Who Dictates The Sale Price - The Buyer or The Seller?

{Note from mods - this thread split from here: Sydney home prices now falling $120,000 a year}




Looking at a development site....basically on the same street...2 different sales 3 months apart...$150,000 price difference....person who got it $150,000 cheaper got 160sqm more in terms of land...for 150k less

 

Oversupply

I am getting re agents contacting me now, they cant sell. Problem is developers find it very difficult to source finance in current market conditions, anything over 4 unit site near impossible

 

Not really oversupply...only 2-3 suitable sites come up for sale in a year in that area...if that...

 

Right, so how do you explain the drop in price???
Usually only means one thing..... no buyers... and price gets adjusted accordingly

 

Not sure to be honest....during the same time...that these 2 sites sold...another person was doing similar development....and finished product hit the market and sold for a record price in 24 days.

 

Its all about the numbers for developers, they wont buy unless it makes sense
If end values have dropped then land must also drop
Much higher risk now for developers esp syd and melb

 

Maybe a distressed seller, a desperate seller or, even worse, a dumb seller.

A property recently sold in our street for around $300,000 less than what I thought was fair market value.

When I attended multiple OFIs, I saw anti-depressants in his and her names, in full public view (on the bench in the Bulter’s Panty and on the desk in the Office) . Not a good look.

When I googled his name, it shows the minutes of recent creditor meeting. An even worse look.

No surprise as to the final result

 

But a seller never dictates the market price, its the market that dictates the price. demand vs supply.

$300K drop is significant. So need to look at comps of recent sales. This drop in price would not be the norm and perhaps it was a fire sale? No idea

What I am seeing in my backyard is certain product is selling in desirable locations but it is still price sensitive, we just don't have the buyers pushing prices up in Perth, who knows this may change, not seeing signs at the moment.

Counter cycle buying is great strategy, but its perhaps too early to do this as markets have just started softening.

 

I know everyone espouses that but I personally don’t believe it.

For me, the buyer and seller have input into the price BUT the seller has the ultimate power and the final decision. It is the seller who accepts/rejects every offer and it is the seller who dictates the sale price.

To give an example:- someone I know really well was selling a property. They believe FMV was around $3M.

The lowest offer they received was $700,000 (a ridiculously lowball by someone looking for “road-kill”).

The highest offer was just above $2M.

If they had accepted the lowball offer, the seller would have set the price, not the buyer.

If they had accepted the highest offer, the seller again would have set the price, not the buyer.

For me, the seller is always in the strongest negotiation position and they always dictate the sale/market price.

All the buyer can do is improve their offer OR walk away.

It certainly is. On top of that, the seller took a hit of over $500,000 between what they paid for it + the funds they spent on renovations AND what they accepted when they sold it.

Overall, they are probably out of pocket by a whopping $750,000+ when one adds in buying costs (especially stamp duty) and selling costs (especially commission).

But the seller dictated the price when they accepted that offer.

It certainly was. And as I keep saying, it was seller who set the price when they accepted that offer.

 

Sellers can get many offers but ultimately it's up to the owners if they accept an offer or reject. A skilled agent will do their best to squeeze the best offer out of the buyers that they can, and the agent can make recommendations to the owner as to either they should accept an offer or not - they know the market and they know your requirements.

So, engage a good local agent who has a history of obtaining top prices and knows your motivation, and they'll work for you.

In a fire sale case, the agent should still work for you.... But it's best to not get yourself in a distressed seller position in a down market if you can help it.

 

Generally agree but there is an exception being when a sellers hand is forced. When a house is subject to a sale or seizure order then the seller may be forced to accept a lower price than if there were no sale or seizure order. I have seen this happen and can't honestly say the property exchanged hands at fair market value.

 

I believe your are agreeing with me 100%.

The seller ALWAYS dictates the price, whether that be the current owners, the mortgagee-in-possession, the executors of a Will, ...

You heretic

 

Sellers can decide what price they want to sell for and decide whether they accept an offer or not, but we know this, its not rocket science

But this is not what I am talking about

How do propery valuers determine the value of a property. They look at last 3 months of sales, comparing same product on similar size block of land etc

They look at market conditions and what buyers have paid for these sold properties and they look at many .... this is how they determine market value. Same as banks


Just because I want $100k more for my property does not mean I will get this or set the market trend. its buyers that dictate the market and certainly these are the stats valuers use

 

For a sale, the seller must have accepted an offer; no acceptance, no sale.

By definition, the seller dictated the price.

... and sellers are accepting.

By definition, the seller dictated the price.

For an actual comp, a buyer must have made an offer and the seller accepted it. Otherwise, no sale.

By definition, the seller dictated the price.

Nope, the seller does.

I will provide another example:-

The last property I bought was my mother’s home from her Estate. I was a co-executor with my sister. So, I was one of two sellers.

There were two Offers on the table, with different offer amounts, different T&C’s, ... One was mine, the other an external party.

We put the two Offers to a vote involving my co-executor/sister plus our three other siblings. I excused myself due to my conflict of interest.

The vote was unanimous in my favour. If it wasn’t, I stated I would withdraw my Offer as I didn’t want any legal hassles with my four siblings.

Once again, the sellers dictated the sale price. My siblings (only need one of the four) could have voted for the other Offer and the property would have achieved a different sale price. The sellers dictated the price.

We will have to agree to disagree .

 

We are talking about two different things here.

Happy to agree to disagree

 

I don’t believe so but let’s move on.

 

May I jump in?

Both sellers and buyers think that they dictate the market. But look at history and stock market to see. The market dictates the price, maybe a big economical force but not a single person. When you are in the investment game, it is a hype to think you dictate the price when being an investor.

You can argue that you set the price at high and can’t sell so you will keep it, no problem.
But it is a big investment problem as you are trying to prove that you are right and forget we are all be investor to make BENEFIT, no benefit, bad investor, no excuse when successful naming lucky one make right decisions at right time make much more and cam do nice things earlier than a strong headed bad luck ones.

 

Of course, as long as you add value .

TBH, the stock market is a totally different animal to the property market.

Hence, buyers and sellers behave differently on each markets.

... and the market is made up of ...?

Individual buyers and sellers, each making their independent decisions based on each of their personal situations. They may research the market (which only shows those transactions where buyers and sellers have reached an agreement and not the ones where they didn’t) and they may take that into account but I don’t believe the market dictates what decisions they should make.

@MTR stated that “...a seller never dictates the market price”.

I don’t agree with that statement and gave two recent examples that I have intimate knowledge of which showed that the seller dictated the price.

So far, my assertion in those two examples hasn’t been refuted nor has any counter-examples (where the buyer dictated the price) have been posted .

I am starting to believe that sellers always dictate the price

 

The seller dictates ‘asking price’. Whether it is converted to ‘sold price’ depends purely on supply & demand. The statement that some party dictates the price is nonsense, unless it is monopoly.

The good examples is auction results. Sellers set (dictate) asking price, if that price doesn’t match a demand, then a property is passed in and the seller either waits more time or makes their asking price lower to match that demand.

Yes, a seller usuallly chooses the highest offer. If they do so, they don’t dictate the price. Using specific cases when a seller intentionally choose lowest price to prove they dictate the price is incorrect. Same way ten different buyers could make an agreement to make very high offers, well above market, just to prove they dictate the price. Specific theoretical cases doesn’t prove either buyers or sellers dictate the price

 

I think I will ask for an extra $500k next time I sell lets see what happens