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what's a reasonable amt to offer under asking price
are there secret rules?


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20 replies to this topic

#1 spear_maiden

Posted 18 November 2012 - 12:10 PM

Hi

There's a cute 2 bed house that we've got our eye on.  Block is a decent size, bathroom needs reno'ing, fibro walls, kitchen is small and functional, looks like they painted if for sale.  The house is listed as comfortable to move into, and do up at leisure. Suburb has two sides - the nicer side where we wouldn't think twice about paying this amt and the down side where it feels over-priced.  This place is on the down side of suburb.

The asking price is $395, 000.  A few years ago, this place would be snapped up for this price but a quick search of recently sold properties and it appears over-priced.  Eg., 2 doors down and a reno'd 4/5 bedder on same size block went for only $469,000. We know this street was flooded in the Bris Jan floods so insurance would be premium.  Other 2 bedders in the area of the same vintage are going for $360,000.

What would you do with your offer?  360, 000 is a bit under 395,000 but we don't want to pay more than what the area is worth.  As a seller, would you even consider a price offer 30, 000 under?

Thanks!

#2 Guest_Sunnycat_*

Posted 18 November 2012 - 12:13 PM

I think you should offer what you think the property is worth.

#3 Tesseract

Posted 18 November 2012 - 12:16 PM

QUOTE (Sunnycat @ 18/11/2012, 01:13 PM) <{POST_SNAPBACK}>
I think you should offer what you think the property is worth.


Agree.

#4 BetteBoop

Posted 18 November 2012 - 12:20 PM

10% below the list price is accepted as reasonable in a very flat market. This is why the vendor lists the price higher than they expect to get for it.

And keep in mind, the market is dropping weekly. If you pay $370k for this house, in 2 months when you settle, it could be worth $5-$10k less.

I wouldn't rush into anything in this market. As a prospective buyer, time is on your side.



#5 kez71

Posted 18 November 2012 - 12:21 PM

Offer what you think its worth. The seller could have listed it high hoping someone would pay it, but knowing they will probably come down in time. Id also check with an insurance company before offering to make sure you can insure it after being flooded..will give you more of an indication on its value too

#6 Lokum

Posted 18 November 2012 - 12:37 PM

QUOTE (BetteBoop @ 18/11/2012, 01:20 PM)
15088817[/url]']

I wouldn't rush into anything in this market. As a prospective buyer, time is on your side.


Which market? Australia, and even Melbourne, has a higly segmented market at the moment. There are pockets of our suburb which are flat, and pockets which are running hot with surprisingly high auction results (clearance high 70s% and geting 15% above reserve.) know your own particular market, and also whats valuable to you.
Theres nothing offensive about an offer they dont accept, so dont feel pressured into offering higher just because of the price theyve put on it.

#7 beaglebaby

Posted 18 November 2012 - 12:50 PM

Offer whatever you think is fair, the worst that can happen is the seller says no!  We received some ridiculously low offers and just said to the agent we weren't even going to bother counter-offering, just tell them they were too far below our asking price.  They thought it was worth a try, in the end we got what we wanted, only about 4% down on the full list price.  

Across the road from us now was on and off the market for several years at a very high price.  2 people we know were interested in putting in offers about 20% under the asking price, the agent told them not to bother.  The vendor ended up accepting an offer 25% below asking price - the agent did himself out of money (and us out of decent neighbours!!)

You never know, just don't take the vendors response personally.

#8 BetteBoop

Posted 18 November 2012 - 12:52 PM

QUOTE (Lokum @ 18/11/2012, 12:37 PM) <{POST_SNAPBACK}>
Which market? Australia, and even Melbourne, has a higly segmented market at the moment. There are pockets of our suburb which are flat, and pockets which are running hot with surprisingly high auction results (clearance high 70s% and geting 15% above reserve.) know your own particular market, and also whats valuable to you.
Theres nothing offensive about an offer they dont accept, so dont feel pressured into offering higher just because of the price theyve put on it.


There may be a couple of anomalous post codes but across Australia, all evidence points to the property market being on a slow melt. I'm not sure that means the market is segmented in any real way.



#9 ms flib

Posted 18 November 2012 - 12:57 PM

I would give it a go.

The fact that it has fibro walls and could flood would concern me however. It might be worth continuing to look.



#10 Lokum

Posted 18 November 2012 - 01:02 PM

QUOTE (BetteBoop @ 18/11/2012, 01:52 PM)
15088867[/url]']
There may be a couple of anomalous post codes but across Australia, all evidence points to the property market being on a slow melt. I'm not sure that means the market is segmented in any real way.


Averages are averages. There's still a housing shortage in major metro centres. Our municipality (socio-eco diverse, covers the edge of inner east to the edge of outer east) has clearance rates significantly higher than the melb clearance rate.

