Working out exactly how much to offer on a property can be one of the most daunting tasks in the home buying journey. But by taking the following steps you should be in a better position to make a competitive offer with confidence.

Learn about the market

No matter what the advertised sales price may be, it’s the recent sales of comparable properties that should give you a good idea of a property’s ‘fair market value’.

And when looking for ‘comparable properties’, this doesn’t just mean other properties in the same suburb – it should also be a property with the same number of bedrooms, bathrooms, parking spaces and features (for example air conditioning), in similar condition in a similar complex (for apartments) and with a similar total floor space.

Learn about the property

A home lending specialist can often help you find out how long the property you're interested in has been on the market. If it has been sitting unsold at a certain price for many weeks that may be an indication it’s overpriced – particularly if properties in that suburb are typically listed for a much shorter time before being sold.

You could also check for ‘vendor discount’ trends in the suburb you're buying in – this tells you whether and by what percentage the average vendor has cut the original listed price of a property in order to make a sale.

CommBank's complimentary Property and Suburb Reports can also help you make informed decisions by providing the latest information on new listings, auctions, recent sales and suburb profiles.

Learn about the vendor

It’s not unusual for prospective buyers to ask the real estate agent why the current owners are selling the property. The vendor may, for example, be selling on behalf of the property’s owner who has passed away (known as a ‘deceased estate’), in which case maximising the sale price may not necessarily be the vendor’s top priority.

In cases like this, you may be able to snap up the property for less if you're willing to offer a shorter settlement than usual.

Know what you can afford

Make sure any offer you make isn’t above an upper limit you’ve set yourself. This means your offer should not be more than that for which your home loan has been conditionally pre-approved, and should also take into account both your upfront and ongoing property costs, which can vary.

You should also be prepared to negotiate. Be conscious that even if you aren't willing to offer more money for a property, you may still be able to negotiate on conditions of the sale, such as the settlement period, provided you're able to be flexible with this.

Know your competition

Ask the real estate agent if any other interested buyers have put in offers, and if so for how much. Keep in mind that some agents may prefer not to disclose other offers, but it can be worth asking to try and gauge the level of interest. 

It’s not uncommon to see properties listed with ‘offers above ($X)’ as the sale price. Under both federal and state laws, real estate agents must not falsely represent the price at which the vendor is willing to sell the property.

Our Home Lending Specialists can help you with making an offer on your next property

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Things you should know

CommBank Property and Suburb Reports contain information that is obtained from third parties and is not intended to be advice or a professional property appraisal and should not be relied upon as such. You should also make your own enquiries and assessments before making any decisions.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs. You should, before acting on this, consider the appropriateness to your circumstances.