OK, so MrsZ and I are finally getting round to buying our first house. We live in Australia, so I’m not after any region-specific advice unless there are any fellow Adelaidians still lurking on here.

My question is this – what is a reasonable first offer relative to listed price that doesn’t take the proverbial whilst not leaving us paying over the odds.

Going off house price increases in the area since the house last sold, it would be reasonable for it to be between 8 and 13% more expensive than the current owners paid four years ago. In that time, it’s been well re-decorated, new carpets throughout, and extensive landing mezzanine converted into a fourth bedroom. It’s listed as 17% higher than it was when it last sold.

I’m not sure if a british based MTB forum is the best place to ask for advice regarding buying a house in Australia…..

I hope all of that lovely weather becomes tiresome…. not jealous much.

This British-based MTB forum has an awful lot of people on it who have bought houses 😀

And in any case, all the Australian MTB fora I’ve found all seem to just want to talk about riding, fixing, buying and selling bikes. How boring.

I’m not after legal advice, just a straw poll of how much people paid relative to initial asking price. It seems to be a piece of guidance that’s very hard to come by through more conventional channels.

If you’re not embarrassed to make your first offer then it’s too high.

see if Zoopla covers your area and look for prices in the area and it will show rates of house price increase, then determine whether you think the changesd made command the premium.

In the UK at least I would point out that if looking at semi-detached it is worth targetted something with shared passageways rather than adjoining living rooms.

If you’re not embarrassed to make your first offer then it’s too high.

not sure I agree with that, taking the mickey too much means the seller might be less inclined to consider your offer when you find you have to increase it later.

it really depends on the local market.

When i bought my first house I put in an offer 15k under the asking price and got th ehouse, 3 years later I was taking offers 10k over and ended up buying a house for 20k over asking.

Move to Hobart?
Not sure on SA but several areas of Melb and Syd have do not lend or massive deposits needed due to the level of risk going on.
Affordability and value (not price paid) is making it into some of the calculations now as banks are being increasingly regulated and pushed on previous ambitious lending.
From being in a couple of rentals that were being sold make sure you have a builder, sparky and plumber to get around before making a serious offer, the variety of building “styles” means there could be some interesting problems (the one I moved out of the sales fell through as the floor are roof were going to soon on a 70’s build)
Not an Aussie home owner but had some interesting conversations with people

Sadly zoopla doesn’t have its price advice for Australia. A couple of sites that weren’t paywalled gave me those 8-13% increases over the last four years. It’s also worth noting that the market here is stagnating at present, and as first time buyers we have no chain, which should leave us in a strong position.

It’s market-dependent.
In some areas you may be expected to bid more than the list price, in others, less.

Compare downtown San Francisco with Detroit, for instance.
Around here (Bristol, UK) , prices tend to be “offers in excess of” for popular areas. Successful bids seem to be 5% over list.
In Hartlepool it might be different.

@mike – we’re pre-approved for well over what we’d need to borrow. The fact I still ride a 26-er Cotic should give some indication of how hard we’ve been saving since we moved here 🙂

Hobart would be lovely, but looks jeffing freezing at the BBL right now on the TV, and I’m not sure work would approve, even though we do have offices there.

@moses – cheers for that. As naive as it sounds it’s really not something we’d considered much so advice helpful.

Given housing market in the area currently I suspect offers below will be considered.

Not buying the house to make a profit, we expect it’ll be the family home for some time. But nonetheless, I’d rather not pay more than I have to!

I think buying houses makes folk lose their heads (not accusing you Zokes). Just stick to rules you would use when bartering. I do some contract negs at work and these are my rules.

0) It is a game. But there are no rules. Other than the agent/otherparty is probably lying through their teeth to get you to up your price.

1) Make them think you are only mildly interested. EG do not let yourself or partner gush over the property in front of agent.
Otherwise he knows you want it bad and will push you.

2) If you can- be prepared to walk away, with many work contracts, cars and bikes and one house, I walked hard and got them to roll over. If you can’t then pretend at least..

3) Go low, give solid reasons as to why price should be reduced, use the terrible state of the economy. eg if its booming, then its about to bust everything is overpriced and all the economists agree. If the economy is in a state in your region, well then that’s easy.. However, do not let them talk you out of your reasons, say “oh I appreciate what you say, thanks for the advice but I do not agree”

4) Make them think you have good finances and are considering other places (don’t tell them what other places, its confidential the other houses you are looking at) – make comparisons to the other places and tell them the other one is winning..

