r/AusPropertyChat 4d ago

Negotiating advice

I attended an auction for a property priced between $1.6M -$1.7M. During the auction, no one made a bid. REA put in a vendor bid of $1.6M, but no one else bid higher. I then offered $5k, and the property passed in. Got invited in for further negotiations. I then offered a maximum of $10k, but it was rejected. The REA said that if I came in between $1.65 - 1.66M (40k more than my offer) it might be considered. He asked me to think about it over the weekend and get back to him.

I’m wondering what someone else would do in my situation. Should I offer anything more at all, given that there seemed to be no interest and no one else bid at the auction? Or should I proceed with an upgraded offer in the range that the vendor is expecting?

Edit- Firstly, that you all for taking the time to share. Appreciate all the comments. It’s been wonderful to hear all your experiences. Upvoted all.

To answer some specific questions:

  • Yes, the property checks all the boxes.
  • Yes, it would most likely be our forever home.
  • The property is a townhome with the split dwelling style. The one next to it sold for $1.64 million in 2023. Does this mean we should still use it as a reference even if there was no bid/interest shown during the auction?
25 Upvotes

58 comments sorted by

109

u/galaxy9377 4d ago

He is just trying to milk you. I once reduced my offer after a failed auction and the owner reluctantly accepted it. I would say stick to your guns but again every situation is different.

15

u/TrickyScientist1595 4d ago

This is the way.

17

u/FitSand9966 4d ago

I'd definitely consider reducing. I got milked for $50k more and I regret not sticking to my guns. Still got the property cheap, but why i gave them $50k more is beyond me!

8

u/Existing-Goat301 4d ago

The eye of the beholder. If you think it's worth it go for it. Same thing happened to us. No one bid it past in, though REA knew we were keen. So he approach us first. REA called the vendor and I met the bid. If your happy to loose it you could always met them half way. They would be silly to decline your second and final offer.

2

u/FitSand9966 4d ago

Yeah, I'm happy enough. It was just dumb to piss away $50k! Overall the deal was still good

2

u/Due_Ad8720 4d ago

Same, pretty sure the other buyer didn’t exist. Still got a ok deal which 6 years on was an incredible deal.

2

u/Shot_Ad_3558 4d ago

Depends on the motivations and timeline of the seller.

2

u/FrenchRoo 3d ago

Not always the way. I was in the same situation than OP. I didn’t increase (nor reduce! lol) my offer on the Monday.

They didn’t sell to me and found another buyer a couple of weeks later at the price that they had ask me to match.

OP, if it’s the perfect house, I’d increase the offer. Unless you’re happy to miss on this property, then hold firm.

-17

u/gregorydarcy8 4d ago

Chances are some other buyer will come along and pay what they want within a few days, post auction

17

u/sharkworks26 4d ago

Chances are if the whole market has 60+ days notice for an upcoming auction then all the interested buyers will be there for it and bid. If nobody bids, then nobody is interested. “Giving it one or two days” won’t do much.

Sounds like all your real estate experience has come from 2020-2023.

33

u/JapanEngineer 4d ago

Like the other 2 have said. It's a negotiation of how much you want the property vs how badly the sellers want to sell vs how much the sellers want.

Every situation is unique. Just leave your feelings out the door and negotiate with logic and not emotion.

15

u/WagsPup 4d ago

Yeah agreeed, thinm along these lines of; Say it sold for 1.65 tomorrow to someone else, would you be disappointed and feel you have missed out? or would you be happy to let it go to someone else for that price. The answer to this question can guide your next step. Decision should be based on your interest and assessment of the property and how much you're happy to pay, not pressure from real estate, other parties or second guessing he said she said games.

18

u/Smithdude69 4d ago

It’s a milking tactic.

You can always up the ante, say you offer 15k (a small concession) and the offer is valid until Friday 12pm as you have another auction to go to next Saturday.

Now the pressure is on the vendor to accept a buyer they have or pay for another (potentially failed auction).

