Real Estate

Our Latest Buy (Part 2)

Reading Time: 4 Minutes

OK boys and girls, we are back!

Back for the continuation of our most recent real estate purchase.

If you missed part 1, don’t fret! Have a read of it here.

Basically, after zipping around the Greater Perth area for the best part of a long weekend, we’ve narrowed the shortlist down to the FINAL FOUR.

Ironically none were detached houses, which is a shame because I was on the look-out for somewhere with a bit of land.

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Somewhere with a bit of land.

As we all know, it’s land which appreciates in value and the building which depreciates – hence anything with good land content and value, usually receives a big tick.

However the houses in the areas which I was interested in were a bit too pricey for me – a big mortgage wasn’t something I was willing to commit to at this stage, considering the lower yields on offer with houses.

I did inspect houses, but as mentioned in the last post, for one reason or another – they were discounted.

Anywho, after viewing and returning to Sydney, I got stuck into researching the remaining properties and their immediate vicinity with the view of making formal offers.

The Agents

If you ever wanted to get a good feel of whether it’s a buyers or sellers market – just see how proactive a real estate agent is.

I remember during the boom-time of Sydney 2014-2017, my word you could not reach a real estate agent unless you flipped a 20% premium, unconditional offer in their face.

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“Hi, Mr Agent I’ve got an offer for you!”

What a difference these Perth agents were! They were almost frenzied in their follow-ups afterwards.

I was shocked…

So naturally, I decided to do what I always do when making offers… I decided to test the waters.

The offers

Now it’s been a life-long philosophy of mine to try and extract the absolute maximum value out of a good or service wherever possible.

I was once quite abashed and disconcerted with this personality trait, but after 31 long, hard years – I’ve come to accept who I am.

An individual, talented but misunderstood, brilliant but ostracized, alluring yet unknown… I could go on.

So when it comes to making offers on hundred of thousands of dollars worth of real estate, you bet I would go in hard, and LOW, LOw, Low, low.

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As low as THIS.

Don’t be embarrassed

Some of you may feel uncomfortable in negotiation or haggling or going in hard, to those of you I say find someone else to talk price with the agents.

From my low ball offers, I’ve had feedback ranging from and I quote:

“I’m confused…” Sydney agent circa 2012

“Your offer has no relevance in this current market” Sydney agent circa 2014

“Thank you for the joke, we’ve all had a good laugh in the office” Melbourne agent circa 2015

“You investors! You **** are all the same, you think you can just come in and… (this was a full A4 reply rant, I think the poor guy’s wife was being fclosed by his boss) Rural VIC agent circa 2016

“I’m sorry, I think I misunderstood you, can…can you repeat that” Brisbane agent circa 2016 

And countless dozens…

Now, I don’t mind the feedback, in fact I’d be disappointed in myself if I DIDN’T receive negative comments from my initial offer.

The trick

So naturally I went in low with these four.

But I did use a little trick I’ve developed through the ages, it kind of keeps me onside with the agent.

The trick is to send a non-committal SMS text to the agent stating that you’ve talked it over with your lender/broker and they advised that you should not offer more than $XXXX. Shift the bad guy focus on them (sorry John, if you’re reading!)

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“Before I make an offer, can you just let me speak to my broker first?”

So if a property is advertised as $500,000 – you might say something like:

“…Based on the advice of our lender, they advise us that we should not offer more than $380,000, however we are able to obtain financing at this level no problems”.

Now 8/10 times, the agent will just either knock-back your offer or ignore you as a non-serious buyer.

That’s OK, that’s fine – there will always be another deal-of-the-century, believe me.

But 2/10, the agent will ask you to either put it in writing or counter-offer.

Investing is just a game of numbers, you make money when you buy.

*Note, low-balling does NOT work during rising and booming markets. Nor should it be applied for a primary home. A principal place of residence and an investment property are COMPLETELY different, and should be treated as thus.

The Fab Four

So naturally, I tried my little trick on the fab 4 (detailed property breakdown in previous post):

Property 1 

2 Bedroom, 1 Bathroom and 1 Car townhouse, asking $399,000.

“…Based on the advice of our lender, they advise us that we should not offer more than $360,000 however we are able to obtain financing at this level no problems”

Property 2

3 Bedroom, 1 Bathroom, 1 Car villa, asking $359,000.

“…Based on the advice of our lender, they advise us that we should not offer more than $300,000…”

Property 3

2 Bedroom, 1 Bathroom, 1 Car unit, asking $298,000.

“…they advise us that we should not offer more than $210,000…”

Property 4

2 Bedroom, 1 Bathroom, 1 car unit, asking $149,000.

“…not offer more than $105,000…” (This was after the agent saying they’d accept an offer $15k-$20k below… what the hell right, just see what sticks!)

And you know what their response was?

Well, Property 1 agent said…

~~~

Oh Shizzle, sorry guys, just realized it’s Valentine’s Day tomorrow – diligent husband duties await.

So… make sure you come back next time to find out what those agents responded with!

Oh oh, before you go – I’d be keen to know what you would offer in these situations? Leave your replies below!

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