The reigning market conditions for real estate should definitely be taken into account in deciding on your ideal offer price. Each distinct real estate market has it's own rules and considerations, so it is important to identify the market conditions correctly.
Seller's Market
A hot market is a "seller's market". During a seller's market, properties can sell within a few days of being listed, if not on the very same day, and there are often multiple offers. Sometimes homes even sell above the asking price, because there are so many buyers fighting over the properties on the market, that they want to make sure they don't "lose" a property, by making an offer higher than the asking price.
Though most buyer's want to get a "deal" on a home (or should that be a "steal"?), reducing your offer by even a few thousand Rand could mean that someone else will get the home you desire.
Buyer's Market
A slow market is a "buyer's market". During a buyer's market, properties may sit on the market for some time, and offers are few and far between. Property prices may even decline. If the economy slows down unexpectedly, people who bought on the high end of a seller's market could find that their homes actually lose value in the buyer's market that eventually follows.
Such a buyer's market would allow you to be more aggressive, by offering a lower price for the home. Even if your offered price is too low, the seller is likely to make some sort of counter-offer, and you can begin negotiations in earnest. The sellers in a buyer's market are just too happy to get any offers on their properties, to disregard any potential sale.
Transitional Market
But more often than not, throughout the history of South African real estate, the market is simply "steady", or in transition. In a transitional market, no real rules apply on whether you should make an offer on the high end of your fair price range, or the low end. You could find yourself in a situation in the same transitional market, with multiple offers on your desired property, or in a situation where no one has made any offer to purchase in weeks. You will have to "feel" your way here. Transitional markets are more difficult to define than a seller's market or a buyer's market.
Market Conditions And Your Offer Price
Remember, there may be a general trend for real estate in the whole of South Africa, but there really is no such thing as "South African real estate market conditions". Each distinct area has its own market conditions. While a seller's market is reigning in one suburb of Johannesburg, another suburb may, along with Koppies in the Free State, be experiencing a buyer's market. At the same time, Upington could be having a transitional market.
Speak to the local people who work with real estate every day. They can give you a good idea of the market conditions in their area.
Some real estate investors try to predict the future real estate market conditions. But no one has ever been proven truly reliable in predicting when the real estate market will change, or how good or bad the real estate market will become. So, the only way to make sure you buy right, is to try and buy a property at below market value, in any market. But that is usually easier said than done.