5) Do not be afraid by the “other higher offer” it is likely fictional and even at a lower price you are a better bet for the vendor as you are massively solvent.

6) balance the impression of solvency against not letting them know how much you have got, or got access to, as the agent will aim to get his hands on this.

7) Do not let them know it is your first rodeo. Pretend to be an investor or have been a multi property millionaire in the UK before you came to convict land.

8 ) Did I mention agents are liars?

9) Don’t blame me if the house of your dreams slips through your fingers..

My question is this – what is a reasonable first offer relative to listed price that doesn’t take the proverbial whilst not leaving us paying over the odds.

Who say’s your first offer has to be reasonable? They can always say no and you can revise your offer. I know plenty of people who have put In silly offers for houses not expecting to have them accepted and ultimately got them, so try your luck. The longer the house has been on the market for then the lower you go. A friend of mine was looking at a house on the market for £375k, it had been on for a while, he put an offer in for just under £300k (probably £299,999) and it was eventually accepted after an initial rejection. He didn’t bother revising his offer and a few weeks later they came back asking if his offer was still on the table. He was in two minds to lower his offer once they came back, but by then decided probably best to just get the deal done and get the ball rolling.

People tend to overthink this stuff sometimes, often it pays to be a bit cheeky.

@mike – we’re pre-approved for well over what we’d need to borrow.

Doesn’t matter though as the value of the house needs to match the mortgage, banks are being pressured with a lot more rules and quota’s these days so overpaying may cause some issues – the bank needs to have an asset on the books to cover what they lent you.

Not fully up to date but
https://www.allhomes.com.au/ah/research/105-new-world-avenue-trevallyn-tas-7250/201111793411
https://www.realestate.com.au/property/105-new-world-ave-trevallyn-tas-7250?rsf=syn:oth
This is more up to day but that was the last place I rented – the one that was falling down! 15k up (stamp duty was 9.8k) and they had done a heap of renovations without looking under at the supports for the house

Just a cool day down here, was balmy all day as I was lugging boxes around

5plusn8 – Member 
I think buying houses makes folk lose their heads (not accusing you Zokes). Just stick to rules you would use when bartering. I do some contract negs at work and these are my rules.
0) It is a game. But there are no rules. Other than the agent/otherparty is probably lying through their teeth to get you to up your price.
1) Make them think you are only mildly interested. EG do not let yourself or partner gush over the property in front of agent.
Otherwise he knows you want it bad and will push you.
2) If you can- be prepared to walk away, with many work contracts, cars and bikes and one house, I walked hard and got them to roll over. If you can’t then pretend at least..
3) Go low, give solid reasons as to why price should be reduced, use the terrible state of the economy. eg if its booming, then its about to bust everything is overpriced and all the economists agree. If the economy is in a state in your region, well then that’s easy.. However, do not let them talk you out of your reasons, say “oh I appreciate what you say, thanks for the advice but I do not agree”
4) Make them think you have good finances and are considering other places (don’t tell them what other places, its confidential the other houses you are looking at) – make comparisons to the other places and tell them the other one is winning..
5) Do not be afraid by the “other higher offer” it is likely fictional and even at a lower price you are a better bet for the vendor as you are massively solvent.
6) balance the impression of solvency against not letting them know how much you have got, or got access to, as the agent will aim to get his hands on this.
7) Do not let them know it is your first rodeo. Pretend to be an investor or have been a multi property millionaire in the UK before you came to convict land.
8 ) Did I mention agents are liars?
9) Don’t blame me if the house of your dreams slips through your fingers..

And after you are finished playing psychological games with people, constructing strange alter-ego’s and personalities and lose the house you want to people willing to pay for it and express genuine interest you will probably come back to the real-world.

Not being too harsh, a lot of it is true about the games agents play, the lies they tell etc but if there are 5 people after the house you like pissing about will only achieve one thing, same as anything in life, a good friend of mine lost out on his dream house doing just this.

It has worked nicely for me over the years.
As I said – check points 2 and 9. If you are not prepared to walk away it makes it hard to negotiate, especially if agent has actual other buyers.
You have to choose your own level of risk.

but if there are 5 people after the house you like

well then you are over a barrel…

Last house I bought offered 20 percent below asking price then rang back 15 minutes after every refusal upping it by £500. Agents and seller soon got bored and told me minimum sale price which was less than I expected and very happy to pay. They are not your friends so set your price and haggle hard. Do not be British about it at all. Good luck.

Seeing as OP said

It’s also worth noting that the market here is stagnating at present, and as first time buyers we have no chain, which should leave us in a strong position.

he probs is in exactly the position to go low.
How bad to you want this house Zokes?

