What is a reasonable offer below the asking price of a property right now?

hj2k_x

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Whenever I'm buying a property above R20m, I always start with an offer at least 20% below market
 

cguy

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Bad article. Most of the points it raises are valid, but they’re also cumulative, not really different scenarios at all.

The more expensive houses suffer from liquidity issues, especially in an economic downturn. Cash, no-need-to-sell-first offers are very strong because the deal is much harder to kill and side-steps the potentially huge opportunity cost of taking the property off the market only to have to resist it months later.

Extensive time on market reflects either mispricing or lack of liquidity - either of which could result in a significant discount. Even more so with a cash and no-sell offer.

Multiple offers changes things, but it really depends on whether these are cash or contingency free too.
 

SauRoNZA

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If the property is priced right there is no reasonable amount.

Most people price it wrong hoping for the best and then struggle.

It’s ultimately a case by case basis.

You can of course taken chances as you will I’ve put in a few offers on places that were well
beyond what I was willing to pay and offered what I was willing to pay just on a luck.

Current place was priced well but went in 100,000 less than they wanted and they knew that was still solid and accepted.

When you can pay cash you have serious bargaining power to force a deal.
 

bromster

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At least 20% below asking. These agents are living in a fantasy world.
 

SauRoNZA

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At least 20% below asking. These agents are living in a fantasy world.
You appear to be living in a fantasy world.

You realise 20% of 2,000,000 is 400,000 right?

1/5th of the value.

5% maybe. On a badly priced place.

But one simply cannot make these unilateral statements across the board.
 

cguy

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You appear to be living in a fantasy world.

You realise 20% of 2,000,000 is 400,000 right?

1/5th of the value.

5% maybe. On a badly priced place.

But one simply cannot make these unilateral statements across the board.
My experience is that in a buyer's market, cash for high end property can get you a 15-20% discount. The opportunity to sell with a high-probability is worth quite a premium. Outside of the high end, both obtaining loans and sell-contingencies are a lot less problematic.

The above isn't so much due to bad pricing, so much as because the valuation assumes worst case time and risk (i.e., loan+contingencies), along with some negotiation margin.
 
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