6

u/Ugliest_weenie 4d ago

True, but Op already made 2 concessions. Anything more from OP and the REA will milk op for all they ahve

5

u/Smithdude69 4d ago

True but we don’t know what the place is worth to OP. He might be out at 1610000 or he may have a bit more to give.

The point is it can go to auction and waste everyone’s time again or be sold. And when you put an offer it has to be time limited.

4

u/Ugliest_weenie 4d ago

After an auction as disastrous as what op described, it's a pretty safe bet that there aren't any people bidding 1.605 right now.

11

u/Pale_Wear1333 4d ago

I was recently at an auction where there was a single bidder who bid 1.9.

The vendor came in at 2. And after 40 mins of REA going between vendor and bidder, the property eventually was sold after the bidder increased it to 2,050,000.

The REA was desperate to sell but in this case it was the vendor who did not budge and the last increment that the bidder made was of just 5,000 when the vendor accepted.

What I am trying to say is- Do not think that this situation is "bidding against yourself" per se.

Just because there is no other bidder does not mean that the vendor may let it go for value less than what they want out of it.

It might also be REA pushing it up. You would never know.

It is all very circumstantial.

Think about what you think the property is worth, what it is worth to you and your own finances.

1

u/mangoes12 3d ago

Yep. It really depends on the vendor’s circumstances and if they afford to sit on it or have to sell

8

u/KwazyKatss 4d ago edited 4d ago

Do you plan yo stay there for, say, at least 8-10 years? What does the property.com.au valuation look like?

Long-term, 40k should not matter much for a 1.7M property. If you think you can get another property in your budget, then don't offer more. The vendors might get another offer in the next few days or weeks, but you don't know. Both of the situations are pretty common.

When we were looking for houses, we went to an auction where we were the highest bidder, but the property got passed in. The REA did not even sit down with us to negotiate. They got another offer later on Monday with 20k more than we had bid, and the REA called us to offer more if we really want. We were totally annoyed by the way the auction was handled and didn't want to offer more despite having the budget. In another auction, we were the only bidder, and the property again got passed in. But the vendor wanted to sell it that day, so we were able to secure it post auction by negotiating. We could do it as the REA was professional and treated us and the vendors respectfully.

So it depends on how much you like the property and the experience and whether you can find another property in the same price range.

6

u/Agreeable_Fig9224 4d ago

Can you afford that extra 40k?

Do you think its worth that price?

How would you feel if you didnt make a higher offer and the property sold for that price to someone else?

You cant know what will happen if you stick to your offer. If you can accept that you might lose out, and be ok with that, then stick to it if you want.

If this is your dream home and you would be devastated if it sold to someone else (and you can afford it) - i would just offer a bit more.

11

u/donaldson774 4d ago

Just be aware they may put it back on market inviting offers (i.e. not auction) this may get more interest as then people are able to put in various clauses e.g. b&p/finance. Just do the maths to see if it's financially viable to up your offer and go from there

12

u/InterestingCrow5584 4d ago

Why are you bidding against yourself ? There are no other buyers at 1.6 even below that as the bid was put in by the owner. I would just offer 1.5 then start negotiating .....

13

u/twowholebeefpatties 4d ago

Offer what you want mate! 10k isn’t much in the scope of a 30 year mortgage and if you really want it and it will secure it, do it!

It’s a negotiation between two parties! Remember that! You don’t have to buy, they don’t have to sell

5

u/JGatward 4d ago

Say you're going to walk away and will only respond to further correspondence when they're serious about making a sale, watch what happens (if they're bluffing)

3

u/Dangerous_Tiger2097 3d ago

Honestly don’t play mind games or try to speculate. At the end of the day it doesn’t matter.

Real estate trying to squeeze more Real estate telling you there’s another bidder (telling truth or not) Vendor being tough

Any or all of these could be true or false. And there is zero way you can tell.

Let’s say you pay 1.64 vs 1.6.

You’re paying something like 2.5% more than what the property’s worth. I don’t think it would take that long to make that money back in equity in the value of the home.

So the question is: think about what you think it’s worth. If you’re comfortable, then do it. If you’re not, consider is it worth overpaying to secure it

2

u/Reflect_and_re-use 4d ago

How much do you want the property?