I paid the asking price on where I’m sitting, I doubt I’d be sitting here if I’d made an offer rather than sign the initial contract. If they are asking the market price and you want it pay up. If you think it’s over priced and aren’t to fussed about not getting it make an offer at market price.

They are not your friends so set your price and haggle hard.

This. I especially liked it when we bought our current house as we were buying from a bank (an old couple had done equity release and subsequently died). I was told on authority by the estate agents that if we offered £xxx,xxx we would definitely get the house and that £yyy,yyy was the absolute minimum the bank would go to. I offered £25,000 less than their claimed minimum and after a couple of days of haggling got it for £23,000 less. 🙂

Thanks for the input guys.

Re: how much do we want it? It’s nice, would suit our needs for a long time, needs nothing doing to it (subject to inspection…) But, there are others about.

Only time pressure is our lease is up in July.

But that said, we’ll have to break our rental contract at not insignificant cost, so the longer we leave it the better until July starts getting close.

make an offer at market price.

Yeah, assessing market price is the tricky bit. The market price is what it sells for. Either we set it, or potentially at some point someone else will.

but if there are 5 people after the house you like

well then you are over a barrel…
[/quote]Yeah, this.
Two houses on our street have been on the market recently. One went for nearly 50% over the initial price, 12-15 people bidding, total bidding process from start to finish was ~36 hours…….

The other is yet to sell 4-5 months on, best offer is 15% under asking. And yes, it’s a sellers market round here. But still, no one wants to buy a house that needs a fortune spending on it. Even if the location is *really* good.

(if it’s still there in the summer, i might buy it and renovate/rent.)

But still, no one wants to buy a house that needs a fortune spending on it. Even if the location is *really* good.

I find this interesting.
A surveyor friend told me that in a rising market all fundamentally similar houses (eg location, no of beds, garden size etc) go for similar prices at any point in time, regardless of condition and extras.
In a mature or flatter market, then condition and extras can make a massive difference.

I have never been in a position to test this.

We put in an offer around 15% lower than the asking price and it was accepted, which I guess means there was potential to go a bit lower, maybe. House was a tip and had been on the market for a long time.

Only time pressure is our lease is up in July.

But that said, we’ll have to break our rental contract at not insignificant cost
What’s the usual settlement time there certainly 60 to 90 here so starting now your looking at covering 2-3 months of rent less if you stall a little.

Did the links on previous prices work for the ones your looking at?

Re: how much do we want it? It’s nice, would suit our needs for a long time, needs nothing doing to it (subject to inspection…) But, there are others about.

Only time pressure is our lease is up in July.

But that said, we’ll have to break our rental contract at not insignificant cost, so the longer we leave it the better until July starts getting close.

I would be tempted to follow my approach on a couple of likelies then and see how it goes. If the market is increasing slowly can you save deposit faster than its increasing?
If not then I would be tend to be less aggressive, if yes and you are happy where you are then pin them down hard.

ghostlymachine – Member 

But still, no one wants to buy a house that needs a fortune spending on it. Even if the location is *really* good.

I don’t think anyone wants to pay market value for a house in good condition for a house that needs work, no, but if that’s the case it isn’t being advertised at market value anyway.

There are shed loads of people after houses that need work, they just expect them to be priced accordingly to the work required.

5plusn8 – Member 

Re: how much do we want it? It’s nice, would suit our needs for a long time, needs nothing doing to it (subject to inspection…) But, there are others about.

Only time pressure is our lease is up in July.
But that said, we’ll have to break our rental contract at not insignificant cost, so the longer we leave it the better until July starts getting close.

I would be tempted to follow my approach on a couple of likelies then and see how it goes. If the market is increasing slowly can you save deposit faster than its increasing?
If not then I would be tend to be less aggressive, if yes and you are happy where you are then pin them down hard.

I agree with taking the approach, just minus the lies, stories, invented personalities and other such behaviour that the agent will see right through anyway just as you confess to see right through them when they behave in exactly that way towards you.

Who say’s your first offer has to be reasonable? They can always say no and you can revise your offer.

ive watched this from the other side with some colleagues selling their house….

the first two offers from the same guy were beyond cheeky, he was told to piss off – i wont deal with this time waster even if he gave me the asking.

so do beware if your not prepared to walk dont try and play hardball. – the other guy may walk if you have read the situation wrong (ie they aint desperate)

seller got asking plus a few grand 😉

Yeah I got another couple tomorrow and another two couples on Wednesday and she said she would definitely take it once shes seen it she just needs to see it first you know so yeh I don’t think it’ll hang around if I’m honest so if I were you I’d be getting in an offer before end of play today you know but its your call yeah

Haggling is not aggressive or hardball if you do it right and have all your cash in place and are looking to buy. Cheerful chappy approach as opposed to stw approach.

