Hi Everyone, I have decided to put in an offer on a house which I haven't done in 5 years so I am a wee bit out of touch. The first home open was yesterday and from what i could see generated a fair bit of interest. Within 15 minutes the Harcourt's agent reckons he has 3 separate parties interested in making an offer so I potentially have some competition on my hands.
The house is 'Price by Negotiation $469,000 – $509,000', I would like the house for 469k, i am prepared to go up but not any more than $480k because thats all i can afford and i know the area extensivley and dont think its worth any more.
My question is, what figure would you initially come in with and why?
Cheers
Hard to say without knowing the area, property and demand of the area…but for me personal; if i see a property with the above range, i would offer $460,000 the offer is not that much outside from the “targeted” range + it’s still a serious offer ( didn’t low ball too much ) – Also dont be put off by the advertised range- i seen plenty of property go over !! and on some odd occasion under.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
It's a suburb where there are 500k houses and 1.5 million dollar houses (depending how close you are to the ocean). Where this houses is there are ocean glimses. It's an old but in good condtion 3×1 on a 680sqm block.
According to realestate.com.au these are the annual average house prices of this suburb for the past 5 years.
2007 $624,500 16.7%
2008 $617,500 -1.1%
2009 $545,000 -11.7%
2010 $605,000 11.0%
2011 $612,500 1.2%So it’s a block of units 3 x1 bedroom?
if it is a block of units then the sale price will be based on rental yield, conditions and development/renovations potential …generally speaking.Block of 3-4 are a investors dream market, especially if it’s located in a good location, and if it’s bring rental yield of 6.5%+ then i wouldn’t low ball too much.
Before making a offer, make sure you gotten your finance in place and the lender/bank understands what sort of property type your buying; as it may not be suitable for some lenders and LVR may be restricted.
http://www.shapehomeloans.com.au/finance-for-multiple-unitsRegards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Phorsha wrote:Hi Everyone, I have decided to put in an offer on a house which I haven't done in 5 years so I am a wee bit out of touch. The first home open was yesterday and from what i could see generated a fair bit of interest. Within 15 minutes the Harcourt's agent reckons he has 3 separate parties interested in making an offer so I potentially have some competition on my hands.The house is 'Price by Negotiation $469,000 – $509,000', I would like the house for 469k, i am prepared to go up but not any more than $480k because thats all i can afford and i know the area extensivley and dont think its worth any more.
My question is, what figure would you initially come in with and why?
Cheers
Hi this is my first post here but I have just finished putting in an offer for a house only yesterday so thought I would share my experience and probably more questions for you! We had a similar dilemna in what to put at a starting point as well!
The place we just got literally yesterday was as follows:
Went on the market on Monday 26th March 2012 for $345K.
Went for an open for inspection only yesterday Saturday 31st March 2012.
Put in an initial offer of $340K they came down to $344K and we went to $342K with the condition of the timeframe for building inspection to be increased from 7 days to 14 days and extended the subject to finance condition by a further week.Only 12K under offer price but well within what we were willing to pay.
What I did between the property being listed on Monday and making the offer on Saturday was as follows:
1) I subscribed last week to Australian Property Investor Magazine after buying a copy last month! It came with three months free access to Price Finder which is a valuation software.
2) Put the property through the price finder software which actually valued it at around 380K straight off. When I did comparable sales it increased the value up to 395K.
3) I then cross checked my valuations with a property profile provided by my bank which came up with pretty much the same figures!
3) Based on the price finder valuation it seemed that even at asking price was a good buy. I had decided I was prepared to even pay asking price but obviously wanted to get the price down if possible.
4) We decided to go for a quick kill rather than wait just in case someone else realised the true market value of the property!
5) Researched to “discounting rate” for the area. Discounting is at around 6%. But this is really a reflection of agents generally overpricing the properties and factoring this in!
6) in the end we were going to use the line of ” well your asking for 354 and the discounting in the area is roughly 6% so we will offer $333K to start which is the discount for the area” However after inspecting we decided it ticked all boxes and thought well I have said I want to pay $340 so lets put that in to show we are serious. We only ended up paying 2K more than that to secure it and achieved extended timeframes for building inspections and pest inspections and finance final approval.
