Ex-Agent’s Cheat Sheet To Buy Smarter in 2021
Building a strong knowledge base and the foundations to springboard you onto the property ladder are crucial to get right before you set out on the hunt. Without these tools, you will waste time looking at the wrong properties or worst still – locate your dream home or investment only to fall short because you cannot raise the money or too slow taking the steps required to close the deal before your competition.
You need to understand what you can afford and that you can access the funds required to action a purchase. It’s better to speak with a mortgage broker that can see the entire lending market rather than just one bank you may already have a relationship with. Researching a good broker will give you options at no cost.
Once your mortgage is pre-approved, you will have a clear financial upper limit to set as a boundary when searching for properties, it’s important to stay within that limit.
Each property of interest will require a solicitor/conveyancer to review the contract of sale, so before you start on the journey to find your dream pad, have an expert ready to work alongside you in reviewing contracts when required. Make sure they are in the same state, as contract law varies across the country.
I’ve found my property, I’m in LOVE ! I made my offer there and then…
When you spot a property that ticks most of your wish list, ensuring it’s not a dud is vital and so is the speed at which you do so – as most of the time you will be competing against multiple other parties with a similar interest.
Referred to as “Due Diligence”, the onus is on you as the buyer to research the property to spot any faults or concerns. You may like to organise a building and pest report, strata report (if an apartment / villa) or even arrange for building quotes from specialist to ascertain the real cost of any rectification works that may be required.
Together with the contract review, these checks need to be completed quickly, as speed through the buying process will be advantageous. It doesn’t mean rushing, it means being well organised and quick to arrange these items.
Once you have completed your homework on the property, now you’re ready to make an offer.
But is it the right property?
One of the biggest mistakes buyers make is rushing to the finish line when they have finance approval and very soon thereafter spot what they feel is the perfect property. Sure, if you’re lucky, the right property may present itself fast, however, are you ready to commit without really understanding what your options are ? It’s advisable to see 30+ properties personally before making a key financial decision that you may live to regret making in haste.
The main way Australian’s shop for property is typically via one of the two main property portals, it’s the lazy way to shop because they make it so easy to scroll through thousands of options. Just know, that if you are first spotting your options here, then you are paying “Retail” and you’re not alone. It’s likely hundreds of other buyers are seeing the same property at the same time – ensuring your have strong competition. You’ll see many listings show up already ‘under offer’, that’s because smart buyers got there first.
I registered my details with the local agents so they know what I’m looking for right?
Finding properties earlier in the selling process is crucial to limiting your competition and increase choice, and it’s easy enough to do if you take the time upfront to implement a simple strategy and stay consistent with your follow up, in effect ‘staying top of mind’ with busy agents who deal with thousands of buyers.
Compile a basic, short and clear shopping list that you will email WEEKLY, BCC to the 30-50 leading local agents that sell your type of property:
- Christine Smith
- $500,000 finance approved (be honest with your budget)
- 4218 Postcode
- 3+ bedroom house
- Requiring renovation
Whatever your key metrics, make sure it’s easy to understand for agents and not limiting them to looking for a unicorn which doesn’t exist.
This will unearth pre & off market listing opportunities, the trick is then to make yourself readily available to see them instantly should an agent contact you. Failing to jump when the agents reach out will likely mean no future contact from them as they don’t believe you’re a real buyer.
The difference between buying well and overpaying is the level of market knowledge you possess when negotiating. It cannot be overlooked and failing to understand market trends, buyer depth and comparable sales leaves you woefully unprepared to talk price with a skilled agent who’s job it is to extract an emotional premium from buyers.
You’ll hear tales of buyers stating they have been looking for 6m+, unable to find a property and it’s all too hard. They are not laser focused and committing to the process. This is one of the biggest financial commitments you’ll make in life, it’s worth committing more hours of your precious time than you did watching ‘Game of Thrones’.
Ok, I’m ready, I went to a few opens last weekend and got a sense of what I can buy
The best buyers put aside 4-8 weeks to study a suburb (or two max), physically inspecting every property in their price range, watching auctions live and building rapport with the agents face to face. When you have done this, you’ll better understand prices being paid in real time and be well prepared to make an offer when the right property presents.
