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.
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.
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.
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.
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.
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.
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!)
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):
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”
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…”
2 Bedroom, 1 Bathroom, 1 Car unit, asking $298,000.
“…they advise us that we should not offer more than $210,000…”
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!
What do you think? Did you enjoy this post? Please help me out if you enjoyed this and put your email in and click on the little “subscribe” button at the top right. This way, you’ll never miss my words of awesomeness! So do the right thing, be a subscriber and get it straight to your inbox fresh out of the oven!