This is an all too common question we get asked, and of course, as you know when you ask it – we can’t answer it for you.
But we can give you some guidance.
I always say that when you’re making an offer on a property it should feel exciting, perhaps daunting, there should be butterflies in your stomach – BUT – it shouldn’t make you feel sick to your stomach. If it does, take a pause.
If there are other people involved – i.e. multiple offers, this post will be of help to you: https://www.uploans.com.au/blog/2017/01/11/multiple-offers-what-to-do-to-stand-out-in-a-crowd/
But if it’s just you and the property owner – how do you know what price is fair? Here are some tips:
- Research is your best friend. Hopefully you’ll have done the rounds at open homes, and made friends with agents, you’ll be familiar with other homes on the market and have had the chutzpah to have gone back to the agents when they’ve sold and found out the sales price OR done some stalking later on at www.realestate.com.auIf you head to the research section of www.allhomes.com.au you can see previous sales of the property in question and others nearby all neatly categorised by street. Bear in mind however that for a sale to be relevant, the closer it is to the time you’re buying in the better (no point trying to use the fact that Bill and Betty paid $45,000 for the property back in 19XX as a negotiating tactic)
- Bear in mind the cost of anything you’ll need to spend on the property after you move in and realise that most banks aren’t going to lend you the funds to do this – read: https://www.uploans.com.au/blog/2017/12/21/can-i-fund-renovations-required-to-a-property-when-we-get-a-loan/
- Realise the relative heat of the market you’re buying in – is it a buyer’s market or a seller’s market
- Be guided by your broker on your budget – DO NOT be tempted to go higher than the lower of whatever is your broker guided budget and YOUR comfort level – read: https://www.uploans.com.au/blog/2018/01/06/assessment-rates,-building-a-buffer-and-a-feeling-of-safety/
- If you’re down to the final negotiations don’t be afraid to work out what that extra few thousand will cost you over the life of a loan and decide if you’re ok with that that extra $XX per week or month if it means you secure the property now.