What questions should you ask yourself when trying to work out how much to put in an offer for a property?
This can be especially confusing when the property has no asking price, but is ‘taking offers’ from a set amount. Do you offer the absolute minimum or will that put the vendor off taking you seriously or even offend them? Or do you put in a big offer to beat other buyers and snare it for sure? What if the vendor would have taken much less and you’ve paid way more than you had to?
The one thing it’s probably best not to do is ask the property agent, or ‘selling agent’. It’s their job to get the highest price for the vendor so that’s not a good idea. It’s better to ask them what properties that are similar recently have sold and what price they went for if you want to get a good gauge on market price.
So unless you have a buyer’s agent, which we discussed last week, you’re basically on your own when having to work out how much the property you want is worth, and how much you will offer for it.
In real estate today, most asking prices and offers are up for negotiation, they are generally starting points. Agents typically list properties between 5-10 per cent above what the vendor is willing to accept for the property to allow for this negotiation.
Before putting down your offer on a property, make sure you ask yourself these five questions:
1. Why is the vendor asking the amount they are?
Is it the amount their agent suggested they list for or do they have a target price that achieves some personal goal for them (and they are more likely to be over-priced and less willing to negotiate in this instance).
2. Are there any other offers on the table?
This tells you if you have competition from other buyers and if you might need to go higher to beat them. You can play harder ball if there are no other offers.
3. How long has the property been on the market?
Generally the longer the property has been on the market the keener the vendor will be to sell. However, sometimes those properties just up will go very quickly at a fast low offer because the vendor wants a quick sale for time constraints or as part of other deals they may have.
4. Why are they selling the property?
You can get a gauge on how keen the vendor is to sell if you know why they are selling. Has there been a marriage break-up? Are they moving overseas? Is there a noisy neighbour with two massive barking dogs next door?
5. Has the asking price come down since the property went on the market?
If it has you can assume the vendor is keen to sell and you may get a bargain if you successfully negotiate the price down further.