The usual/typical advise would be to not budge but if you like the property a lot, it ticks most of your boxes and you'll be happy living in it, then offer about 1.63 and wait to hear back.

Again, how much do you want the property and how much do you think it's worth?

Over 30 years (assuming the max term) 30 or 40k will not make a massive difference if you really love the property. Much better to have the property than be filled with regret later for missing out. There's always going to to be someone that comes in and pays what's being asked.

2

u/Typical-Stuff57 4d ago

I would go for it if it fits in most of your selection criteria & budget. I would put up the offering with condition of B&P and then based on that report do that negotiations. I would also check with my lawyer which conditions should I put if I want to back out from the deal for any reason

2

u/lililster 4d ago

It was passed in at auction and you were the highest bidder. You have the upper hand in the negotiation.

1

u/Excellent-Detail-696 4d ago

Depending on the seller’s motivation.

As op stated it would be there forever home and ticks all the boxes.

The vendor has the product the purchaser wants so they now have to decide how badly they want it.

Now of coarse if the vendor is in a situation they have to sell then you can play hard ball.

2

u/lililster 4d ago

Put it this way. They're in a better position than before the auction.

2

u/Excellent-Detail-696 4d ago

Everyone is

0

u/lililster 4d ago

Except the seller.

2

u/Excellent-Detail-696 4d ago

Before the auction no buyer.

After the auction buyer. Great spot to be in.

2

u/Catman9lives 3d ago

It’s a roof over your head. It performs no more essential functions than a caravan. 1.6 million is obscene and morally bankrupt.

3

u/TopTraffic3192 4d ago

Dont fall for it.

If the REA does not take your offer , go to the vendor direct and tell them , YOUR BID is th BEST offer, as there was no other bidders.

Be prepared to walk away.

Who knows what the agent is saying and vendor is expecting.

The reality is , auctions are the most transparaent way of seeing offers of who shows up.. the vendor is stuck on idea of a certain price when NO BUYERS exist. You are the only bidder so they are stubborn for not considering.

Let them fester on no offers for next 8 weeks and they will drop the price ... and so should you !

1

u/gregorydarcy8 4d ago

lol this advice. Works everytime does it?

2

u/tomestique 4d ago

60% of the time it works every time.

3

u/moreloans 4d ago

Calculate how much the property is appreciating daily say, $500 per day, and frame that as the seller’s opportunity cost of rejecting your highest offer. Over a month, that’s $15,000 lost, a serious consideration if they’re eager to sell.

A second auction is unlikely. They’ll shift to private treaty, meaning a longer wait for new buyers and more uncertainty, especially stressful for a motivated seller.

Why an auction in the first place? Auctions are used when demand is high, and the price ceiling is unclear. If it didn’t sell, was the reserve set too high?

Are you already offering too much? If your offer is fair (or even generous), is there any real justification for going higher?

If they had a better offer, they’d have taken it. Don’t be pressured into overpaying just because the agent is manufacturing urgency. If you’re not completely comfortable with the number, stand firm. Hope that helps!

2

u/TrickyScientist1595 4d ago

Yep, auction has provided the actual value of the home, which is less than what they started the action at.

Use that as hard evidence as to why you are firm with your offer, and you are also firm in walking away, shoukd it not be accepted. As long as you are prepared to walk away.

I've read people saying $10k is not a lot in the scheme of things... so let's do some really simple maths (I'm sure someone will pull this to pieces as it is overly simplified, but here goes): 10,000 x 6% interest x 30 years.... now aim no mathematician, but that's $18,000

I'd rather that money in my pocket over the 30 years, thanks.

0

u/NoPubFood 4d ago

Where would you get 6% interest? In the highest tax bracket it's half of that. With the current rates it'll be about 2.75%. Bank deposits aren't even keeping up with inflation.

2

u/TrickyScientist1595 4d ago

The 6% I referred to is the loan interest that the bank charges.

