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In this week’s episode, Dave, Cate and Pete take you through:
- Extending the negotiation or offer acceptance period. The agent has given you a deadline to submit your offer, you wait with bated breath… Then the acceptance period gets extended. The reality is that there is no obligation for the agent to stick by a specific timeframe and the agent has full control of the process; they call shots. While buyers will be doing their best to shut down competition, it’s the agent’s job to bring extra players to the fold and create competition to bolster prices to great a great result for the vendor. The Property Buyer gives her tips and key questions to explore before you put pen to paper and submit your offer.
- Asking if your best offer is actually that. The Property Buyer estimates that 70% of the time when an agent asks you for your best offer, they will come back to you asking if that’s your best. This is common practice. The trio discuss how to navigate this situation.
- Not offering private inspections. There may be many reasons why an agent declines a private inspection. They may be related to the vendor’s circumstances or the agent could just be busy, (or lazy). Some reasons may be related to you! The agent may believe that your budget is nowhere close to where it needs to be or that you’re not serious about the property. Strong conditions in a seller’s market, where there is lots of interest in the property may mean that the agent doesn’t have to go the extra mile and give prospective purchasers private inspections. In Victoria, if the property is tenanted, the tenants are entitled to rebates for every open and agents don’t want to rack up a huge bill!
- Not returning your phone calls. In this market, agents are being inundated with enquiries and properties are selling in days, not weeks. The trio discuss the fundamentals of providing good service and getting back to people in a timely manner. Those that prosper are the ones that provide good service consistently.
- Insisting on a signed contract and a deposit payment. Agency practices can differ widely. One may be ok with an offer submitted via email, while another may insist on a signed contract with deposit. Agents and vendors no doubt have been burned in the past by receiving verbal offers from buyers that have then disappeared over night. The trio talk about the agent obligations in running a trust account, and recommend that buyers always ask for a receipt. Remember, an agent is only legally required to present your offer to a vendor if you’ve submitted a signed contract with a consideration.
- Not disclosing sold prices on the internet. This is a huge frustration for buyers and businesses in the property industry. It means that the quality of the data on hand may not be accurate or to the highest standard. However there are no legal requirements for the agents to disclose. The trio discuss the reasons why a sale price may be withheld from public record . They also discuss the side issue of the dangers of purchasing in medium to high density apartment blocks, where the data can be skewed by a number of factors.
- Over-quoting the rental potential for a property. Agents are not all on the money with their rental appraisals, particularly if you’ve put them on the spot. This can be a nasty shock when you’ve modelled your cash flows, only to find out that the rental return is far from what was quoted. Some agents will feel a vested interest to over-state the likely rental return in an effort to drum up interest and competition. Always get a second opinion from an independent local property manager or valuer.
- Understanding the real estate agent behaviours that buyers don’t like – Part 1 (Ep.77)
- Preparing for auction: Part 1 – Appraising, budget setting, due diligence, reserves, low-ball offers & auction twists (Ep.60)
- Congenial negotiation tactics and how to apply them in the right situation (Ep.29)
- Bidding tactics 101 (Ep.20)
- The art and science of removing emotions when buying property
- Making the first move – why the first property you buy is the most important of all
- The seven rules of bidding at auction
- There’s more to an auction than just putting your hand up
- Negotiate like a pro
- Top buyer’s agents reveal their secret sauce for negotiating a great deal
- How to negotiate a killer deal
- The critical mistakes of property investment – starting without a plan
- The ‘best and highest’ method of bidding
- Why short-term investing has long-term consequences
- Property Cycle Management – why now is always the best time to buy if it suits your personal economy and you have a long-term property plan (Ep. 12)
- Questions to ask when buying an investment property
- How our mortgage strategy helps us to hold properties
- Why your approach and assessment of risk is paramount to property success! (Ep.10)
- Why the land-to-asset ratio of a property can determine its future price growth
- How data can help property investors identify gentrification before it happens
- Choosing whether to hold or sell investment property
- How to succeed with Property and Create your Ideal Lifestyle
- Mortgage Strategy 101 – YouTube video series.
- Extending the negotiation/offer acceptance period
- The agent words for the vendor, if they make a decision to extend, it’s likely that there are other players to bring to the fold. We don’t like it, but it’s the agent’s job to create competition to bolster prices, as they work for the vendor.
