Good morning,
Today I am thinking about the making offers system. At least thats what I call it.
I have set my purchasing criteria and determined the price that works for me. My problem being everyone in my target area seems to want approx 60k – 100k more than my buying price, but thats okay cause not alot is selling, prices are coming back and every now and then a property sells at auction for an absolute bargain. (just not the auctions I'm at obviously).
I have read and listened to a whole lot of differing techniques and one that I think works for me right now is the 'put in lots and lots of low ball offers' someones got to eventually say yes right (I think so).
So I am getting ready to get to ball rolling and will have a little time up my sleeve soon, so am keen to get offering!
I was hoping that you may be able to offer me some tips and or cautionery tales…..
I want to purchase a house for approx $240k. Most properties are on market at $300 although some starting to come into more 285 – 290 range. I have spoken with a few local agents and they tell me that my criteria does not fit, no returns available like i want etc… Obviously or everyone would have brought them! I want to flush out the desperate seller. (sometimes I think agents spent too much time determining what the seller wants not what they need).
So when it come to making offers do I go to these agents that do not believe in what I am trying to do? Do I pick one agent and ride them or work with each individual agent that has the listing? How do I make sure they present my offer?
Should I be trying to contact the owners direct (could get messy with agency agreements and the like). Do I get a blank contract of the net and fill it in and take to agent with a letter to the seller or do I just tell the agent what I want to offer and trust they will present in writing? I am not feeling very confident that agents will help me get the deal I want, particularly as it is their legal duty to get the best price for the seller. (there are no buyers agents in my town).What if I send out a bunch of offers i.e. I offer 4 properties the $240 I want to pay and its my lucky day they say yes, by they I mean what if more than one says yes. would I be obligated to purchase and as such I should make one offer at a time or do I just then get to choose which one I want.
all help welcomed and appreciated
You've got 2 options – review your budget to what the market is saying (yes agents do work for the owners so are going to push you away with ridiculously low offers) or get serious. Find a property which IS overpriced at $300k, has been on the market for a while, you have sussed out weeks ago (and has failed at auction/had better offers or yours previously rejected) and it is still sitting there. Then put in your offer complete with executed contract & waiver – if it is old stock you might get lucky, especially if they want a pre-Christmas sale.
Thanks Scott. I dont mean to sound like a fool. You see my pricing I feel is alot closer to the real market value that the current asking prices.
The majority of properies in the areas I am looking have been on market in excess of 100 days (some in excess of 12 months). They have often been listed with one agency and then changed to another and sometimes another. They have often had a couple of price drops but still no real interest. It is a common belief (even amongst the agents) that these couple of areas have been overinflated. They surround a key area and pices rose dramatically throughout the late 2006 – early 2009 as everyone was of the belief prices would continue to skyrocket (I'm talking 20% per year type stuff). But the GFC happened and QLD property seemed to take a hard hit. Property in the key area I mention has come back 20-30% but in the areas I am watching (near by) this is not so as yet. It is my belief that the sellers will soon need to accept the situation and also bring back their pricing expectations.
The way I see it, I can wait for that to happen, or I can be a bit more pro-active and get out there and make offers. I was talking to a seller in that area the other day (collegue) she not know I looking, she says she has home on market for $310. She would happily take $285 but she has had no offers at all (due to this she is not reducing the price) go figure? Now If she had to sell quickly I am sure she would need to consider my $240 offer.
Am I wrong?
Hi Intrigue,
your not wrong but half the problem is that many of your potential Vendors are no doubt mortgaged to +90% therefore your low-ball offers are well below a break even price!! This may be the case for your friend and @240 may be below what she owes on the place!
I would include in my criteria (along with your own points) houses that have ederly vendors. They more than likely own it freehold and therefore may be open to low-ball offers because their not trying to fund an eloborate lifestyle or discharge a 97% low doc mortgage.
I might be wrong here, but does that make sense?
regards,
Dave
Good luck with your offers I don’t think anyone would take $60,000+ off there home as they probably owe more then 240k or have there own money tied up in the place.
only 2 real choices in this situation letter drop in unadvertised houses not listed for sale or maybe private sale although I find a lot of private sellers have high expectations. or engage the services of a buyers agent they are well worth the fee.
