All Topics / Help Needed! / Helpful tips for when writing up an offer

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  • Profile photo of WaynelWaynel
    Participant
    @wayneleech
    Join Date: 2014
    Post Count: 19

    Hi there,

    I’m considering making an offer on a property in Perth’s northern suburbs (close to where I live).  Before I do, does anyone have a link to helpful tips when making an offer?  Eg, things to include in the written offer, strategies to build a strong case for what your offering and so on?

    Thanks

    Wayne

    Profile photo of Kent CliffeKent Cliffe
    Participant
    @kent-cliffe
    Join Date: 2011
    Post Count: 110

    There are a few areas to consider, but with any negotiation it isn’t just limited to the items discussed:

    Settlement Date: Motivated sellers generally like a quick settlement, Home Sellers to Home Buyers like a settlement date that coincidence with the settlement of the property they plan to buy. Also, rent backs are quite attractive to some Sellers.

    Finance Terms: Cash is the strongest, but if you play your cards right finance can be competitive too. We coordinate 5-10 business day finance terms with our brokers. Have a per-approval letter to show to the Selling Agent, but be sure to white out the max budget and do it in a way that doesn’t suggest a max price was even there.

    Special Conditions: Be sure to have contract conditions which protect you. I never recommend using the Selling Agent’s clauses as they are there to protect the Seller. Speak to a solicitor and have a good working order and or building inspections clause written up.

    Acceptance:Always have a reason that you need a quick answer. For example, you could be looking at another property so you need a quick answer on this or some Buyers have work commitments to head back up North. This way the Selling Agent knows there is a deadline and reduces the chances your offer could be shopped around.

    Price: Never start on a whole number (i.e.$400,000) this too a Seller just looks like an initial offer. I would always recommend odd numbers ($397,235). The other item is to increase in decreasing increments so first counter may increase by $9537, next is 6,221 and final is $3648. This looks like you’re closing a gap to your max budget.

    Psychology: He who cares least wins negotiations. So be sure to have plenty of options and a plan B to fall on. The other tip is if you have a spouse, parent or a partner and there is a single person signing the offer. You can play them up as the bad guy and deflect any negative sentiment or price increases on them.

    Profile photo of ChrisA1ChrisA1
    Participant
    @chrisa1
    Join Date: 2011
    Post Count: 172

    Interesting comments there Cliffe. While I agree with never starting on a whole number, the numbers you provide are quite unique, do you need to be that specific, or can going to the nearest 50 be enough? (I’m thinking about not p***ing off the REA. I like the comment about finance as that can be a deal maker or breaker.

    • This reply was modified 5 years, 11 months ago by Profile photo of ChrisA1 ChrisA1.

    ChrisA1

    Persistence is 'to keep on keeping on, no matter how hard the going may be'

    Profile photo of TheNewGuyTheNewGuy
    Participant
    @thenewguy
    Join Date: 2014
    Post Count: 151

    I agree with Kent, especially the Psych part. I don’t really buy on feelings anyway, even on my PPOR. For my current place I openly told REA’s that I had multiple offers in for other properties and the first accepted offer wins. This worked perfectly for me, because two offers were in to different REAs at the same agency. So they found out that I wasn’t joking, and actively competed with each other for the sale! Worked in my favour.

    Quick sales are also important, such as not needing to sell your current place.

    PS. I almost always try and get additional things in the sale for my PPOR for free. If the couch / fridge / etc look really good with the house, then I ask for them. In my current place I got the bar fridge and all the entertainment centre, TV, amplifier, speakers etc.

    Profile photo of mattstamattsta
    Participant
    @mattsta
    Join Date: 2011
    Post Count: 604

    Also, you could add “Subject to” clauses regarding the acceptability of the building inspection results and pest inspection results.

    I always put them in my offers.

    Profile photo of WaynelWaynel
    Participant
    @wayneleech
    Join Date: 2014
    Post Count: 19

    Hi All,

    Thanks heaps for the insightful advice. I decided to hold off on making an offer on this one (numbers didn’t quite stack up) though I’ll certainly be using some of the tips above for future offers:)

    cheers

    Wayne

    Profile photo of Long JohnLong John
    Blocked
    @longjohnsback
    Join Date: 2014
    Post Count: 32

    Hi All,

    Thanks heaps for the insightful advice. I decided to hold off on making an offer on this one (numbers didn’t quite stack up) though I’ll certainly be using some of the tips above for future offers:)

    cheers

    Wayne

    Make offers anyway but with a price that makes the numbers work. It’s how you learn to negotiate. You get to see how and what agents and sellers react to. Every offer regardless of how far below asking or how it turns out will teach you something.

    And if an agent tries to tell you the seller won’t accept an offer just tell them to present it anyway.

    I was having a chat to a guy just the other day who happened to have purchased a property where I knew the previous owner quite well but hadn’t seen for years. He made an offer to the agents who put him off. He eventually went direct to the owner and had a full and frank discussion offering substantially below asking. The owner had to insist the agents present the offer (he was a gambler holic and in deep %$#@ with the bank who were threatening foreclosure) so he could accept it (agents had the contract to sell so he couldn’t cut them out). We believe but couldn’t prove the agents were setting him up for a significantly discounted price but the purchaser would be one of the agents or an associate.

    Lowballing is an art and some buyers specialise in it but you need to learn the drill.

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