im looking into purchasing my next IP and while i am getting all my preapproval done i was wondering how you successful investors go about negotiating a price and what sort of terms do you include?
i would like to know what you would first offer then counter with. im not so much interested in 'special' terms so you can get out of the contract, more towards anything which sweetens the deal or aids in reducing the final negotiated price.
what do you do if its a hot property and you want to try secure it early but at a good price?
any hints tips or questions are appreciated
If you have any past success with a technique or even just a bit of luck that went your way please post your story.
I would also like those hard luck stories of the 'big fish' that you let get away by trying something or pushing the limits.
thanksbeaniemonsterParticipant@beaniemonsterJoin Date: 2006Post Count: 48
I have a sad storey. A year ago we were looking to rent out our current house and build a new house. We found a block 800sqm 2 blocks from the beach in Altona. The owner wanted to sell asap as he had moved out. The house was pretty bad and small so perfect for us to knock down. We offered 370k, he would of taken $380k. So we refused based on principal that it was 10k overpriced. hmmmmmmm, 1 year later that same block is now worth 500k+. But we ended up extending our house which is 3 blocks from the beach and it's now worth almost triple what we paid 3 yrs ago. I guess the saying is true 'Those who hesitate…..miss out'.
We will never get another block of that size for that price again. Lesson learned.monopoly manMember@monopoly-manJoin Date: 2005Post Count: 20
I'm an ex pusser myself. Made the change to the green side a few backs and now i'm a grunt. Welcome to the site bro.
thank you for your reply beaniemonster, at least you didnt lose money, just missed the opportunity to make some,
hey grunter, why would you go and do a thing like that. where are you based now and what did you do in the puss
PLEASE REPLY, surely with the amount of investing knowledge and all the properties that members to this site own there should be more comments.
do you offer 5% or 10% below asking price or do you use the length of the settlement to negotiate a better price.
what about houses which have an asking price of $200,000+ for example. does this indicate that the seller wont look at offers below 200,000 or is this just a test to see what people will offer.
also thoughts on agents entering price ranges, ie $200,000-$220,000.
davidMacrosMember@macrosJoin Date: 2007Post Count: 4
Gday mate. I'm just 20 years old & on Friday I settle on my 2nd property (3rd if you count the one I had & sold under my parents name). I find it best if you just go with your gut feeling. My last 2 properties I offered prices that the agents said the owner would never go for. Much to the agents surprise, I got my 2nd property $25,000 cheaper than the asking price & the one that settles on Friday I got about $8,000 less than asking price. It's also good to find out why the owner is selling, sometimes you can use that to your advantage.. Good luck
MacrosbeaniemonsterParticipant@beaniemonsterJoin Date: 2006Post Count: 48
It's very hard to answer as it would depend on the market conditions and the area and whether you were buying in a lower/medium or high value area. I have properties in regional victoria and I bought 4 of them with a 10-15% discount even though some were advertised as 'negotiable above only'. I have found 30 day settlements work for most people but it depends on the sellers situation and if anyone else is interested too.
Your best bet is to find out from the agent what is their motivation for selling. How long has the property been on the market. Vacant properties would probably be easier to negotiate if their isn't a tenant or if the owner moved out and bought elsewhere. I have found deceased estates harder as the bottom line is the money and the money is usually going to be divided up (find out how many people will benefit, sometimes if there are say 5 kids a $10k discount won't seem like much when they divide it up). Usually go in at 20-30% lower than asking price,
One thing that has worked for me a few times is offer two amounts…. one with a much lower price on 30days… and the other a bit higher subject to a few things on a 60-90 day settlement. Basically they can pick one (they so feel they have options).
But usually the agent is working for 'the seller' so they will do what they can to get a better price out of you (even if they pretend to be your friend)
hope this is some of the info you were hoping for. good luck with it all.jssmithMember@jssmithJoin Date: 2006Post Count: 11
Hey Navy boy
Some interesting and very valid comments, i will put my two cents in.
Last weekend I brought a property for a development purpose.
Steves backyard Box Hill Sth.
The property was listed at a good price for the area, actually very good.
The house is located on a coner block and has an inground pool on the actual corner.
So the plan is to reno the old 1910 victorian house, split the block and build a towh house on the coner
where the pool is.
How this relates to your question is i had to sum up a number of things when it came to price.
1) it was a good price to start with, through an agent that is not well known and under priced the house.
2) there was a number of options and the worst case was just a reno if the council didnt approve plans(still a profit)
3) I have brought in a very hot area , but have to turn the the house over quick in the same market.
Based on this i used my gut feeling and offered $1,800 above the asking to sweeten the deal, and also had the house checked
by my planning guy prior for the subdivsion.
I was called that night to say someone offered $30k above my price,but had a number of conditions and clauses in the deal.
The owner selected my offer as there was no hassles, unconditional.
Hope this helpselkamMember@elkamJoin Date: 2006Post Count: 722
Just to stress what has been posted above, the reason why the vendor is selling and their needs are often the deciding factor as to what you will need to offer.
A few years ago I had just bought the front unit of 2 on a block at auction and had just settled when I heard from the back owner that they were also selling. Unfortunately they had just given it to the agent who had sold me the front unit and it was going to auction too. I was very keen to own the back unit as well, for obvious reasons, but was not keen to have to go to auction. I asked the owner if she would name a price she would take before auction.
She did. It was not unreasonable and I think it was very close to what I would have had to pay at auction assuming there was no over keen other buyer.. the unit is a bit bigger, better layout and with more land.
The reason she was selling was that her husband had Alzheimer's and they were moving to Qld to be near their only daughter so she could help with his care. For this reason she wanted to go as quickly as possible but was definitely not looking forward to having people wandering through her place for inspections.
Armed with this info I offered $20K less, no conditions and settlement 30 days or a time to suite her as soon as my solicitor and bank were ready. I also pointed out that she would be saving all the advertising costs. She took it. For her, the certain, quick sale plus the fact that she would not have people traipsing through her house was worth the 20K.
I was lucky as I had had access to the owner. I think with the agent it would have been more difficult as they had me over a barrel …. if I wanted the unit.
thank you all for the comments, it gives me a bit of an idea what other people do.
i am looking at a property which would have a good return with just a paint but due to the size of the block i might be able to subdivide the back and maybe sell the land or refinance and if i can afford it without putting myself into too much det, i will build.
the thoughts of using an unconditional contract to your advantage is great so i will look at making sure i have everything ready before i put any offers in.
thank you for your past experiences, it gives me that warm feeling that a better price could be achieved.
more comments are welcome.