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Is this too lowball?

Discussion in 'The Buying & Selling Process' started by Dale, 8th Oct, 2015.

  1. Dale

    Dale Member

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    Wannabe investor here. Own 0 IP's. After a little advice.

    Just put an offer on a townhouse.

    Seller is asking offers over $225k
    Checked rpdata, seller purchased it a year ago for $230k.

    I found another townhouse very similar & within the same complex. This sold approx. 1 year ago for $210k. Only difference is it doesn't have a small shed, little garden + colourbond patio roof + side access. I haven't seen inside this other comparable property, just going by photos I can find online.

    Estimate rental appraisal = $310pw
    Body corp $1700pa

    So thinking below market value my first offer was 200k. The agent actually sounded a little offended & said he wont take this offer to the seller because he will "lose the listing". So I said I'd come up to 210k. But he still refused to take the offer to the seller & asked me to sleep on it. He also mentioned the owner would most likely sell at $225k.

    I guess it does say offers over $225k :p
    But does it really hurt to take my offer to the owner?
     
  2. jrc

    jrc Well-Known Member

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    It seems to me like you are negotiating against yourself at the moment
     
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  3. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    Property business stock and agents act states they have to take all offers to the vendor. The most important thing to do if lowballing is have confidence(they will know your fishing for extra equity give them reasoning for price, property defects/negatives) and most likely get ready to miss out on it. I lowball everything sometimes it works and the majority of the time it doesn't. Don't get emotionally attached to it. I'd tell the agent that's your offer the vendor and you don't have to like it but its on the table for a time period(at your discretion). At that yield it sounds like its probably a less than desirable area so you might be able to pull it off. Good luck
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I don't think it's unreasonable - you've done your research and it's the value you perceive.

    On that basis - place your offer, give them a time limit to respond. If the agent laughs at it - so be it, onto the next one.

    You might be laughing a few weeks from now when the agent comes back asking if you'd still like to purchase it at the initial offer amount :)

    Cheers

    Jamie
     
  5. trinity168

    trinity168 Well-Known Member

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    I think if you can substantiate your offer with comparative sales around the area and show that to the agent then, that is a valid offer.

    Agents are obligated to present offers to the sellers, regardless of the amount, that is my understanding.
     
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  6. Ryno

    Ryno Active Member

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    Dude im a noob as well I have 1 IP.
    My advice is to stick to what you believe you are willing to pay and be prepared to lose it. Dont let the real estate people full hou in paying more. Fortunately for me as im a sucker my wife is really strong with the negotiating.
    We paid $35k less then the previous owners on our IP and we were pushed to raise it but we stayed firm based on our research and we got the result we wanted.
     
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  7. proper_noobie

    proper_noobie Well-Known Member

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    You've slept on it and your offer is now $3k below what you offered the agent yesterday. 30 day settlement if the vendor accepts within the next two days.
     
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  8. dabbler

    dabbler Well-Known Member

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    Agent should take what you offer to vendor, if that is what you will pay, then that is what you will pay ! If it was first few days on market, I could understand the reluctance, but still....
     
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  9. legallyblonde

    legallyblonde Well-Known Member

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    It sounds like the agent has you right where they want you! I would stick with the original offer.. They can accept, reject or counter. Nice and simple. =)
     
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  10. Dale

    Dale Member

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    Thank you all for the advice.

    I have spoken with the agent again. He mentioned another interested buyer is inspecting the place today :p

    Although I offered 210k yesterday, I changed my mind and said my offer stands at 205k :rolleyes:
     
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  11. inertia

    inertia Well-Known Member

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    I've never really understood the whole "offers over" thing - can anyone tell me how that is supposed to work? Why not just put a price on it, people submit an offer, and negotiation goes around in circles.

    We made an offer on a house that was listed as "offers over $649000k". We initially said $625k, and just kept saying no to their counter offers, until they came back with $627500 (we figured we could let them save some face...)

    Offer what you think it is worth, and be prepared to walk away.

    Cheers,
    Inertia
     
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  12. Azazel

    Azazel Well-Known Member

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    It helps to look at 'OA' as 'offers around' instead of 'offers above'.
     
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  13. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    The old other interested buyer trick lol
     
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  14. See Change

    See Change Timing Lord Premium Member

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    in NSW , agents have a legal obligation to take all offers to the owner unless they have had specific offers to the contrary .

    In 2001 , when we were looking for a PPOR , we went around making offers that we could afford , on properties we couldn't afford .

    Didn't end up buying any of them BUT , it gave is the confidence to make low offers and not bat an eye lid when the agent came back and said " that's on the low side " . It also worked as a kind of reverse conditioning . We made one offer and didn't come back with a higher offer . Don't know if it made a difference when we made an offer on the place we ended up buying , but they accepted our first low offer .

    .
    We worked out a couple of ways to go at that point which were " we realise that it's worth more than that , but that's all we can afford " or " we know it's low , but the reality is that all we think it's worth in terms of an investment , and that's all we're prepared to offer " .

    My opinion is that there are times for low balling . In Brisbane , you could do it in 2013 , but I wouldn't waste my time at the moment . You can low ball on something that's been on the market for 6 months , but chances are it's not going to work on a property that came on two weeks ago ...

    Cliff
     
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  15. legallyblonde

    legallyblonde Well-Known Member

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    That was my first thought!
     
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  16. Azazel

    Azazel Well-Known Member

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    Yep, they're a sneaky bunch.
     
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  17. WattleIdo

    WattleIdo renovating Premium Member

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    Even if you don't get this one, the agent will take you more seriously if you come across him/her again. Stay with it. Don't call again. Wait and watch ... and keep looking!
     
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  18. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

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    So what are you offering for your Lower Price?

    Recently i offered far far less on a IP, they took it, i offered 10% deposit same day .
    No cooling off period, and quick settlement not 6 weeks , i think it was 21 days and i agreed to take on their tenant who they were having problems with.

    If your serious buyer then offer them more in other yerms than your low price.
    Some Vendors just want a quick sale but cant be fart arsed around waiting for your 6 settlement .
    If he purchased it for 230k a year ago and is willing to sell for 225k it sounds like he wants out .
    he has added garden shed etc so it seems a good buy, i dont know because it could be in the middle of nowhere , but use your speaking skills to find out more about the owner and why he wants out so quick.
    If you really want it and are prepared to take the risk offer him 210k with a deposit down same day , be then 210 plus your stamp duty will still be less than he paid for it a year ago.
     
    Last edited: 10th Oct, 2015
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  19. chindonly

    chindonly Well-Known Member

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    Stick with your offer but put a deadline on it.
    Put it in writing with a contract.
    Keep looking at other properties though. Always good to have options.
     
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  20. legallyblonde

    legallyblonde Well-Known Member

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    At an EMPTY open home today the agent was saying how much interest there was for the home... LOL this was the first open home as well for the new listing.
     
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