Looking to take advantage of the favourable property buying conditions and put in an offer to purchase, but not sure what would be a reasonable offer below asking price?
In this insightful article in Private Property August 26, Samuel Seeff, chairman of the Seeff Property Group takes buyers through the negotiating process.
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One of the important aspects to purchasing a property is knowing whether the seller is open to negotiation and how much below the asking price the seller would accept. This is important information to avoid losing out to a competing purchaser, says Samuel Seeff, chairman of the Seeff Property Group.
Every pricing scenario is different
Buyers should not be misguided by reports about bargains because even in this market, well-priced properties are selling for close to and full asking prices, he says further. While the slanting of a market in favour of sellers or buyers come into play, the willingness of a seller to accept a lower offer depends on how well the property is priced, his circumstances and urgency to sell.
What is a reasonable offer below the asking price?
Never assume that the seller will take a lower offer, even in a buyer’s market. If you are unable to afford the full asking price, it is best to shop around for properties which are more aligned to your budget.
Some instances where a seller may accept a lower offer include the seller’s own needs and urgency, especially if there is a shortage of buyers or the property has been on the market for a while.
When could you offer 20% below the asking price?
Such a significant discount is rare in the primary market below R1.5 million but more prevalent in the market above R20 million depending on various factors including the motivation of the seller.
Reasons why a seller may accept such an offer is the need to make a quick sale, or if the property requires significant work, or if he really just wants the property off his hands. Another could be where the price is significantly higher compared to peer properties because the seller wanted to “test the market” and it has now been on the market for some time with no offers.
When could you offer 10% below the asking price?
Older properties with seriously dated finishes or an urgent seller may consider a 10% discount, especially if the property has been on the market for a while. Other reasons could include an urgency due to relocation to another city or emigration.
A property overpriced compared to peer properties in the area may also offer the opportunity for a 10% discount if the seller is motivated to sell, or if the property has been on the market for several weeks without much interest.
When could you offer 5% below the asking price?
If you are a cash buyer or do not have to sell a property first, the seller may well be willing to accept a lower price as it means that the transaction can be wrapped up quite quickly. Likewise, if the seller has already put in an offer elsewhere, they may be willing to accept a lower offer to speed up the process.
When should you offer more than the asking price? When there are multiple offers on the table, the seller will typically accept the highest offer. If the property is in a great location and well-priced, your best chance to secure the property would be to offer higher than the asking price.