Looking to Buy First Home - to Increase Offer or Not

Looking to purchase my first house. Have offered an amount ($1.32m to be exact, in writing) and the agent has rejected our offer, coming back saying the owner wants $1.4m, or close enough to it.

House has been on the market for just less than 2 weeks, and we are the only written offer.

Our absolute highest we would be willing to pay is about $1.36m - so another 40k. This is in line with other similar sold properties in the area (albeit not many options to compare, quite a unique house). Only few years old.

Been looking for a while and this has definitely peaked our interest. Dream home you can say in our budget.

Question: Do we now offer our max price, or do we wait it out? Owner doesn't seem to be in any rush to sell. Would be happy to pay $1.36 - but mindful of "bidding against ourselves" and driving the price up. Agent hasn't been forthcoming with a price under $1.4m, however has expressed vaguely that vendor may sell at a price close enough to it. After seeing many MANY properties, and finally selecting one that fits - don't want to miss out.

Keen to get everyone's thoughts.

Comments

  • +1 vote

    no where near enough info to give you any advice if the house perhaps you could link the house so we have an idea of what the house looks like and the area your hoping to buy into

  •  

    I think that's a reasonable amount to drive the price up by to 'be close enough to it.' If that's your max you may as well see how it goes, at the end of they day if they get a higher offer that's closer to what they want they're gonna take it

  • +4 votes

    Wow. You have $1 million - it's what Dr. Evil first asked for when he held the world to ransom.

    Life must be pretty sweet.

  •  

    If this is genuinely your dream home…. why not just offer the full amount? Difference of $40k when we're talking 1,400k seems marginal, especially if the other option is losing your dream home and spending another few months looking and potentially not finding it (no idea how unique your criteria is though for a dream home).

    That being said, based on what you say I'd just offer the 1.36 as demand seems pretty low, and if that fails go to 1.4. Seems reasonable the seller might accept 1.36 mil.

    • +8 votes

      Difference of $40k

      … is still $40K that needs to be earned and saved. 40 flubbing K! It's this "It's just 40k" type of talk that has driven prices to the ridiculous place they now are.

      •  

        $40k between owning your dream home and not seems easy though. Put another way, is it worth around $2k a year for your happiness in your dream house assuming you live there at least 20 years?

        • +1 vote

          Yep, that's exactly the talk I was talking about. You've been sold on it; we all have.

          That 40k is often the last 40k the buyer has access to, and the little bit that takes them from managing the situation easily to one of stress.

  •  

    If the offer has been flatly rejected you currently have one of two options.

    Say "thanks very much, but I believe the offer is a strong one, I'm not in a position to offer any more, and am actively pursuing another property" and see what happens.

    OR

    Say, "look I can stretch to to $1.36m, but if not accepted and contracts signed and exchanged by 4.00pm on Friday it will be withdrawn".

    Neither of these approaches guarantee you anything, but it may just help flush your buyer out.

    •  

      I tried the sunset clause strategy in the past. Unless you have another property you are willing to purchase at the end of that clock, the vendor can fish out that it is a hollow statement.

      • +2 votes

        Agreed. And for the most part is it a hollow statement. If they want to sell at your price, they'll still come looking.

  • +6 votes

    Set a price and just wait until there are other offers.

    The vendor isn't going to be tempted to close the deal after being listed for only two weeks. Raising your offer only serves to reassure the vendors that the property is worth more than you are offering.

    Even if you offered $1.4m now, they may turn you down. Your offer is close enough to their asking price. They need to either wait out the clock or receive lesser offers.

    Unless you're willing to offer ludicrously above asking, there's nothing more you can/should do.

  • +3 votes

    Keep the 40k to yourself for now and hold firm on the 1.32. The agent will give you a call in a week or two as it's a buyers market. You'll tell the agent that you are still interested and the agent will mention this other last minute buyer at which point you'll have to add the 40k to your offer to match theirs.

  •  

    Definitely a buyers market now, with conditions worsening for sellers come the September end of jobkeeper/seeker. Sellers don't have much of a leg to stand on in this climate. The longer they wait the more you can drop your offer

  • +1 vote

    I hope you get it. The Sydney market is holding up well and is up 1.1% during the March to May quarter. You probably will still have some competition from other buyers.

  •  

    It's tough, but as long as you have time a property of this one will come at your price. The other thing is if this falls through look at other areas in your budget. There's nothing worse than missing out all the time. Sure it might be a buyers market. Your still competing against another buyer in the end most likely. How long have you been looking? Is this the first offer. If so unless it's the perfect house you want, go for it to your limit. Also IMO. Better to just find a small house with a moderate budget in a great street, near good school, near shops and PT. for your first home. Debt is still debt. Your young but if it all goes pair shaped who needs a massive debt.

  •  

    If you can afford to go to $1.36mio then go for it. (a) if you don't and the place gets sold to someone else you will always be left wondering "what if" and more importantly (b), that extra $40k you pay now will seem inconsequential in 5-10 years time.

    • +1 vote

      The thing with offering $1.36M now would be that the agent will come to you and say that the vendor will refuse to sell for anything under 1.4M and what's another 40k? The agent is just doing their job but that'll end up being a +80k jump all up for OP and out of reach.

  • +1 vote

    There must be some really rich people on this website when $40k is referred to as "marginal" and "inconsequential".

    • +1 vote

      There are. There was a poll on it.

    • +1 vote

      It's 3% on a long term investment which isn't huge in relative terms.

