Property Investment Blog

New call-to-action
All Posts

What is Percentage of Vendor Discounting?

Understanding the level of vendor discounting in an area is important as it can help you determine the level of demand for property in the area.

Real Estate Investar provides data on this statistic to help property investors understand whether sellers need to use discounting as a strategy to attract potential buyers.

What is a "Vendor Discount"?

The vendor discount is the difference from the original asking price of a property and the final sale price.

This figure is expressed as a percentage, for example a property is asking $500,000 but eventually sells for $450,000 which means the vendor has had to discount the property by $50,000 which equals a 10% discount ($50,000 divided by $500,000).

When investors review a suburb, an average vendor discounting percentage can be calculated by reviewing all properties that have sold and will help you get an indication of the overall state of the market within that suburb.

What does a low or high level of vendor discounting percentage mean?

A low level of vendor discounting indicates that sellers generally don't need to provide much of a discount because there are a number of buyers interested.

Sometimes, there is no discounting at all and properties may even sell higher than the original asking price because there are enough buyers and they drive prices up. 

A high level of vendor discounting indicates that sellers are struggling to find a buyer or have listed a price that is too high and need to reduce the price to attract interest.

By lowering the price, this may then lead to a sale and generally these properties will have also been on the market for some time. 

By understand the level of discounting that may or may not be occurring in an area allows property investors to understand the level of demand and supply.

In turn, this allows investors to determine the likely market value of a property and whether there is any opportunity to purchase a property at a discount.

How do I obtain this information?

Through a Real Estate Investar membership, you'll have access to CoreLogic RP Data and can run a Market Compare Report.

Once a property has sold, this report will provide the following data:

  • First Advertised Price
  • Last Advertised Price
  • Actual Sale Price
  • Percentage Change from First Price to Last Ad Price
  • Percentage Change from Last Price to Actual Sale Price
  • Percentage Total Change

How Does the Property Cycle Impact Vendor Discounting?

Watch this quick video to learn more.

 

Webinar Wednesday 8 June - How to Create Instant Chunks of Equity

Real Estate Investar Editor
Real Estate Investar Editor
Real Estate Investar provides intelligent software, tools and data to help you save time and make money in the residential property investment market.

Related Posts

How to Combat Raising Interest Rates When Buying

This month, the RBA has come out and raised the official cash rate for the first time in more than a decade. 

Property Prices Rise 0.6 Per Cent In Last Month

Property prices across the country saw another increase in value last month, however, the rate of increase continues to slow down. 

2022 Federal Budget for Home Ownership

The 2022 Federal Budget had a key focus of reducing the cost of living with rising housing prices and increased rents becoming a common issue for many Australians.