how to offer when you know it is too low?

[Blueberry]

Hi,
Husband wants to make an offer on a house that I feel is too low and I know that it won't be accepted (he wants room to negotiate). I was wondering how others would make the offer?

Should I call and basically almost apologise with "I know it isn't as high as they are wanting, but I can offer x,y,z sweeteners" (preferred length until settlement, larger deposit blah blah blah) .

or basically call or email with price, conditions, sunset clause and a take it or leave it attitude?

thanks

 

[MTR]

I don't do low balling, it does not sit right with me, so I get my partner to do this instead.

Back to you, if you are going to place an offer on the table and low ball, I assume it is not a rising market otherwise you will have no hope in hell of securing the property.

Don't apologise for your offer, just do it they either accept or not, nothing to lose, definitely find out what the sellers want, ie short settlement etc and try to meet this as the sweetener.

 

[MRO]

Definitely don't apologise for your offer.

Let them know it is an investment decision so you are not emotionally attached and the numbers only stack up at the right price. Also let them know you are looking at other properties and don't want to be restricted by an unanswered offer, hence the time restriction on accepting or declining.

 

[perthguy]

Vendors are different so there is no telling how they will react. I wouldn't take it personally and would counter offer. I also want to see all offers no matter how low. It's just business, it's not personal. However, I know other vendors who have asked their agents not to present offers under a certain amount and others who will not counter if an offer is too low. This makes no sense to me.

If your low offer is justified, you can always lodge a submission to support your offer. My last one was nearly 3 pages long. Otherwise, just lodge the offer and see what happens. I don't think there is a "nice" way to do it. You just do it. No excuses, no apologies.... just "here is my offer".

 

[norwoodman]

"If you're serious about selling, I'm serious about buying."

 

[MTR]

Vendors are different so there is no telling how they will react. I wouldn't take it personally and would counter offer. I also want to see all offers no matter how low. It's just business, it's not personal. However, I know other vendors who have asked their agents not to present offers under a certain amount and others who will not counter if an offer is too low. This makes no sense to me.

If your low offer is justified, you can always lodge a submission to support your offer. My last one was nearly 3 pages long. Otherwise, just lodge the offer and see what happens. I don't think there is a "nice" way to do it. You just do it. No excuses, no apologies.... just "here is my offer".

Hi Perthguy
In the Re agent industry agents have a term they use for buyers, it called "BUYERS LIERS", and its common knowledge amongst this nasty group the more a prospective buyer complains or tries to identify negatives, its a "heads up" to the agents that this person is seriously interested in buying the property and trying to talk it down.

Silence is golden, say nothing, just do the dirty deed, this way they have no idea what or where you are coming from.

 

[Tulamalula]

When you all talk about low ball offers, are you talking 10% under what is being asked, or 15% or 20% or more??

 

[perthguy]

Hi Perthguy
In the Re agent industry agents have a term they use for buyers, it called "BUYERS LIERS", and its common knowledge amongst this nasty group the more a prospective buyer complains or tries to identify negatives, its a "heads up" to the agents that this person is seriously interested in buying the property and trying to talk it down.

Silence is golden, say nothing, just do the dirty deed, this way they have no idea what or where you are coming from.

I did the silence is golden thing first. Put in the offer. Agent picked up the phone and yelled at me about it and refused to show it to the vendor. Hence the 3 page submission. The agent showed it to the vendor and used it as leverage to get the vendor to negotiate a lower price. I ended up negotiating the purchase of the property, so that tactic worked in that situation. So I would agree that silence is golden but if that doesn't work then you need to try a new approach.

 

[vaughan]

Depends on the market.

I just enquired about a property in 2770, nicely panted outside. Agent advised it's already under contract, was sold after first ofi. Went for over $320,000.

Low-ballers don't get a look-in when the market is this hot. Just makes them look stupid IMHO.

 

[perthguy]

When you all talk about low ball offers, are you talking 10% under what is being asked, or 15% or 20% or more??

My first offer was 8% under the low end of a price range. Price range was $469,000 - $499,000. My first offer was $430,000. I had zero competition though, which is why I used that tactic on that property.

 

[pully]

agree with Vaughan. depends on the market. plus some agents might consider a very low offer as simply a time wasting exercise. some will say make your offer your best offer, as no further negotiation will occur. depends on how much you want the property.

 

[perthguy]

Depends on the market.

I just enquired about a property in 2770, nicely panted outside. Agent advised it's already under contract, was sold after first ofi. Went for over $320,000.

Low-ballers don't get a look-in when the market is this hot. Just makes them look stupid IMHO.

I don't agree with that at all. Even in a hot market, properties can be overpriced. You have to know the market. While you definitely can't go around low-balling any property, you can go under asking if a property was overpriced in the first place. The R20/40 potential development site markets in the City of Belmont was one of the hottest markets in Perth last year.

This R20/40 potential development site in Cloverdale was on the market last year for ages at $675,000. Someone picked it up for $612,750, in a hot market. That buyer did not pick up this property at that price in a hot market without low-balling.

http://www.realestate.com.au/property-house-wa-cloverdale-114143907

Note this property had been on the market for fair while at $675,000. Time on market is really important when considering your offer.

