Making an offer on a property – What price should you offer?


We all want to buy our new home or investment property at the lowest price possible, or at least get good value for our money.

And of course, the vendor wants the most he can get for his property.  Especially in today’s hot market where property values seem to be rising by the week.

making an offer on a house

Yet you now know that the asking price quoted by the selling agent will usually be more than the owner is willing to take for their home.

It’s just part of the real estate game – they expect to come down in price as part of the negotiation process.

So when making an offer on a house, what should you do?

If you ask the selling agent what price you should offer, you’re asking the wrong person.

Remember, the agent is paid by the seller to represent them and to get the best price possible.

However, it’s usually still worth asking them what they would consider was a ‘fair offer’ and then ask them to justify it with a list of comparable sales.

You are probably thinking that the agent just wants to make a sale

And in most cases you are right – in reality, the agent doesn’t get paid unless a sale is made, so obviously, he is keen to sell you the house.

But most agents prefer an easy negotiation, knowing that sellers get offended when they receive low offers on their homes.

This means they will probably recommend you make an offer close to the asking price. 

So unless you use a buyers’ agent to help you negotiate, you are really going to have to rely on your own research to work out what the property is worth.

By the time you end up at the negotiation table, you should have put some of these into practice, looked at many homes, and gotten a pretty good idea of what similar homes in the area have sold for.

Remember, it’s the sale price, not the asking price that you need to focus on when you’re doing your pre-negotiation homework.

In most markets (other than during boom times), houses sell for considerably less than their asking price.

There is no standard discount, but as everyone knows there will be some ‘argy-bargy’ about the price as agents tend to ‘list the property for sale at an asking price usually about 5-10% more than the vendor will accept to sell their home.

The asking price: a starting point for the negotiations

If you pay what the seller is asking you could be wasting money.

The trick is to know how much less the seller will accept.

Sometimes it’s only a few thousand dollars.

Frequently it’s about 10% or more, but in a seller’s market – a hot market, where there multiple buyers making an offer on a house like we are now experiencing – vendors may not be willing drop the asking price at all.

Is it worth getting a valuation?

Another way to determine the market value of the home is to have a valuation done. 34407022_l

Your lender will usually organise a valuation as part of the loan process, but this will occur after the deal has been done.

I’ve heard some people wonder if it’s worth having a valuation done prior to making an offer on a house or make their offer subject to a satisfactory valuation.

Not many sellers accept this type of condition and it’s possible you will lose out to somebody else who will buy the property without this type of condition.

The trouble with engaging a valuer is that it usually takes three to four days or even up to a week before you get their report, and it may cost you $400 to $600.

If you have the time and want a professionally acquired figure, then a valuer may be the way to go.

The valuation report may even provide you with ammunition to use in the negotiation process.

While your lender will require a valuation on the property as part of your finance application, not all valuers are approved by certain lenders.

Each lender only works with a small group of valuers (called their valuation panel.)

This means that if you pay for a valuation for your purposes, it may not be accepted by your lender.

And remember that if you ultimately don’t buy the property, you will still have to pay for the valuation.

So to help you determine what price you should offer if you’re considering buying a house…

5 questions to ask the agent before you make your offer

1. How did the vendor come to the asking price for their home? 25849329_l

Was it from the agent’s suggestion or because that’s how much they need to buy their next dream home?

Some sellers are unrealistic and unlikely to come down from their asking price if they have to get a certain amount for a particular reason.

2. Have there been any other offers made?

This lets you know if you have any competition and how serious the vendor is about selling their home at a reasonable price.

3. How long has the home been on the market?

If it’s just been put up for sale, the seller may not be anxious to accept the first offer.

If the home has been on the market for several months it’s more likely the seller would be ready to accept your offer.

4. Why is the vendor selling? House for sale

Are they going through a divorce?

Do they have to move interstate urgently?

Have they already bought another home that would put them under pressure to sell their current home?

This will let you know how motivated the seller is.

5. Has the asking price been reduced during the time the property has been on the market?

This will tell you whether the seller is really keen to offload their home and also let you know that you might have a motivated seller on your hands and perhaps greater bargaining power.


When will this perfect storm for property prices end?

Guess what the median Australian house price was in 1976?