I completely understand what is being said here and have done some homework. RPdata is a pretty fantastic tool. From this I can find out what the property was purhased for and when. One property I am looking at was purchased for $95k in 1999. It is currently listed at $330k. I understand that these sellers have since heavily invested in commercial property and would like out of residential investments.
On one hand I say yay.. If I purchased for $240k they would still have made 2.5 times their money in 11years – Thats not bad.
On the other hand its costing them nothing to hold it, in fact they would be earning a good income from it, so not real urgency to sell. (that said realising a profit can be nice motivation).When I first started thinking that my offers were going to be about $60k under asking price, I thought who am I kidding. Since then I have stumbled upon deals being done that are very similar – so my thoughts of it being impossible have turned to it could be possible, if I'm smart enough and find the right property. One property in this area sold for $205k, where was I that day.. dou
What is a buyers agent going to do that I can't?
How many houses do you buy from agents per month? How many does a buyers agent buy? There is your answer. Agents know buyers agents buy lots of property, albeit on behalf of their clients. So of course they are going to receive the call before you do, because they are in a position to move more sales than you are.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
But there arent any buyers agents in my area, so there isnt anyone that buys several properties a month on behalf of clients.
But I get the picture – I'm a dill. At least I put my ideas out there and am learning.. thanks for the patience and contributions
Intrigue, you say $205k a bargain! Not if it was a transfer between related parties eg division of assets or divorce etc. A little information is a dangerous thing, too little information is even more so.
Intrigue wrote:I completely understand what is being said here and have done some homework. RPdata is a pretty fantastic tool. From this I can find out what the property was purhased for and when. One property I am looking at was purchased for $95k in 1999. It is currently listed at $330k. I understand that these sellers have since heavily invested in commercial property and would like out of residential investments.On one hand I say yay.. If I purchased for $240k they would still have made 2.5 times their money in 11years – Thats not bad.
On the other hand its costing them nothing to hold it, in fact they would be earning a good income from it, so not real urgency to sell. (that said realising a profit can be nice motivation).When I first started thinking that my offers were going to be about $60k under asking price, I thought who am I kidding. Since then I have stumbled upon deals being done that are very similar – so my thoughts of it being impossible have turned to it could be possible, if I'm smart enough and find the right property. One property in this area sold for $205k, where was I that day.. dou
What is a buyers agent going to do that I can't?
Hi, Intrigue:
May I know how to get RP data tool? That is very useful.
You will need to contact RP Data for a subscription.
I think it is rare that people would drop $65K+ but not totally unrealistic, I spoke to a lady this week who is trying to sell her elderly mother’s home. The mother has gone into an aged care facility and the lady just wants the house to sell soon. She said it was $345K but they dropped it to $295K over the weekend because 1. they want it sold and 2. they thought they’d get more interest by dropping it below $300K, some people may have had $300K as their ceiling. It isn’t in our price range or I may have thought it worth looking it. So it’s not unheard of but definitely rare.
If I was putting in multiple offers I’d be concerned in case more than one was accepted but I guess the caveats in place would prevent that from being an issue. When I put in an offer I only give 48hrs before the offer expires so you can still put a lot of offers on the table in a short time but just not concurrently
Cheers
Ruth
Hi Guys,
As reluctant as some sellers are, some are accepting the low ball offers, however I would assume the following are sound strategies.
Targeting the elderly sellers – 2 reasons, the first is that they probably own their property outright meaning that they are more likely to be flexible, the other reason is that generally elderly people sell their property to go into a nursing home. the difference of $50K means nothing to them as long as they can have a quick sale. That said some elderly people may question whether they have misjudged the value of the property if a low ball offer comes in.
Target deceased estates
Houses unsold at auction. Sometimes a bargain can be found at Auctions as these might also be repossession houses.
You can ask the real estate agent how long a house has been on the market, to gage the situation. You could specifically ask real estate agents which houses have they been unable to sell.
Many strategies, you may have to just wait until the right one pays off.
If more than one offer is accepted don't you have to pay % penalty if you don't go ahead with the contract ?
Intrigue
Bit of useful info – if you submit a formal written offer on a property, the Agent (by law) must amend the price guide to your offer.
For example, if a property was marketed with a range of $250K – $300K and you put in an offer of $280K (which would be declined by vendor, no doubt), then the agent must amend the price guide to $280K+
This takes out a lot of the competition as they're expecting it to go much higher than this.Cheers
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