Here are some easy hacks to fastback your learnings:
- Narrow your search down to 1-2 suburbs only (anymore than this and you will not be able to do the research)
- Visit every open home of comparable properties (if you want to buy a 3 bed house, inspect every 2-4 bed house)
- Make sure the agents know you on a first name basis. (they will remember you when they list the next one that may suit)
- Attend and watch every auction locally (gauge the buyer depth and real time prices being paid)
- Physically inspect 30+ properties before making offers (if that’s possible where you’re buying)
- Don’t just refer to the “sold” section of the property sites, call the current “under offer” properties to ask what they just traded at
Use www.realestate.com.au or www.domain.com.au current listings to gauge the stock levels or supply. Use the sold section to track recent sales over the past 3m. You’ll quickly determine how long it may be that you could wait for the next suitable property to enter the market for sale again. Maybe it’s every 3-4 months for a home ticking your boxes to appear, that indicates you need to watch the listings like a hawk, get their first and negotiate to win.
Leverage other local agents, if you spot a property you’re seriously interested in, reach out to a local expert and ask their opinion to its value. They may know why the owner is selling, been through the house or had other buyers they are working with give them positive / negative feedback or have previously made offers.
It’s never been easier or faster to access this information to determine market value, but as much as you can get a sense of prices online, nothing replaces actually inspecting yourself to gauge privacy, road noise, natural light and more items the agents go to great lengths to hide in the marketing material.
The art of negotiation is a learnt skill crafted by years of practice and experience working on property deals. There are no shortcuts, the words you say will be used against you by your jousting partner (the agent). So, be careful what you say, when and how you say it – as it will likely cost you money.
Confidence is a dangerous thing when it comes time to negotiate, if you fancy yourself as a deal maker but don’t have the substance to back it up with product knowledge, you will get burnt. Good agents train daly to outperform buyers with the goal to extract an emotional premium every time. Good agents also train to make you feel like you won. You won’t realise when you are getting fleeced – that’s the problem and it’s why Aussie buyers keep going it solo thinking they are in control when they are not.
But … Aunt Cheryl bought last year and didn’t need any help, chipped the agent $20k too
Overpriced listings get set at a certain level to leave negotiation room, so when Aunt Cheryl negotiated a great $20k discount from the $350k asking price, she may of also overpaid by $30,000 as the seller was expecting around $300k. Get where we are going here ? Auction guide prices, properties listed for a specific selling price and so on, have no relevance to market value. You need to know your pricing and be able to use that in such a way that works the price down in a “live” negotiation.
There are so many ways to buy a property in Australia, are you familiar and confident you know how to negotiate to win via these methods:
- Boardroom Auction
- Sealed Bids
- Expression of Interest
- Online auction
- Best and Final Offer
- On-site Auctions
- In-Room Auctions
- Post Auction negotiation
- Private Treaty
Highly skilled negotiators control the process, they make sure the deal is as close to a win / win / win as possible – you want to win at all costs but make the agent & seller feel like they were in control and not rorted – not easy to achieve.
Buyers could use time pressure, leverage another property they are seriously interested in, play under and overs with the offers made, offer low and slowly move up, offer once and make it your best and final, offer close to the vendors expectations and don’t move at all, request the final offer post all other buyers offering first and so on. Which tactic is right for which situation?
- Why is the vendor selling?
- What is their ideal timeframe? Long or short settlement? Flexible rolling settlement perhaps?
- Will they accept a 5% deposit?
- Can I offer subject to satisfactory finance plus building and pest reports?
- What is the best offer you have rejected to date?
- What will the vendor accept today?
- Is there anything that requires work to the home that you are aware of?
- Is there anything in the contract that may be unusual and worth discussing upfront?
Don’t Do This
- How many contracts out? (they will just make this up, not too many, not too little – creating competition in your mind straight away)
- How many offers have you had?
- Does it have to go to auction or can I make an offer? (The agent wants their 4 week marketing campaign, they often don’t want your offer, don’t worry about what they want, you drive this process)
Knowing what the vendor is after together with you expert knowledge of local property prices means you can confidently make your offer with the ideal terms to suit the seller, whilst priced to perfection to save you money.
Follow my steps to navigate the buying property with speed to land your dream home or investment at the right price. Or, should you prefer to outsource this to Australia’s leading property negotiator, I’m ready to go right now on your behalf, reach out to email@example.com or call Scott Aggett 0400119830.