 

[vaughan]

This is the property listing:

http://www.realestate.com.au/property-house-nsw-dharruk-115900051

The "listing" price is $5 short of $330,000. My guess is that if it sold first day on the market, it wasn't for anything less than $330k.

I reckon that it's not possible to have a property in 2770 that's "overpriced" at the moment. Perth is probably different.

I'm seriously thinking of selling mine now. This cannot continue forever.

 

[Chris B]

Hi,
Husband wants to make an offer on a house that I feel is too low and I know that it won't be accepted (he wants room to negotiate). I was wondering how others would make the offer?

Should I call and basically almost apologise with "I know it isn't as high as they are wanting, but I can offer x,y,z sweeteners" (preferred length until settlement, larger deposit blah blah blah) .

or basically call or email with price, conditions, sunset clause and a take it or leave it attitude?

thanks

Do you know how long it has been on the market? In some parts of country VIC properties can take ages to sell, so it might come down to how desperate they are to move (or if they have already found what they want to buy).

Definitely don't apologise, either keep it simple or use some comparables to justify why you are offering that amount (if you have them).

 

[perthguy]

This is the property listing:

http://www.realestate.com.au/property-house-nsw-dharruk-115900051

The "listing" price is $5 short of $330,000. My guess is that if it sold first day on the market, it wasn't for anything less than $330k.

I reckon that it's not possible to have a property in 2770 that's "overpriced" at the moment. Perth is probably different.

I'm seriously thinking of selling mine now. This cannot continue forever.

Perth has some agents that are classic for overpricing and some that are classic for underpricing. If you go to a home open on a development site in this market and you are the only person there, there is a good chance the property is overpriced. e.g. "from $959,000" is a joke for this property:

http://reiwa.com.au/_layouts/REIWASPAdvancedSearch/SearchResults.aspx

You could easily lowball that one.

In contrast, I went to a home open in Embleton last year on Gatton way priced at $435,000 - $475,000. There was over a hundred people at the inspection. There was no lowballing on that one. The only strategy for a property like that is to bid as high as you can afford. It was a great house but I was looking for something under $500k and I knew it would go over $500k. It sold for $552,000 and the purchaser got a bargain IMO. On the market 48 hours. 18 offers after the first home open (on day 2) and it sold on that day.

http://www.homesales.com.au/sold/3-gatton-way/hs857256.aspx

 

[perthguy]

Low-ballers don't get a look-in when the market is this hot. Just makes them look stupid IMHO.

I got a hot tip today from an agent I know and trust. A property on the market for a while at a decent price but no one wants it. To date, there has been zero interest. However, it is in an area I have been trying to get into for a while and right up my alley. The local area market is hot but this property is the wrong product, at the wrong price at the wrong time for the market. I am inspecting tomorrow but if I like it, I will definitely low-ball. It's not about the market, it's about the property, condition, demand, time on market and competition. If there is zero competition, there is no way I am going in at asking. To do so would be stupid IMHO.

 

[Brady]

I got a hot tip today from an agent I know and trust. A property on the market for a while at a decent price but no one wants it. To date, there has been zero interest. However, it is in an area I have been trying to get into for a while and right up my alley. The local area market is hot but this property is the wrong product, at the wrong price at the wrong time for the market. I am inspecting tomorrow but if I like it, I will definitely low-ball. It's not about the market, it's about the property, condition, demand, time on market and competition. If there is zero competition, there is no way I am going in at asking. To do so would be stupid IMHO.

I'm so confused. You say it's not the market... But then go on to say demand, time on the market and competition, aren't these factors of the market???

 

[Blueberry]

When you all talk about low ball offers, are you talking 10% under what is being asked, or 15% or 20% or more??

less then 10% under bottom of range.

 

[perthguy]

I'm so confused. You say it's not the market... But then go on to say demand, time on the market and competition, aren't these factors of the market???

I was responding to a claim to you should never low-ball in a strong market. The area I am looking in is red hot. Houses are selling in days to a week. This is what I mean by "the market". Demand in the area is strong overall. However, the house I looked at today within that broader market is not what the broader market wants. It is the wrong house, in the wrong place at the wrong time at the wrong price. It won't sell for asking price even though it's not necessarily‎ overpriced. If I was interested in the house next door, I would have plenty of competition, it will sell fast and go over asking, even though it's not necessarily‎ underpriced as such. That's just the way the market it at the moment, in that place, at this time. I couldn't generalise the specific market conditions in that location to any other area.

 

[vaughan]

I was responding to a claim to you should never low-ball in a strong market. The area I am looking in is red hot. Houses are selling in days to a week. This is what I mean by "the market". Demand in the area is strong overall. However, the house I looked at today within that broader market is not what the broader market wants. It is the wrong house, in the wrong place at the wrong time at the wrong price. It won't sell for asking price even though it's not necessarily‎ overpriced. If I was interested in the house next door, I would have plenty of competition, it will sell fast and go over asking, even though it's not necessarily‎ underpriced as such. That's just the way the market it at the moment, in that place, at this time. I couldn't generalise the specific market conditions in that location to any other area.

I never said not to low ball bid, only that it's not likely to be a successful strategy in a hot market when other buyers are happy to offer above ask price. YMMV.