There are mining towns where you cant buy a house at all, and other towns where you cant sell a house for any amount. Yep, theres a national average and it's trending - that doesnt mean theres not significant segmentation.

#11 red_squirrel

Posted 18 November 2012 - 03:43 PM

I wouldn't put any offer on a house that is in a flood prone area.

If you still want to buy it I would go with the 360 ish offer or perhaps even lower.

#12 SeaPrincess

Posted 18 November 2012 - 03:49 PM

QUOTE (Studybug @ 18/11/2012, 10:10 AM) <{POST_SNAPBACK}>
We know this street was flooded in the Bris Jan floods

Don't buy it.

#13 skylark

Posted 18 November 2012 - 03:53 PM

Ditto to whoever said fibro and flooding = do not buy.

#14 spear_maiden

Posted 19 November 2012 - 02:36 PM

Thanks for all the replies.  Thanks BB for sharing the 10% "rule".

The house has just gone on the market apparently, so we're thinking the owners would probably turn down our lower offer.  Also, got my street wrong.  It was a street over that flooded.  Will definitely check out the effects on insurance of the postcode anyway.  Good to know that flood & fibro is a no go tho (I'm obviously very new to all this serious house hunting wink.gif ).  If it all looks good on thorough inspection, we'll put in the offer we think is reasonable and see how we go.

Cheers.

#15 SeaPrincess

Posted 20 November 2012 - 03:26 PM

QUOTE (Studybug @ 19/11/2012, 12:36 PM) <{POST_SNAPBACK}>
Thanks for all the replies.  Thanks BB for sharing the 10% "rule".

I actually disagree with the 10% rule. If you're familiar with the local market (price ranges, what's selling, what's not), it's better to put in an offer of what you think it's worth. While this may be 10% lower, I wouldn't offer 10% lower just because.  When we've bought and sold our own houses, we've never dropped or settled more than 3% lower than what was being asked.

But that's not what I came back for. Flooding is my dad's "thing" when he buys houses.  We lived in Graceville in the early 70's and when my parents bought that house, Dad went back through the flood records before buying. The house was high enough that there was no record of that area having been flooded and our house didn't flood in 1974 or this time around. I would be very wary of buying a house in an area that has been known to flood.

#16 tle

Posted 20 November 2012 - 03:41 PM

After recent news articles in our area I wuoldn't buy any house without first checking what it would cost to insure. The papers here reported about one lady who had lived in her house for 40 years and never had any flooding or stormwater damage and always insured with the one insurer. Her premium has just risen from $900 to $7500 in one year and the reason given was that she was at risk of stormwater damage. Another man (who is in a floodprone area) had his premiums rise from $1000 to $13,000 a year. The insurance costs more thanm the mortgage.

#17 MrsLexiK

Posted 20 November 2012 - 03:52 PM

I wouldn't write a house off because it flooded, depending on whether I was looking at building another house on block (like a qld or something) but that would looking at the actual block more so then the house.

#18 Coffeegirl

Posted 20 November 2012 - 04:09 PM

Friends of ours just signed a contract on a house on the weekend.   Owners wanted 795,000, the most my friends would pay was 720,000.   Owners turned the offer down.   Two weeks later, after three open homes and not a single nibble, the owners accepted the offer as they had purchased elsewhere and had to sell.

Worth asking why the owners are selling  wink.gif

Also as PPs said, make sure you check the flooding zone and insurance rates



As to the real estate trends.  Our friends above and purchased two suburbs away from us in South Sydney.  It's an older home that needs lots of renos done.  4 bedroom.  That area has had values drop a little over the past few years.  But the area that we have our house in has steadily risen since we bought 4 years ago.  Easily up by 30% on what we paid.  And that's based on bank valuation, not just the local RE guy.

#19 Always amazed!

Posted 20 November 2012 - 04:15 PM

Offer what you think ... Leave room for negotiation if you want..

Our house was on at $360 droped to $340 we offered $270 and got it for $285.


Depends on how desperate they are to sell ect!

#20 FomoJnr

Posted 20 November 2012 - 05:23 PM

Offer what you think it's worth. Our place was advertised at 435. We offered 405 and got a big no. They called back two week later and accepted.You just need to be prepared to walk away, they'll know you're serious. You never know, you might just catch them at a time when they just want to sell and move on!

#21 threeinnyc

Posted 21 November 2012 - 01:05 PM

QUOTE (BetteBoop @ 18/11/2012, 12:20 PM) <{POST_SNAPBACK}>
I wouldn't rush into anything in this market. As a prospective buyer, time is on your side.


Not really. Sorry BB. If the area is already have certain reputation for being good and well-sought after, the price still pretty much the same.  






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