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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.
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.
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.
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!)
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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