As its an investment we were also happy to accomodate 3.5 months for settlement as the agent wanted to marry up the settlement of this place with the new house they bought. It then gives us plenty of time to get a tenant in from day one!
The issue we had was do we go in with a soft offer or do we go in with something close by to what we wanted to pay. We decided to go in with close by. Being only listed if we went to far down then the seller would say lets wait and see. Getting close made them realise they can get it sold within a week of being listed.
From the above have you:
Actually checked what the market value of the property would be or as you say you “think” it would not be worth more than 480K. I based ours on facts and numbers and not on gut feel. Have you done an independent check (through price finder or similar) on what the actual value of the property is?
Have you checked the discounting for the area?
Have you checked the average number of days properties stay on the market in the area?
Being a new listing means the sellers are more than likely to take a wait and see approach. If its been on the market already for a couple of months then they are more than likely to accept lower offers.
Also try to suss out the reason the owners are trying to sell and move away to figure out what there priorities are. In our example they had 3.5 months to 4 months before settling on a new property so if we didnt go in with a serious enough offer they would take the wait and see approach. If however they were after a 30 day settlement or something then we would of gone in with less knowing they are looking for a quick sale!
Australian property investor lists all the average days, discounting etc in the back of the magazine each issue.
See the 'right' offer price is the value you believe in. In short term even though you end up paying a little bit extra to acquire the location and kind of house you wanted, you will recover this over payment if you are planning to hold it for longer. And I'm not saying this – I have done it myself. Sometimes you need to add a few grand just to get it and there is nothing wrong about it so long you have specifc reasons for it.
Otherwise, you can always put your best price less $5K as offer and if this doesn't come through find another property and keep doing it until such time comes within your price range.
Shape wrote:So it's a block of units 3 x1 bedroom?She said house, I assumed 3×1 was 3 bedroom, 1 bathroom????
so have you put in the offer, how'd it go?
Put in 480k, as soon as i said subject to the sale of my house the agent made it very obvious I didn't stand a chance. He also said there would be no counter offers because the owners expectations had already been exceeded by the other offers.
SUCKS!
Subject to sale of my house – won't work unless you are offering a price which simply exceeds owners expectations.
Phorsha wrote:Put in 480k, as soon as i said subject to the sale of my house the agent made it very obvious I didn't stand a chance. He also said there would be no counter offers because the owners expectations had already been exceeded by the other offers.SUCKS!
At least you know where you stand! no pussy footing around now. You can move on to your next prospective purchase.
Stay in touch the agent may be bs'ing you. You never know finance may fall through from the other buyers?
The agent called today and said the property went for over $500k which he said was even a suprise to him. There was no way i could compete with that and i'd prefer hearing that than losing a house for a couple of grand.
Without straying off the track too much, a few of the comments remind me of a time I lost out on an $88k property, by haggling over a few grand, and having $84k as my final offer, and the owner coming back and wanting $85k as a compromise.
Other issues arose at the time, but 4 years later that type of place was worth around $180 – $190k….so learnt a lesson there.
And to put things in perspective, if anyone is interested in researching rather than being told, go to one of the banks on line mortgage calculators, and work out as an example, say a $215k loan over 30 years at 7%. Now up it to $225k and see the difference in the repayment – kind of puts things in perspective does'nt it. If it is good value, and you want it, a few grand is nothing in the scheme of things. You can save more shopping for a good rate, or making sure your rental income is appropraite for the area.All the best with your next one!
Cheers
Hey guys and girls,
I have a problem I hope you can help me with. My partner and I are currently settling on our next investment property (settlement is mid-april) and we are going overseas for 3 weeks (contactable sporadically by email only) but we have found another property that we would like to put an offer on. Do I wait until I get back from my overseas holiday and hope someone doesn't snap it up or are there measures in place where I can put an offer in now. Leave for holiday on 6th april.
Cheers
You can put the offer in now but make sure that you are able to pay the deposit to make the contract acceptable to the vendor.
Thanks Aaron… I'm thinking we'll put the offer in but ask for a longer finance approval as well just to cover ourselves. We normally deal with our bank via email anyway because of the lack of a branch in our country town so I think it should be okay
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