All Topics / Help Needed! / Negotiating an offer on IP

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  • Profile photo of zorrohdzorrohd
    Member
    @zorrohd
    Join Date: 2013
    Post Count: 34

    Hi all, hope you're having a great weekend.

    tomorrow, I will be putting an offer in on my first IP for my SMSF, and looking for some guidance on the negotiating. 

    I have inspected the property, and it appears quite serviceable, and at this stage the numbers stack up, so ready to advance to offer stage. The asking price is now at a 15% discount to the original asking price, and now represents reasonable buying at about 8.5% gross return. The current tenants are moving out in 3 weeks, and it is being sold with vacant possession.  Settlement timeframe not really an issue for me, just need to allow enough time to get SMSF legals and finance sorted.  If our negotiations are successful, I would like to spend a week painting and general cleanup.

    My questions are as follows:-

    (I) any tips for negotiating perhaps a further discount given the impending vacant period for the vendors? 

    (Ii)  what about including pre-settlement access for cleanup and perhaps new tenant inspections?  Or would this be a bit rude?

    any other tips would be most appreciated. 

    Cheers

    Profile photo of ClaireRClaireR
    Participant
    @clairer
    Join Date: 2013
    Post Count: 16

    I only just read this post so you've probably already made your decisions.

    One negotiating tip I've found very useful is renegotiating after the building and pest as at this stage you already have a contract so nothing to lose if they say no and you have a good basis to negotiate, you need to use a very good building inspector to help you with this though and it won't always be available depending on the property although we've found it available on both newer brink and older timber houses.

    I don't think it's rude at all to ask for pre-settlement access especially if the tenants have moved out and it's vacant for a couple of weeks, I would talk to your solicitor and ask them to put it into the contract, the worst that can happen is they say no.

    As far as negotiating more off the purchase price before you have a contract it just depends how happy you are with the numbers, if your happy for someone else to offer more and miss out although if it's already discounted then it's a good sign they want to sell and will discount further.

    That's my advice anyway..

    Profile photo of zorrohdzorrohd
    Member
    @zorrohd
    Join Date: 2013
    Post Count: 34

    Thanks for your advice, Claire. Building and Pest inspections will be scheduled for next week, so I definitely have further opportunity – love this suggestion. Also, vendors have agreed to access, but I will make sure it's in the contract as well. 

    And will be looking at more properties shortly, so any advice is still welcome and valid.

    From one Claire to another – thanks girlfriend!

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Do you have a report on recent sales that could be used to potentially negotiate the property down?

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of zorrohdzorrohd
    Member
    @zorrohd
    Join Date: 2013
    Post Count: 34

    Yes but it would probably negotiate the price up. It's under market. The only houses worth less are really crappy weatherboard or hardiplank that are probably riddled with asbestos. 

    Profile photo of zorrohdzorrohd
    Member
    @zorrohd
    Join Date: 2013
    Post Count: 34

    Sorry Shahin – that was very rude of me to so quickly dismiss your feedback. 

     Given my previous comment about the market here, I would be most appreciative if you could point me in the right direction with maybe some more specifics in this situation. 

    Thank you for your input and have a great weekend. 

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Claire (Zorro) whilst we wait for the valuation to come back i will shoot you a RP Data report on the property.

    Certainly when i negotiate any property deal i get the Terms set first and then worry about the price. 

    Access to the property to undertake certain items of repair etc can always be negotiated as long as you are correctly insured.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    I don't see how asking for access to clean up and show prospective tenants through would be rude.  It doesn't cost the vendor anything…

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

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