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Brett Warren is Director of Metropole Properties Brisbane and uses his 13 plus years property investment experience to advise clients how to grow, protect and pass on their build their wealth through property. Visit: Metropole Brisbane

'Making an offer on a property – What price should you offer?' have 19 comments

    Avatar for Brett Warren

    October 23, 2021 Margaret Morgan

    Hi Michael
    Today I saw a place I finally really liked along with at least 50 other people. A dozen of them I overheard, like myself, wanting to make an offer before auction. Is there a record that agents have to account for with offers? Does this sort of work like an auction except that there actually isn’t any proof that someone else is even bidding? What would you suggest?


      October 23, 2021 Michael Yardney

      WHile the agent keeps a record of all oofers and must submit them to the vendor, they are under no obligation to tell you – the potential buyer – of other offers. This is why you need to level the playing field and have a professional buyers agent represent you


    Avatar for Brett Warren

    October 17, 2021 Marlene

    Hi Michael, I’m looking at small rural properties. Can I just make an offer of what I’m willing to pay based on my own research and if it’s accepted, good but if not, I just move on to the next. Not really interested in all this negotiation.


      October 17, 2021 Michael Yardney

      That would be nice Marlene, however that’s not the way the world works, in particular Real Estate. Unless you make a stupidly overpriced offer it is very unlikely that the vendor will accept your first offer.


    Avatar for Brett Warren

    October 6, 2021 Carly

    Hi Michael,
    I’m interested in understanding more about hot markets, where properties are going under offer in less than a week and prices are moving fast.
    If there is a comparable property in the same block which sold for a certain price say 6 weeks earlier, should you offer the same price or aim for a certain percentage higher knowing how fast the market and prices are moving? I find it hard to know as sometimes agents don’t tell you that you do not have the highest offer and then you miss out.



      October 7, 2021 Michael Yardney

      Carly, what you’re asking for is not easy – but a professional buyers agent who is in the market all day, every day and knows their patch well would have access to this type of information


    Avatar for Brett Warren

    October 5, 2021 Gulshad Ali

    Please advise whether engaging a Buyers Agent a good thing. What are the costs involved and do you service the Goldcoast area?


      October 5, 2021 Michael Yardney

      clearly I’m biased because I am the founder of Australia’s largest and most active buyers agency in Australia. I know that the result our investor clients get outperform the market in general and home buyers buy their properties with less hassle stress and worry.
      Are you looking to buy a home or an investment?


    Avatar for Brett Warren

    May 4, 2021 Judith

    URGENT I have found a house that says offers over $700,000 (it has been reduced). It is currently under contract but I really want it. What can I do. URGENT


      May 4, 2021 Michael Yardney

      don’t rush – have you done your due diligence- what is it really worth?


    Avatar for Brett Warren

    January 4, 2021 Ellen

    Hello Michael,
    As a first time buyer, this is really helpful. I’m interested in the property which has been on the market for more than 6 months now, and the owner of it wants to sell it asap. Current the price range of this is 730K-760K, and this was 800K at first on the market. Would it be ok to make an offer at around 650K? Discounting 10%. Am I offending the buyer? Worried. Thank you!


      January 4, 2021 Michael Yardney

      I would not be worried about offending the buyer – I’d be more concerned about what’s wrong with the property if it has been o the market so long – where is it located?


    Avatar for Brett Warren

    June 26, 2020 James

    Hi Michael, I have found a property advertised. I have the asking price, and ready to pay the asking price. However the agent has now stated it will sell for more than originally advertised, Is this common?


      June 26, 2020 Michael Yardney

      James it happens occasionally when there are a number of interested parties who are willing to pay more than the advertised price.
      The other hand, it is illegal to purposefully mislead the public by under quoting the asking price.


    Avatar for Brett Warren

    October 14, 2019 Lin

    is there a time limit within which a real estate must submit an offer to a seller?


      October 14, 2019 Michael Yardney

      It must be done in a timely manner – there is no fixed time specified that I know of


    Avatar for Brett Warren

    July 14, 2019 Tom

    Thanks Michael!


    Avatar for Brett Warren

    July 14, 2019 Tom

    What’s the best way to negotiate when agents list a price range. Am I offending the seller if I submit an initial written offer below the price range?


      July 14, 2019 Michael Yardney

      Tom – you won’t offend them if you can back up your offer with other comparable sales showing why you made the offer. This will give the agent ammunition to “condition” his vendor


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