!t and you have to learn to trust your instinct.
Before someone chimes in and says, don't worry, there will always be another one, let me suggest that if it takes another couple of months to find it, and property is rising at 10%, then it has just cost you around $3,500.
I hope you have better luck with the next one.
Jon
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