Offers over. Price by negotiation. What do the different sale methods mean? 🏠 FIRST HOME QUESTIONS
Hi Samara,
First day of looking tomorrow? Make sure you plan a couple of coffee stops in there. Not only will you get to see where the good brew is around your potential home, youâre likely to need a pick me up. Thereâs a lot of information coming at you on the first day of opens.
Youâre probably going to be looking a houses that have different selling methods, which means if you do find something on the first day (very rare, but I also know you bought the first wedding dress you tried onâŚ) then youâll need to understand the differences.
Offers over
âOffers overâ (sometimes shown as $XXX+) means the seller has a minimum price and will only consider offers over that amount. Itâs useful to set expectations, so that buyers know what range the property is in and whether they should bother inspecting it.
Having said that, hereâs an insider tip: if the advert says âOffers over $520kâ and the top of your budget is $500k, itâs still worth putting in an offer. Most sellers arenât going to give away their real bottom line in an advert.
When putting in an offer for this kind of sale method, you should ask the listing agent what the buyer price feedback has been. All great agents will be asking buyers coming through the home what they think of the home and where they see the value sitting at. When deciding on your offer amount, make sure you take this feedback into consideration. There is no point going in with an offer well below what the market feedback is at. Also, ask the agent if there have been any offers received to date.
You can always test before putting in a formal offer, something like: âIf put in an offer of $XXX would I be in the ballpark?â
If you decide this is the home for you, and you want to put an offer in writing, how you play this is really up to the market you are purchasing in. Is the market hot where there is low stock and lots of buyers? Or there is lots of stock and few buyers? Or something in between? There will be plenty of telltale signs and information out there to indicate what market you are in.
What is a super important decision is â is this the house for you? Can you see yourself in it for the medium to long-term? If the answer is yes, put your offer in writing. It is always good to add that you want to know feedback as soon as possible and ask for a date when you should expect to hear back.
I would also tell them that if your offer is rejected you want to know quickly and why, so that you have the opportunity to make an additional offer if you are able.
Often when the market is hot, and it is an âoffers overâ campaign, the agent may be taking offers until a specific day and time and then all of these will go to the owner for a decision. In this scenario, it is ideal to put your best offer in as it is likely you will not get another chance. If the market is cold, then you have the capacity to play the back and forth game. Always be super clear of your intentions and put it in writing.
Price by negotiation
âPrice by negotiationâ (sometimes phrased as âexpressions of interestâ in more high-end properties) gives less away. It doesnât give you a starting point. Some sellers prefer this, because they donât want to set a price range that might limit how much they can get.
Personally? I advise sellers to go with an âoffers overâ campaign or an auction, rather than price by negotiation. Itâs a bit like that old saying: if you have to ask how much something is, you canât afford it. A lot of buyers - and you might be one of them - donât want to waste time travelling to an inspection if thereâs a chance the home is way out of reach.
Having said that, âprice by negotiationâ is a great tactic for sellers if property prices have been up and down recently, or if itâs a really unusual property and they want to test out the market. Itâs also great for those really high-end properties, where sellers are always hoping that someone with deep pockets falls in love and is prepared to pay over the odds.
My tip here would be, always enquire. Price by negotiation can feel pretty intimidating, but it might just be a seller trying to keep their options open. Give the agent a ring and ask them what kind of price range they think the place would be in. If a buyer rings me and says something like âIf I were to put an offer in in the $500,00 range, would the seller entertain that?â, Iâll do my best to answer. I might not be able to give you a definite yes or no, of course, but I can tell you if youâre in the ballpark. If youâre not, Iâll suggest other properties that might fit your budget.
Auction
The other obvious pricing method is auction. These are becoming increasingly popular in Canberra. Sellers like them because they generate competition between buyers, which can lead to the best sale price. Buyers like them because all the negotiation is out in the open. You agree on the terms (settlement length etc.) beforehand and then the highest bidder wins.
Auction campaigns usually go for four weeks. Throughout that time, the agent will be updating the price guide based on the feedback theyâre getting from buyers during open homes. Keep in touch with them regularly if youâre serious about an auction property.
Also, donât feel as though you have to wait for the auction before putting in an offer. If the seller is happy with the price and terms youâre putting forward, they may choose to take the offer and cancel the auction. This is also why itâs important to let the agent know if youâre interested, so they can tell you if the seller is considering another buyerâs offer.
When it comes to auction day, weâve got a guide for buyers that will give you all the tips you need.
Good luck at the opens! Keep us updated đ
TAKEAWAYS
- âOffers overâ give you an idea of what the seller wants â but if your budget is slightly less than their floor, itâs still worth trying your luck
- âPrice by negotiationâ might mean the seller is testing the market. Donât be scared off!
- Feel free to give the agent a ring and ask them what price the seller might consider. What do you have to lose?
FOLLOWING SAMARA'S JOURNEY?
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