What is a reasonable offer in the current market?
Category Property Tips
The property market is experiencing a growth spurt on the back of pent-up demand following the extended Covid-19 Lockdown period. An important aspect to the current market dynamics is understanding whether sellers might be open to negotiating their price and by how much.
Putting in an offer which is too low could mean that you risk losing out to a buyer who is prepared to pay a higher price. At the same time, a seller who does not consider all reasonable offers could also risk losing out on a buyer who will simply move on to the next property.
What is a reasonable offer below the asking price? Every pricing scenario is different
Buyers and sellers should take care not to be misguided by generalised media reports. Even in this market, correctly priced properties will sell for close to or full asking price. Each area and property are different, and it is therefore important to take guidance from a skilled local area agent on pricing trends to avoid mismatched pricing and offers.
When could you offer 5% to 10% below the asking price?
If you are a cash buyer or do not have to sell a property first, the seller may be willing to accept a lower price as it means the transaction can be wrapped up quite quickly. Likewise, if there is urgency on the part of the seller as he may need to relocate or has already put in an offer elsewhere, he may be willing to accept a lower offer to speed up the process.
The seller of an older property with seriously dated finishes may also consider a discount, especially if the property has been on the market for a while. A property which is overpriced compared to peer properties in the area or where the property has been on the market for several weeks without much interest, might also offer the opportunity for a discount on the asking price.
When could you offer 20% below the asking price?
Such a significant discount is more prevalent in the market above R10 million and depends on various factors including the motivation of the seller. A seller may accept a lower offer if he needs to sell or 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 apparent that the price is well above the market or the property has been on the market for some time with no offers.
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.
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Author: Gina Meintjes