I’m with 5plusn8 on this, it’s about low offers and bluffing IMO

The agent doesn’t really care about the price, and will just want a sale. The difference in their commission for an extra £10,000 is tiny in comparison to the commission they lose if the sale doesn’t go through.

Don’t give much away when you view the property, as if they realize you’re in love with it then you’ll be paying more. View other properties with the same agent to emphasise that you have other options. Try and find out why the owner is selling and how desperate they are..

If your first offer is accepted, then you’ve bid too high.. you can always bid higher, but it’s pretty difficult to agree a new lower price once you’ve already reached an agreement..

Money sounds smaller when talking in 1000’s, so don’t fall into the trap of “It’s only 5 extra..” £5,000 is a huge amount..

Look at the property’s previous sale and current listing history.. see how long it’s been on the market and how much the price has dropped since day 1.. also some agents list different prices on different websites, worth checking them all.. someone near me overpaid by 25k on a property that had been on the market for 2 years as they’d agreed based upon the price on the most expensive listing..

Use common sense.. the agent I last dealt with said “They will accept your offer, but it would be a really nice gesture if you could maybe pay an extra grand”. Which I surprisingly didn’t feel like paying.

Edit: Don’t be afraid to ask them outright.. “I don’t want to mess you around at all – What’s the lowest you’ll realistically accept for the property?” Worst case scenario is they tell you the asking price, but you’ll be surprised how many people will give you a price substantially under, which you might be able to negotiate down further if you bid close to it..

Just my 2 cents, feel free to disregard..

Yes There’s haggling but the old if it doesn’t offend it’s too high mantra going on here isn’t haggling . It’s mostly being jist marking your self out as a time waster unless of course the house is well over priced anyway.

So a well placed offer is a better opening gambit than an offensive one because some people don’t suffer fools easy and simply won’t deal with you.

Its a bit like the other thread where the guy wouldn’t give the guy a car sale because the seller wouldn’t budge at all off the sticker price and he felt he just had to get something off – even 50 quid. Make him feel like a man.

Mikewsmith banging the Tassie drum again!!

(family in Acton and Tea Tree – must come back over some time).

Haggling is not aggressive or hardball if you do it right and have all your cash in place and are looking to buy. Cheerful chappy approach as opposed to stw approach.

Exactly. Our standard response (eg counter offer) to a price for services when doing contract negotiation goes like this:
“Oh look really sorry we are probably not going to go ahead as our budget expectations are a bit different, we do appreciate your work in quoting. But just wanted to say we are pulling out and didn’t want to waste any more of your time”
They normally ask then what our budget is, we tell them our bottom end.
Then if we have got it wrong, we hear nothing, but if we are right they will come back with a better quote. It is about reversing the psychology. We are not probing to find out how low we can go.

5plusn8 – Member

They normally ask then what our budget is, we tell them our bottom end.
Then if we have got it wrong, we hear nothing, but if we are right they will come back with a better quote. It is about reversing the psychology. We are not probing to find out how low we can go.

Is this before or after you tell them you are an investor / Multi millionaire or that the house is too expensive because of the economy is about to go bust?

No read all the replies but I did see your comment about the market stagnating.

Be very careful with regards to location.

some ares will always be popular. Some will be very market dependent.

When I chose my flat in Bristol I was very careful to buy as good as I could get in a good strong area of the city and it definitely paid off.

5plusn8 gets it. Silly offers never offend me if not done aggressively you just say no thanks. If it takes 50 offers to get to the price you or they want so be it. No need to throw the rattle out the pram.

Marin – Member

5plusn8 gets it. Silly offers never offend me if not done aggressively you just say no thanks. If it takes 50 offers to get to the price you or they want so be it. No need to throw the rattle out the pram.

Not everybody is the same though, as I say, my friend made some silly (in the ballpark still) offers for a house and proceeded to up them in increments resulting in the agent not taking or returning his calls and the house being sold on shortly afterwards.

Its essentially a lottery as to how you will be received if you go down this route – you could win big and bag the house for a great price, you could also piss the owner / agent off or just lose out to somebody willing to play closer to the asking price.

I think the real question should be, how much do you want it?