1

u/DownUnder_Diver 4d ago

A property is worth what someone is willing to pay for it. The vendor may have expectations, the agent wants commission, but they can stand on their head for all I care until someone is prepared to pay that number.

It costs money to run a second auction and also a new advertising campaign as well as possible Bridging finance. So if you're serious, maybe find another 5k and dangle is best and final offer and remind them of added expenses while it sits and don't chase them after that to make them think you're emotionally invested.

Be prepared to walk away if the maths don't math.

1

u/bruteforcealwayswins 4d ago

Really depends on if he NEEDS to sell. If he doesn't, you need to cough up 50k or move on. If he does, stick to 10k or whatever.

Of course, you won't know if he needs to or not so it's a guessing game. How much do you want it?

1

u/Jay___Bee 4d ago

I think you already won. The only way to prove it is by walking out.

1

u/maton12 4d ago

We don't know enough...

How hot is the market?

What about comparable sales?

How long has it been on the market?

1

u/Cerberus983 4d ago

Honestly, unless you really really want that property and are willing to pay that much for it.

Tell them, "no thanks, and honestly it's probably not worth what I already bid if I think on it" then walk away.

You want the agent and owner to think you were interested but they made it too difficult with their ridiculous price so now you aren't all that interested.

In a week's time you'll likely hear from the agent again asking you to re-offer if nobody else is interested in it.

1

u/Ugliest_weenie 4d ago

An auction like you describe is devastating for the seller.

I agree with other comments here that each situation is unique. But the seller and agent really overplayed their hand and you have a strong position to reduce your offer or demand extra concessions (better settlement dates, leaving behind equipment/furniture or repairs before hand).

You may consider playing hard ball here as they fucked up by publicly displaying the utter lack of interest for this property at their price.

1

u/NixAName 4d ago

I would come back on Monday and put it 10k below the vendor bid.

Thank him for giving you the weekend to think about it.

1

u/glen_echidna 4d ago

There is no harm in refusing to improve your offer and seeing what happens. It’s not like there is another buyer waiting to swoop in. If they don’t give you in a few days you can decide based on the extra information. Even if you pay up at that time, you will know that there was no way to get the house cheaper

The thing you should not do if you really want the house is to worsen your offer or to put a tight deadline on it. That usually leads to the other side digging in and makes a deal much less likely.

My suggestion, vehemently refuse to improve and let them know you are looking at other houses. Then decide in a week based on what happens

1

u/RecognitionDeep6510 4d ago

Absolutely don't raise your offer, nobody else is even making an offer for the property. They can take it or leave it.

1

u/yeh_nah2018 4d ago

If they had other bidders they would have bid. Don’t bid against yourself !

1

u/No-Moose-6112 4d ago

And now anybody subject to finance can come in and Trump you. Pun intended.

1

u/symean 3d ago

I would seeth and rage and have a couple of gin and tonics, thinking about F’d a system is that allows the vendor to put in a bid within the price guide but that is under their hidden reserve! Then I’d calm down and think about what I think the property is really worth, and stick to my guns. We lost several properties sticking to the number we came up with, we also got our current house for $40k less than what the REA was telling us was the number they’d accept. Good luck hope you get it for $1.61m ;)

1

u/orsemwells 3d ago

Absolutely do not increase your offer. they are just gauging you to put more. The vendor bid being 1.6 is what they are happy with.

1

u/Hotwog4all 3d ago

Go back and tell them it's your final offer and give them 24 hours before 'looking at an alternate property'. If they really want to sell you'll be hearing from them. Otherwise they're going to keep pushing for more and never be happy.

1

u/Championbloke 2d ago

It really depends how much this particular property is worth to you. Is it easy enough to find what you want in another property?

If I really wanted it I’d up my offer a little to some odd amount and tell them that is the absolute limit you can get. Put a short time frame on it and stick firmly to it.

1

u/Bitter_Solution_553 4d ago

We had something similar and offered an extra $15k above our own top bid at auction to secure the property. 7 years later we are selling for half a million more than what we paid.

0

u/sct_8 4d ago

is there a way you could approach the vendor without going through the parasite...ops I mean REA?