Offer over 30% below reserve accepted after auction.

Discussion in 'Investor Stories & Showcase' started by Car tart, 16th Mar, 2020.

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  1. Car tart

    Car tart Well-Known Member

    Joined:
    16th Sep, 2018
    Posts:
    670
    Location:
    Sydney-Melbourne
    Firstly I do not believe in low balling.

    Offering a % below what a property is advertised at is a sign that you don’t know what the value of the property is?

    I live mainly in Sydney and for investment generally only buy acreages in Sydney NW for land banking purposes. I saw a property advertised mid last year which was in an area that suited and contacted them, it was zoned to be developed but was landlocked with no services, so was not ready to go and had a creek running through the centre. The agent didn’t seem too interested in telling me the price but after a few calls it was $5.5 million.

    A different agent advertised the same property for auction some weeks ago. I rang and they said it’s auction and they expect close to $4 million.

    Last week out of the blue, I get a call from the agent that the vendor has revised his reserve to the mid to high $3. I said too high and did not go to the auction. After the auction, the agent rang to say the reserve envelope was $3.5 million.

    Today I did my homework on what the square metre value of each zoned piece of the parcel was worth, based on recent sales. It totalled $2.6. I deducted an amount for the fear in the current investment market due to CV.

    I gave this information to the agent without any BS and offered $2.4.

    A few hours later I was advised that my offer was accepted.

    This is not a brag.

    This is simply saying that you don’t upset people by making lowball offers. You do your homework by calculating the value of the property using comparables and GIVE it to the agent to show the vendor as proof that you are serious.

    I didn’t buy the bargain of the year but in 3-5 years time, it certainly will be.
     
    The_Billy, Chris93, Ringo1 and 12 others like this.
  2. Perthguy

    Perthguy Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    11,760
    Location:
    Perth
    Well done! I have done this also but with a much smaller site.

    A seller had put a property on the market for way over market value. He dropped the price, dropped the price, dropped the price and then switched agents. They re-launched the pr at a new price point. I inspected the property and it was disgusting but had potential.

    I made a written offer based on the condition of the property, the market and comparables. The agent called and yelled at me that the offer was too low and he would not present it to the seller.

    Buying is not emotional for me, so I calmly and factually documented the exact reasons for my offer, being:
    - the condition of the property
    - the amount of rubbish on the site and cost of disposal
    - recent comparable sales in the area
    - the average price per square metre based on recent comparable sales
    - the ultimate market value based on the above

    The agent forwarded my email to the seller and my offer was accepted.

    It can be done. You just have to do the research then provide it factually.
     
    New Town, charttv and Car tart like this.
  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    15,067
    Location:
    Sydney
    A lender has probably said - Sell it. If they dont sell the mortgagee will.
     
    TheSackedWiggle likes this.