- The vendors will be trying to limit the conditions and shut down competition.
- If the agent is worried that there is only one buyer, they will simply do the deal.
- There is no obligation for the agent to stick by that time. The agent has full control of the process and they call the shots. The only legal requirement is to submit all written offers to their vendor.
- You have to be clear to the agent what the rules are. Ask questions – tell me your process and your rules? Am I giving you my only offer and there’s no negotiating? So, when can I expect to hear from you?
- Sometimes agents can play games, and you just have to chalk it up to experience and remember that agent for the future.
- Find out what it is you can move on – throw an extra $1,000 on the pile.
- Put in your best offer when they ask for best and highest, but don’t be surprised when they ask you to go higher again – this happens 70% of the time.
- Not offering private inspections
- Private inspection is different to open for inspections – could be private reasons, vendor has a small child, someone ill they are looking after.
- Or the agent could be busy or lazy.
- If the agent believes the buyers budget is nowhere close to where it needs to be, or the buyer is not serious.
- If the property is flying and there is lots of interest, they will just say come to the open.
- If the property is tenanted, getting through the property can be quite difficult. Every tenant is rebated for opens. They have to give a tenant a minimum 7 days notice.
- Agents not calling back
- Properties are selling in days and not weeks in this market, they are getting smashed with enquiries.
- But it’s just common business procedure.
- It’s not easy to provide great service, there is high turnovers in most professions.
- One of the fundamentals is getting back to people in a timely manner. Those that prosper are the ones that do it consistently all the time.
- Insisting on a signed contract and a deposit payment
- A lot of people assume that they can just put forward a verbal offer.
- Agency practices differ and one may be ok with you sending through an email and another may insist on a signed contract with deposit. People can get really nervy about that.
- The trust account is sacred, agents cannot touch that money, but you should ask for a receipt.
- If you’ve submitted a signed offer, it MUST be shown to the vendors legally.
- There will be agents and vendors have been burnt by people throwing out offers and then disappearing, so they may be sensitive about receiving offers not in writing.
- Not disclosing sold prices on the internet
- Means that the quality of data we’re assessing is not of the highest standard, but there are no legal requirements for the agents to know.
- Sometimes vendors and buyers don’t want their friends and family knowing what the property sold for or what they paid.
- The agent could be embarrassed by the price because it’s low and not a good reflection of their ability.
- Other times it’s too high compared to what they have quoted for the property
- Medium to high density apartment blocks – one low sale can set a precedent for the whole building, and agents can manage majority of dwellings in the building, so they are reticent to share sale prices.
- This one was fully furnished, this one had cash back offer, rental guarantees – only if you’re privy to the contract would you see if there was a cash back. Some people are getting duped and paying the full price.
- Be the buyer that gives the agent confidence that you are the right buyer, either for this property or another one.
- Agents overquoting rental potential for a property
- Particularly where this is a verbal offer
- Always get a second opinion, an independent local property manager.
- It’s not a huge percentage that are totally on the money.
- They have a vested interest to over-state the likely rental return to drum up more interest and competition.
Peter Koulizos – The Property Professor’s Golden nugget: An offer is not an offer, unless it’s in writing. Find out from your consumer group, what are the rules for prospective purchasers.
Cate Bakos – The Property Buyer’s Golden nugget: workout what they’re going to do with your offer, how they will field offers and how the vendor will make a decision before you put pen to paper. You need to know this before you show all your cards.
- Cate and Pete’s exciting auction weekend. Tune in to hear Cate and Pete’s thrilling experiences of each successfully securing a property over the weekend, despite the lockdown challenges and last minute changes of plans.
- Tight rental vacancy rates. The national monthly vacancy rate holds steady at 1.7%, from June to July. Not surprisingly, the Sydney and Melbourne CBD markets continue to experience higher vacancies, with Sydney increasing up to 6.1%, now higher than Melbourne’s 5.7%. Brisbane is the only other capital city with vacancies above 1%. The tight vacancy rates have meant that rents have increased 13.7% over the last 12 months. The trio discuss why this is happening, given that international borders are closed and we’re not seeing any population increases.