      If the property ticks all the boxes then is it better to pay the $40k and stop wasting weekends looking for a property or waiting another 6-12 months for something suitable to become available? I'd rather pay the money as my time is invaluable.

    • +1 vote

      Words of banks and agents as they're the ones to gain from it. For the buyer and vendor, they're definitely not.

    •  

      It's contextual. If I'm in the position of offering $1.4 million for a property, then yeah, $40k is pretty small in comparison, especially with a long-term view.

      If I'm living paycheck to paycheck $40k is like a lottery win of course.

      Need to think about where the other person is coming from not just your own circumstances. :P

  • +1 vote

    I would stay in contact with the agent. Give them 7 days to stew on it.

    I would also seek some type of proof that your offer had been passed on to the vendor. When I bought in 2018 I made written offers on 2 places and it was obvious afterwards that the offers weren't passed on to the vendor.

    The place I bought (property 3), the agent knew it ticked all my boxes and that it was within my budget, so he played me like a trout. I made an offer, he came back with the mystery buyer that could pay full price but couldn't access funds for 2 weeks. I paid full price (and I love the place).

    If it really is your dream/forever home then is $40k more an issue?

    PS: it's "piqued"

  • +1 vote

    Read my post in the context that "inconsequential" $40k is only some 3% of the asking price. If you can afford it, then isn't 3% extra a relatively minor price to pay for your "dream home"?

    • +1 vote

      I know what you mean but that's how people get into to debt that they cannot manage, the whole "oh it's only 40k over 30 years" or "it's only 2k on my credit card which I can pay off over a year". I guess it all depends on what the OP means by "Our absolute highest we would be willing to pay" do they mean that they will really stretch their finances if they go that high or do they mean that that is the limit they will not go over so they can still live comfortably?

  •  

    Most response is to spend the money but I would say otherwise but then people are irrational when it comes to property. It just seems on going up. Then there is this stimulus which is coming for property because even the government believes it is going down because demand's dried up.

    We're not going to see the 200k of immigrants coming this year or the next potentially.

  • +1 vote

    I would advise the agent you are looking at another place too, and plan to make an offer on it, so kindly withdraw your original offer that has been rejected.
    Let them know if the vendor is prepared to make a counter offer you will consider it, but you won’t be able to proceed if they delay.
    I have missed a couple of  ‘dream houses’ over the years, and my suggestion is that the biggest regret is that they are all much more expensive now. Does it seem credible that a $1.4m property will be much dearer with high unemployment and economic issues ?

  •  

    Its pretty impossible to say without knowing the house, or where you are - the Sydney market is different to the regional NSW market which is different to the Melbourne market etc.

    In the scheme of things, $40k isn't a massive leap if it is your dream home. Keep in mind that there is every chance they will come back and say no - I've had a couple of situations lately where "close enough to it" would in this case mean $1.395m (in these cases buyer was dreaming.

    By the same token, $80k isn't a massive leap if it seals the deal and is really important to you. Keep in mind that a lot of places are still selling at/above sticker - this 30% drop everyone talked about was always a load of nonsense, particularly in areas where incomes are still flowing and international travel is lower (i.e. Sydney CBD and surrounds have dropped in clearance and prices; outside of that are still clearing great and prices are still up).

  •  

    Ask them for the special morning price

  •  

    "The perfect house comes once a month" - this is something that someone else told me and it wasn't until I started buying houses did I see it true.

    That said, if this is your forever home, then a bit extra may be worth it to save other hassles. Also, a budget of $1.3mil opens quite a few options in terms of buying a site and building your own home - I don't know what other considerations you have so just throwing it out there.

    Also, what is your opinion of the real estate agent? In all me experiences except one purchase, I've never known them to be truthful.

    TLDR version is, don't always trust what the agent says. Otherwise… read below.

    One of my friends offered a price on a house, but got it $30,000 less when it went to auction. He said that the agent told him that the vendor refused the offer. During the paper signing after the auction, my friend told the vendor that they should've accepted his earlier offer, and their response was they never got it!

    I myself made an offer on a house and it was sold to another buyer for some $10,000 less than my offer (it was unconditional). I later found out that that agent sold it to his friend and screwed over the vendor. I know this because I had another property-mogul friend that regularly dealt with that agent, and his experience was that the agent would call my mogul friend and say 'buy this house now'. Sometimes he would say 'just give me an extra $500 cash so I can say to the vendor that I squeezed you for a little bit extra'.

    In one other case, my cousin offered $1.5mil on a $1.8mil house. The agent said that the vendor refused it. My cousin played the agent and said, if you can get the vendor to accept the offer, I'll pass the sale of my current house to you. Agent later came back with vendor accepting the $1.5mil offer.

  •  

    Don't show your max budget. Give a WRITTEN offer. When vendor rejects it make sure they change the advertised price range. Wait to see if there's interest. The agent will NOT sell it without seeing if you want to beat any other genuine offers. If it's going to auction let it go to auction.
    VIC- my place was advertised for 1.39 to 1.49. Offered 1.4 prior to auction. Rejected and had price range moved to 1.45 to 1.55 as they rejected two offers higher than mine. At auction we got it for 1.41 and could have gotten it for less but I was stupid. Plus they knew our max budget (eg best offer from before). So just hold on. If it goes to someone else u will find something else. I was beaten at an auction by 1k and it was a good thing because my current place is so much better. So don't worry too much theres always another place (speaking as someone trying to find something during the crap market a year ago when there was nothing to buy)

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