Negotiating how much?

[Dr. Shiva]

When checking the real estate prices most time there are listed "price negotiable". 

How strong can be the negotiation in the Philippines? Only slightly or can be taken out the sledgehammer? One factor is if someone can pay spot cash at once which results quite often in a discount. A real discount seems to be between 5% and 20% with an average around 8% to 11%

Examples: House and lot is listed as 6M PHP negotiable. A precalculation results in a more realistic price around 5M PHP.
With slight negotiation a barter would probably be started around 4.8M to 5M PHP, and the meeting price will be around 5.3M to 5.5M PHP.
With sledgehammer method starting at 4M PHP to meet at 5M PHP. But the seller can say that this 4M is far too low and he will no longer make any business with you.

With rentals it looks similar to barter the rental per month down if staying longer time.

Which negotiating method would be better in the Philippines?

Edited November 26, 2017 by Dr. Shiva

[Mike J]

If you paid 5.3 to 5.5 for a property that was listed at 6.0 most sellers would laugh all the way to bank.  Listed prices here seem to be based on wistful thinking as opposed to reality.  The dream of many sellers is to sell to a foreigner who has no idea of actual property values.  If you see a property you like just walk away and say you are still looking at other property.  Then have a trusted Filipino friend, relative, or spouse come in a few days later as if they were a different party.  Let them pretend to be the buyer and have them start the negotiation with a BIG HAMMER.   Don't show your face again until the documents are ready to be signed and money is ready to change hands.  Try not to become emotionally invested in a property, it makes it too difficult to walk away from a deal that goes sideways.

[AlwaysRt]

No reason to look at or ask the 'asking price' until you look at the property and decide what it is worth to you. Then you can use your 20% rule and under bid yourself (or the asking price in the extremely unlikely event it is lower than your price - which probably means you missed a major problem somewhere).

[Snowy79]

A lot depends on the seller and his family. I've offered well below asking price on some properties and the seller has accepted yet I was the one that never went through with it, and again I've offered just under and been knocked back due to other family members expecting their share of the profits to be less. 

The best way of judging the discount is by the amount of similar properties for sale and how long it's been advertised. I viewed apartments on Boracay within a resort. Most apartments were listed about 7m peso. I found two apartments that had been joined by an internal door for sale in the same building. Owned by an old foreigner who hadn't stayed in it for 2 years as he moved home for health reasons. I had no intention of buying them but offered 8.5m and had the offer accepted. In theory I could have bricked the door up and had 2 seperate apartments. I did my homework and decided I'd probably struggle to sell one of them as the individual apartments appeared to never sell. 

[Jack Peterson]

 I once asked a silly man who paid over the Odds for land, would you pay that for this now? NOPE was his reply I said well my Friend land is only the value of what you want to pay. You see he wanted to sell and had priced himself way out of the game, Buying is OK but let's not forget resale is twice as hard without losing any money  

 Jack

Morning All

[ClearSky]

IMHO I believe a house that foreigners will want to buy will likely only sell to another foreigner. Local ppl in those price ranges often time will select a small office building or very small business building in city and live in an upstairs apartment instead of a nicer house on a side street. There are always some exceptions.

As for how to negotiate, you won't get the best price until you have walked away at least once. Probably seller will get annoyed w/ you also. When you offer low, be silent until they speak.

Unless you must have a certain house, keep trying until you get a great deal. It can be done.

One thing you can do is ask your bank (in the Philippines) how much they would pawn the house for. Seller is not going to take less than that unless there is some problem.

You probably already know, but watch out for the paperwork if you buy, really really watch out for the paper work.

 

[davewe]

For fun we've been looking at the Dumaguete property market for the last 3 years; ok we have an odd notion of what fun is. We've seen properties that eventually sold for 1/3 off of the original price. We've also seen properties that are still available after 3 years. When we moved into our rental we realized that one house that we liked was right around the corner. 3 years ago it was 12M. Even I knew back then it was overpriced. Today it's 9M, which is still overpriced. So after three years, you can't help but wonder whether someone with cash in hand can't come in with a low ball offer and get a deal.

In that sense it's like property sales in the West. If the house stays on the market for awhile buyers think there's something wrong with it and it becomes even more difficult to sell. When you see a property here that's been on the market for years you wonder what's wrong. Of course it's usually a crazy price.

Just yesterday we were taking our daily walk and passed another house we had seen and liked online. Coincidentally the owner was there doing some work on it. He starts showing us around and it is as nice as the pics online indicated. He talks about stuff he is going to do to upgrade. Janet asks if the price is 7M as stated online. It's only 6.5 he says, seeing what he assumes are real actual potential buyers. After the tour I mentioned to Janet that there were no aircons and that would have to be dealt with. The guy jumped and immediately said he'd put in aircons units for the 6.5.

Another story. Several years ago we were in Janet's home town of Alcoy and looking at property. We saw a house we liked for 6.5 - "firm!" The owner asked how I would pay and I said cash; immediately the 6.5 firm became 6. We left and the owner texted us constantly over the next few days. Finally to get rid of her I texted back that I was not going to spend more than 5M on a house. "That'll shut her up," I told Janet. 5 minutes later I got the responding text. "Will take 5M, Sir."

I guess my only point is that at a certain level it is a buyers market here. 

Edited November 27, 2017 by davewe

[Dave Hounddriver]

1 hour ago, davewe said:

We've seen properties that eventually sold for 1/3 off of the original price.

Agreed, in instances where it is a private sale.

I believe it depends on 3 things.  Buyer's motivation to buy.  Seller's motivation to sell.  Negotiation skills.  The usual procedure seems to be to decide what they absolutely must get out of the property, including any costs of sale, and then double it.  That way everything he gets over half what he is asking is a bonus and 1/3 off the original price makes everyone happy.  Such is only my observation.

I notice this does not work if the seller is not motivated.  Sometimes they list a property for sale with no real intention of selling it.  They just want to see if anyone will give them that much.

I notice this does not work if the buyer is TOO motivated.  The seller can tell if you really want that particular property and he will not go down as much.

I notice this does not work if the buyer is not tactful.  If you do as davewe did, and keep walking away until the price comes down close to what you are willing to pay, then the seller is offering discounts and does not "lose face" over that.  Offering half what the asking price is would be an insult. However, it is possible to get it for that with patience and good negotiation skills "in some instances".

None of this applies to buying from imediate family or from developers.  

 

[stevewool]

None of this applies to buying from imediate family .

Top price always i am thinking.

[Jack Peterson]

16 minutes ago, stevewool said:

None of this applies to buying from imediate family .

Top price always i am thinking.

 Depends on how you treated them before Steve.