Hi,
I am looking at investing in Melbourne property and am from Sydney myself. What is the typcial buffer that vendrs buid into their list price?
In Sydney it seems to be around 10%.
Is there a difference if the property has been recently constructed?
Thanks PK
Hi PK,
Depends where you are looking and what the property is.
Houses around inner Melbourne – Carlton, Fitzroy, Elwood – add at least 10%. For example 2 places in North Carlton last weekend – one asking 590 plus went for 735, one asking 600plus went for 720.
Most people looking at desirable properties are paying at least 10% more than advertised. At the top end it's even worse. Houses at 900 going for 1.3 M or more.
Newer houses, less desirable, likely to be more accurately marked, but even then 10% would be reasonable.Good Luck!
I think merryc8470 is talking about auctions I guess?
The phenomenon he mentioned is classic under-quoting on price by agents. It was made illegal a couple of years ago, but the govt is reluctant to step in and do something serious about it – conflict of interest. sorry; I digress and don't get me started on that topic.
The properties he mentions aren't actually selling above market value and you will find this is true when the Bank does a valuation to approve finance. The properties are advertised lower to create more interest and so the agents can collect names and numbers for future canvassing of buyers and sellers.
If you are looking to buy via Private treaty, then offer whatever you like. The market in Melb is supposedly currently flat, but apparently on the rise in some areas, so you may still find a desperate seller who will accept less if you make a move soon.
The standard low offer is 10% below asking, then go from there, but try 20% on a very short settlement; this does work occasionally.
The worst thing that can happen when you make ridiculous offers is you get into an argument with an offended agent – great fun.
PK
There is no typical buffer – it partly depends upon the agent, and the property and the current market.
May I suggest that's not the way to go about buying a property – work out it's fair market price and in the inner and middle ring suburbs of Melbourne, you are going to have to be prepared to pay a "fair" price today.
The days of the bargains are gone – well located properties are snapped up in days and there are usually multiple offers on each property . I have a team of 7 buyers agents out there buying properties all day and I her what's going on in the "trenches"
If you find a "bargain" then maybe you should be asking "What's wrong with this property? Why don't others want it?"
The market in Melbourne strated turning 12 months ago and is pretty hpt at present. Buy the best property you can afford and look for properties with strong upsaide potential or properties to which you can add value
Good point, Marc, that's exactly what I was talking about. Unfortunately in the "hot" areas and there are more and more in Melbourne at the moment, particularly inner city, most houses advertised on internet etc are up for auction.
You can find private treaty houses, but again, the 'buffer' depends on the area. As Michael says, if you are in a good area the competition is very hot and usually there is a real problem that stops a house selling – busy road/freeway frontage, unliveable condition etc
If you are heading to the outer suburbs, the market is a little flatter, but the top end (>1mill) is pretty hot everywhere.
Good luck!
Chris
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