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What should be your offer price for a house
Negotiating for the house(analogy of negotiating for a used car)
Say for example you want to buy a used car (3 years or 4 years old).
Since we are in 2019, we will be using 2016 and 2015 models.
You want to buy a house, it is not new but existing house and is few years old. You go to open homes every saturday and don’t know what to offer as a price. Every week, when you come back from open home, you see that next day the house goes under offer.
You wonder, why didn’t the agent call you and tell that the house has received an offer, as you could have offerred a bit more and bought it. You are looking to buy a house. Every week you go to open home, one week you go to western suburbs, another week northen suburbs and some weeks in southern suburbs.
It is similar to going to buy a used car, one week you go to view Nissans, another week Toyatos, occasionally Audi’s BMW also you check out. As you are circling around so many brands, you wonder what is the price you should offer to buy it. You seem to be lost. After week’s of running around and not getting anywhere, you finally sit down and do some home work. You find that you have around budget of 40000 to buy car. You decide to narrow down to Audi Q5.
You see that Audi has a few options, you can buy a sports add-on, lane assist, blind spot check, music package, safety package, leather interiors, alloy wheels, sunroof. You sit down with your partner and discuss that sunroof is the absolute must haves and some of the other features are must haves and some are optional and nice to haves.
You create an excel sheet and write down the absolutes/must haves/nice to haves. Then from next week onwards, you only go to see Audi Q5. You find that 2016 models with sunroof is around 425000. Other must haves and nice to haves range from 38000 to 45000. You see that 2015 are around 3000 cheaper. You also narrow down that you will need black color. You start offering price to the dealers. Dealers are more interested in you as you have narrowed down what you want. You know that there is no point offerring 38000 on a black Q5 with
sunroof as it sells around 42500 usually. You miss a few of them as you offerred too low or missed by just 1000 or few hundred dollars.
Finally another black Q5 comes and you sit with the sales agent to negotiate. The sales agent also knows that you want to badly as you missed the last one by few hundreds. He also wants to help you and work with you to get over the line as he knows you are serious and committed buyer and not someone who is aimlessly running around. You and your partner sit with the agent and go through the points and features and finally you offer a fair price based upon your focus and past experience from a few weeks. You also talk to the bank or broker and make sure that they will be able to finance the car and you already have a pre-approval for a certain amount. And finally you pay the token price and get it sealed, Audi Q5 is all yours. So guys, instead of running around from hornsby to schofields.
Leppington to strathfield. Sit down with your partner, talk to bank or broker. Make an excel sheet and write down absolute, must haves and nice to haves. Sort out your budget and deposit. Then go to market with a focussed approach. It is ok to not buy a dream home as your first home. It is ok to not impress your friends with a mansion. It is ok not to overcommit. It is ok to look at your immediate needs for the next 5 years. It is ok to give weightage to commute time to work, it is ok to consider school for kids, it is ok if you have to save for next 2 years for the initial deposit, it is ok to buy appartment, it is ok to do things which are in best interest of your family, it is even ok not to buy and it is ok to rent for whole life. Do your homework, create a priority excel sheet, budget it, talk to bank or broker and bring the focus back to life. It is really that simple and it is not rocket science.