What should my strategy be for this property negotiation?

Hi all,

I just recently put a lowball offer on a property (about 10% below the high end of the asking range). It was of course rejected by the vendor. Asking range is mid to high 800's.

I want to raise my offer so that its at least somewhat near the asking range. I will be writing an email with reasons as to why i think the property is worth such. However, it will be a 15-20K jump from my initial offer.

I was wondering if by doing this, the REA will think im desperate since ive upped the offer so much and try to get more out of me?
Should i speak to them on the phone first and give a softer offer (say 10K increase) to begin with?

Ultimately, i am willing to pay somewhere in the low end of the asking range. If not then I am happy to walk away.

 

Did they come back with a counteroffer when they rejected?

Seeming desperate isnt a problem if you actually arent. You just walk.

 

No, they just reiterated the vendor's asking price range.

It seems the vendor is holding out for higher offers since its still early days in the market (approaching 1 month) and I think I am the first/only offer so far.

 

Then its unlikely theyll even negotiate unless its in the higher end of the range.

sit tight and wait. You miss it you miss it.

 

Yeah thats what I was thinking too.

But since my offer is so low atm, i was wondering if i i should up it abit in the time being or else they may not even consider me as a potential buyer when/if the vendor decides to lower their expectations.

 

Pretty much standard everything - 42 day settlement time, 5 day cooling off. Im in NSW btw.

I will be using the cool off period to get a strata report, as suggested by my conveyancer, so i dont have any 'subject to' clauses. My finances should be ok.

 

Hmm, i could...but i think i would want the cool-off just incase anything happens.

I think the vendor is mainly looking at price at this point in time anyway. Is there anything else I can do to sweeten the deal?

 

It's not clear where you actually pitched your initial offer.
You say you made an offer 10 per cent below the *high* end of the asking range, then say you want to raise your offer to *near* the asking range, and are willing to pay at the lower end of that range. So was your initial offer within the asking range, or below it?

 

Suggest you forget this property.

It appears you have played games by making an insulting offer and have probably ****** off both the vendor and the agent. If you were even remotely serious, your offer would have been a bit realistic.

If you really are “newtothis” and relatively inexperienced in property purchase, it appears you have been caught up with the buzz words “strategy”, “lowball” and “negotiation”. Suggest you research carefully, find a property you want and make a decent and realistic offer if you want to be taken seriously.

Otherwise, if “lowball is your strategy”, make the offer and look elsewhere when it is refused. Who knows, you could get lucky.

 

It was below the asking range (~5% below the low end and ~10% below the high end)

 

Actually I did alot of research before offering. In my opinion, the vendor's asking price range is high compared to other properties and recent sales in the area. I tried to go abit lower than fair value, but not insultingly low, for my first offer because it seemed like there wasnt too much interest in the property based on the open homes, no current offers, etc

 

I really don't understand people that do this. What was the point?

Imo, you've just lost credibility, and now you want to go back and be like "hey, please listen to my reasons and justification".

I wouldn't believe a word you said as a vendor at this point!

 

The only way lowball offers work is if the vendor doesnt have anything else and they are forced to come back to you.

In any normal market, lowball doesnt work.

 

Maybe I shouldnt have used the term "lowball". Its low relative to what the vendor wants, but I think its in reasonable range of the market value of the property.

 

But if you already knew or suspected the vendor wasn't going to go for it - then I think its just been a waste of time and potentially risking ******* off the vendor.

And it doesn't line up with your strategy for the second offer, which relies on credibility and good will.

I'm not saying this as a beat up. I think its honestly important to have a consistent strategy in negotiations. If it was to try and convince the vendor using an email or sales evidence, then you've shot yourself in the foot a bit I think.

 

I would say that if you are willing to pay in the low part of their range then offer that now. If they still say no, then go onto the next place.
If your valuation of the place and their valuation of the place don't line up then there isn't much you can do about it but wait for them to be educated by the market silence.

 

What do you think I should have done then?

If i had put in my initial offer within the asking price range, in my opinion it would have been considered high compared to what i think the market value is - and this would give me no wiggle room for negotiations.

My strategy was to start low and work up little by little from there, giving reasons each time as to why i think the property is worth X amount at most, so it grounds the vendor's expectations.