1. Shop around
“Before you even start seriously looking, you should inspect at least 100 properties,” Lally says.
You should be at a point where you can confidently say what any property in the marketplace is worth – not just the ones you’re interested in. Only then will you be able to understand your desired market and what different styles of properties are worth.
“You should be able to point to a property and say something like: South Yarra, balcony, north-facing – it’s going to sell between $550,000 and $600,000.”
2. Arrange a meeting with the agent at the property
So, you’ve found a property that’s not going to auction. The first thing you should do is travel to the property and arrange for a private inspection.
There are two reasons for this:
Number one is the obvious need to scope out the property. Lally says you need to observe your surroundings with hawklike vision.
“I’m looking at everything when I visit a property – not just whether it’s got two bedrooms, two bathrooms and a car space. I’m looking at home orientation, carports, position on the block, other houses on the block – anything that could affect the position in the marketplace.”
Number two is the opportunity to start a relationship with the agent that benefits you.
“At the end of the day, the agent is working for the vendor,” Lally says. “Buyers have got to remember this.”
If you can form a friendly relationship with the agent you can ask the questions you need to know in a personal setting.
3. What to ask the agent before making an offer on a property
You can question the agent about other properties – showing off your knowledge of the marketplace and your willingness to look around to find the best deal. Remember, you don’t want to appear desperate.
Here are some of the questions an agent will be able to answer:
- Why is the vendor selling?
- How soon does the vendor want to sell?
- What is it going to take to buy this property today?
- Are there other buyers?
- If there are other buyers – what is their profile? Are they first home buyers or investors?
“My biggest tip is preparedness – do your research,” Lally says. “You’re up against a match-fit negotiator who does this every day.”
4. Place a value on the property
Once your questioning is done and you’ve made considerable observations, you should be able to confidently place a value on the property.
If there’s no listed asking price, it’s time to call back the agent and ask: “What are you chasing?” Based on your research you should be prepared for the answer. If it doesn’t match up, tell them.
Before you start reeling off figures, you should ask the agent what their offers process is. Do you get a right of reply?
Offers processes can differ from state to state so make sure you understand yours fully before you proceed. It can be advisable to check with a solicitor to make sure they’re ok with the process the agent has advised.
This is the hard part – negotiating.
“I’ll make an offer based on the information I’ve prepared and cited – no one can argue with comparable sales,” Lally says.
“Whatever you do, don’t put your best offer forward first,” Lally says. If the vendor is really motivated to sell, your first offer might be accepted, but usually, the agent will ask for more. “It’s like an auction… behind closed doors.”
If so, ask the agent:
- Has there been another offer made?
- Is this offer in writing with a deposit?
- Has this offer been accepted by the vendor?
- If there are multiple parties – will it go to a boardroom auction?
- Or will it just be ‘highest and best’ offer that wins?
If the agent answers ‘yes’ to the first three questions, ask the agent who is making the offer. According to Lally, most good agents understand their marketplace and know which buyers are active. It might be difficult to take on a buyer who has been active for more than a year, but less so someone who has just started feeling around.
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