When it comes to real estate prices, the only way isn’t always up. There are places across the country where homes sell for less than their advertised price, but savvy househunters need to know where to look.
Vendor discounting is the magical percentage between the original asking price of a property for sale by private treaty and the eventual sale price. Armed with this figure, as well as a suburb’s average “days on market” number, househunters can be ready to get serious at the negotiating table.
According to CoreLogic data, the most dramatic vendor discounting city-wide is in Darwin where property prices have stagnated over the past year. The Top End’s capital saw a median house price dip of 0.9 per cent over the last quarter of 2015, and as a result the average vendor discount there is 7.2 per cent.
Although the median unit price in Darwin was actually up a modest 1.1 per cent over the same period, vendor discounts on apartments averaged a huge 11.2 per cent.
Head west and in Perth, where house price medians dipped 1.6 per cent and units were down 0.2 per cent over the quarter, the discounting figures are also significant. The average vendor discount for houses in Perth is 6.8 per cent less than the original ticket price, while average unit discounts are 7.5 per cent.
However, even in “hot” property markets like Sydney and Melbourne there are some examples of vendor discounting.
CoreLogic data shows that in Sydney and Melbourne the average vendor discounts for houses are 4.8 per cent and 4.6 per cent respectively. Units prices in those cities are seeing average vendor discounts of 4.2 per cent and 4.8 per cent.
HOW TO FIND A DISCOUNT
Prices dropping during a marketing campaign could be the sign of a dramatic shift in local property prices, but the phenomenon can also be put down to sellers’ expections being out of line with the current market.
Buyer’s agent Chris Gray of Your Empire said seeking out where price discounts can be made is a matter of doing your homework.
“If you’re constantly monitoring the market, you should be able to tell how long a property has been listed,” he said.
Mr Gray said knowing a property’s time on market, and the average time it takes to sell in a given suburb, is vital before starting negotiations.
“You either need to pay for those reports, or you need to be really organised and basically list every single property and the times that the price changes. Either monitor the market, or pay for the information,” he said.
Mr Gray said depending on which patch of Australia someone is househunting in, prices may not be advertised but by doing your due diligence a buyer can work out a starting point.
“It’s basically pointing out to the agent, ‘This is how long it takes to sell a property here, this is how long yours has been on the market and this is how much the price has dropped’ and then you give them some comparable sales,” he said.
“That’s the logical way to negotiate on a price – show them this is what other similar properties sold for,” he said.
Mr Gray’s additional tips include getting an independent valuation done on the home you’re after and drilling the agent for information.
“The agents should be telling you the truth anyway, but to be sure ask the agent some direct questions like when the home was first listed, what was the price it was listed at originally,” he said.
“The more you can get out of the agent to say why are they selling, what their motivations are, the better. Even if the property is actually worth more the owner might need to get to get out and noone else is buying. That’s when you can act on emotion rather than just waving a cheque around,” he said.
However, he added that waving a cheque could actually be a winning move.
“One of the best things you could do when negotiating is actually write a cheque and give them a contract. Then say ‘Well look here’s the deal, it might not be the best deal but you can cash this cheque today.’ Having an offer in writing is one thing, but it doesn’t commit you to anything so give them something that isn’t subject to something else,” he said.
But it doesn’t always have to be about the cash. There is more that can be discussed at the negotiating table than the sale price.
“You could offer things like a long settlement, or allowing the owners to rent the property for either nothing, or at a cheap market rate for a while after the sale. You could offer to buy their furniture, or look after a pet. It’s almost anything you can think of to help out the seller, be flexible and that can be worth a lot more than money,” he said.
WHERE TO FIND THE BIGGEST DISCOUNT SUBURBS
Suburb – average vendor discount
Wiley Park -25.4 per cent
Belfield -23.9 per cent
Freshwater -22.1 per cent
South Hurstville -20.6 per cent
Forest Lodge -19.5 per cent
Mickleham -26.6 per cent
Vermont South -23.8 per cent
Box Hill North -15.6 per cent
Caulfield North -14.8 per cent
Camberwell -13.6 per cent
Milton -13.9 per cent
Stockleigh -13.3 per cent
Carbrook -12.5 per cent
Clayfield -11.4 per cent
Park Ridge -11.3 per cent
Woodroffe -10.7 per cent
Stuart Park -10.1 per cent
Bayview -9.7 per cent
Ludmilla -9.3 per cent
Fannie Bay -9 per cent
Curtin -19.1 per cent
Florey -10 per cent per cent
Mawson -9.8 per cent
Deakin -9.6 per cent
Wright -7.6 per cent
Primrose Sands -10.6 per cent
Hobart -9.7 per cent
Derwent Park -8.9 per cent
Glebe -8.4 per cent
Rokeby -8.3 per cent
Brigadoon -12.7 per cent
East Perth -12.7 per cent
Dalkeith -12.2 per cent
Peppermint Grove -12 per cent
Woodbridge -11.7 per cent
Urrbrae -15.7 per cent
Semaphore -10.8 per cent
Stirling -10.4 per cent
Medindie -10.4 per cent
Athol Park -10.3 per cent