Most people are not buying property every week, so how do you know how much to actually offer for a property, and when you should be making the offer? Particularly in a changing market.
If you've seen a property you like and are considering taking things further, it's extremely important to ask yourself the following questions:
- Are we 100% certain that this property is the one that we wish to purchase?
- Have we got our finance pre-approved to be able to purchase this property?
- Have we done thorough investigations into recently sold properties and prices in the area to establish a realistic price for the property?
- Have we picked a property with good location and potential to ensure the property will increase extensive capital gain over a period of 5-7 years?
- And most importantly, can we definitely afford the amount we wish to offer for the property?
For the initial offer, it's usually a good tactic to submit an offer about 20-30% lower than the price guide, as you can always come up in price but can never come down in price after you have committed yourself. In most cases it is best to undertake a pest and building inspection before making an offer as this will give you a good guide and bargaining tool on where to start your negotiations and more importantly, whether you should start them at all. Your solicitor or conveyancer can provide some guidance to you upon review of these reports.
You should submit all offers IN WRITING, and when your offer is accepted, always ask the agent to confirm the acceptance of your offer in writing to avoid gazumping. (This is a practise where the sellers agrees to sell to a particular buyer and then either sells to another buyer or raises the price if two or more buyers wish to purchase). Until the contracts are actually “exchanged”, be it conditionally or unconditionally, the property is still “up for grabs”, and there is the potential that one or more people could come along and make an offer. It's not illegal, but is frowned upon. So to avoid this unfortunate situation happening, we'd suggest you get yourself into a position to be able to exchange contracts as soon as possible after you receive “offer and acceptance” for the property.
The timing of your offer is critical. Agents play a lot of games and will often create a sense of urgency to get a deal together, but patience is a virtue and can often save you thousands of dollars.
Our team at PK Property are expert negotiators, and have purchased over 2500 properties over the past 21 years. If you need some help on how to make an offer or some independent advice on a property of interest, please contact our team today on 02 9960 1066 or enquiries@pkproperty.com.au. We look forward to helping you secure a great property for the lowest possible purchase price.