Property Twins | Property Twins™
[rev_slider ]
In: Home Buyers, Property Investors0

Real estate agents are buyers’ friends, not foes. They work for the seller to get the best price for them, however to achieve that they must work with the buyer to enable the sale. Often newbie investors get stumped or scared of approaching real estate agents. The truth is if you don’t know what you want, no property will suit you. The property negotiation game is over rated, assuming you know what you want and can spot it. There are a certain set of questions that you must always ask when starting negotiations on a property. These are:

PROPERTY RELATED QUESTIONS [Houses / Strata Properties]

  1. What’s the block size? What’s the street frontage? [You can enquire this yourself if you have access to Price Finder]
  2. Is the block on the high side or low side? Is it a flat block? [Google street view is a good tool]
  3. If a strata property, how many units in the complex?
  4. How close to amenities such as shops, train and schools? [Google can also help]
  5. How is the current condition for the property? Can it be rented as is?
  6. If renovation is required – what sort of renovation is required?

Further, do some due diligence yourself such as look up the council website for the current and future re-zoning potential for blocks. The selling agent may not always be aware of the same and you don’t necessarily want to educate them on this either.

PROPERTY CASH FLOW – INCOME & EXPENSES

  1. What are the strata, council & water rates for the property?
  2. What’s the rental return on the property?
  3. If renovation is required, how will the rental return improve?
  4. If renovation is required, how will the property value improve?

Personally, we like anything with 7% plus return. This is a tad more difficult today in the Sydney & Melbourne markets. It is still possible in Brisbane. With rates being in the low 4’s, a 6% return is acceptable to give you neutral cash flow. When you have reviewed enough deals, you would be able to easily spot the ones you want to pursue versus the ones you don’t.

Reminder: Rental Yield = (Yearly Rental / Purchase Price) x 100

QUALIFYING THE SELLERS

  1. How long has the property been on the market? [The longer the property has been on the market and often in the past with un realistic expectations, the more you are likely to be able to negotiate to your advantage]
  2. Why are the vendors selling? [are they upgrading / downsizing? is it a deceased estate? Is it a relationship split?]
  3. How flexible are the vendors on the price?
  4. Can you do a written offer and / or pen to paper i.e. sign the contract with a firm offer that the agent can present to the vendors?
  5. Can you purchase prior to the open home? [Some agents may be more open to this than others. It will come down to vendor expectations and situation as well as current market conditions]
  6. What sort of purchase conditions may enable you acquiring the property? Also, known as “sweeteners” for the vendor – i.e. delayed settlement or a quick settlement, unconditional contract [without a cooling off period]

Some sellers are in the market just to test the market and not really to sell. Vendor motivations can give you good indication of what sort of a price and conditions you may want to place with the purchase. If the vendors are game and you offer the “right price” and conditions, you may be on to a winner with a deal. As the saying goes, you make money on the way into the market not when exiting the market.

Most importantly build rapport with the selling agent. Read our blog post on How to jump the queue when negotiating with real estate agents

Happy Shopping!


To Get Started: Schedule A Chat with the Property Twins Team
Join Our Exclusive Facebook Community of 6,000+ Property Investors: Property Addicts Australia
Join our Exclusive Search & Select The Right Property in 90 Days 5-Day challenge

Note: Please ensure you always seek specific specific credit, tax, financial, legal or investment advice. Property Twins' Blogs are not a substitute for personal and specific, taxation, financial, legal or investment advice

Leave a Reply

Your email address will not be published. Required fields are marked *