When it comes to buying a house, the most common methods of sale are Private Treaty or Sale and by Public Auction. As a purchaser, it is important that you are familiar with the differences with these two methods of sale and are able to identify the pit falls of buying under either process.
Private Sale is a top down model, whereby the Vendor sets a top, fi xed or asking price for their property. They usually build in a negotiating margin and are prepared to accept a lower figure than the advertised price.
Houses that have a price range, are still offered for sale under the Private Treaty method and the range is there as an indicator of the Vendor’s top price. The lower end of the range is included to get you, and everyone else who is looking interested in their property! The rationale is to increase the buyer pool, to get more people in at the lower end of the range. Better exposure increases your chances of finding a buyer and sales histories show that buyers find the extra money to purchase what they have eventually found.
The Seller still has a fixed price in mind, but is open to a bit of negotiation.
To purchase a property offered by Private Sale here are a few tips that are worth considering:
1. Establish a good relationship with the local agents. Make yourself known to them as a ready buyer who is fi nance approved and able to offer a short settlement.
2. Give them a typed list of your requirements, email and hard copy as well.
3.Instead of a verbal offer, request the agent to take a written offer that shows you mean business Be persistent!
4. Remember that you have three negotiating tools:
- The amount offered
- An unconditional offer if you are able
- Short or flexible settlement time
These in combination make your offer stronger if you know the Vendor’s needs. Determine the Vendor’s circumstances, then see how you could entice them to take your offer.
5. If in competition with another buyer, offer an odd amount e.g. $435, 227.
6. Know your market. Agents use comparisons to determine the listing price. You should be able to do the same. Look at the land content, dwelling construction and presentation. Keeping this in mind and identifying comparable, inferior and superior listings currently on the market, determine your price.
7. Learn to read the Vendor’s Statement (Section 32) to identify any problems. Where are the easements? etc what overlays are there that might cause you a problem? Look at the council improved value on rates notice then add 20% to get to market value.
8. Be definite with the agent, quite clear in what you want and don’t be pushed around and made to offer more than you think it’s worth.
9. Do your diligence with the council. Look at the council website for their strategic plan. See what they have in mind for the area you’re interested in.
10. If house has been on the market for 6 weeks, the Vendors would be hoping for an offer. If none to date, their expectations are too high and they need to be conditioned by the agent: knocked into shape! Look at all of these factors when determining your offer.
Remember, it’s a buyer’s market so you have the power. Be persistent!
Next time we’ll bring you the top 10 tips for buying by auction. Stay tuned!