Best way to get 'under market value'

Domain and RE publish auction results each week. But of course you should just monitor the properties in the suburbs you are interested in.

 

any suggestions for this side of things?

 

look for places being sold by out of area agents.

 

The last part of their definition is the bit that really explains why some people think they can buy undermarket ...

Another example is a group of four properties we bought in Brisbane in the last half of last year . Messy divorce , parties playing hardball , rejecting reasonable offers , agent very frustrated and had got tired of wasting his time showing people the properties just to have offers knocked back . Then the banks step in and basically they have to sell or they loose control of every thing . At this stage I happen to ring up and ask about one of the properties and the agent ( who by this time just wants a sale ) mentions that they are selling four . I ask is there a bulk discount ?

About a week later I get a phone call from the agent asking were we still interested . The agent had put together a proposal for us to buy them all for around 10-15 % below market value and with the banks breathing down their necks they had to agree on something which just happened to be me .

Cliff

 

yes, this is a good one

 

Go to auctions.

 

Pricefinder is also really good and gives you lots of info. If you get a subscription to API you get 3 months subsciption to pricefinder (Subscribe to API - Australian Property Investor magazine This is cheaper way than getting the subscription itself, even if you don't use the magazine)

 

Ha! I only learn't about the negotiation skills part after getting kicked to the curb a couple of times.

Got the research part down pat now......negotiation skills on the other hand need some serious work.....

Such is life for a newbie....

 

These helped me mate:

Secrets of Power Negotiating - inside secrets from master negotiator, by Roger Dawson

Negotiating Secrets, by David Brown

A property investor's guide to negotiating, by John Potter

The negotiation book, By Stave Gates

Trump Style negotiation, by George Ross

 

Thanks Leo would you recommend these in this order?

 

Best experience we had with negotiating was with our previous PPOR ( 2001 ) so early in our investing career and time on somersoft . Market was quiet ( yes , at times Sydney does get quiet ... ) so we could take our time .

We went around making offers we could afford , on properties we couldn't.

Was interesting to see how we reacted , how the agents reacted and how often we had counter offers that were a lot closer to our low ball bid than the asking price . Some agents were quite indignant saying they wouldn't pass it on . We pointed out that unless they had specific instructions they had a legal obligation to do so .

At no time did we come back and make a counter offer .

Took the emotion out of it , so when we made low ball offers later on , it was easy to stick to our guns .

Like anything .......

Practice .

Cliff

 

If I only wanted to get 1 then I would probably get A property investor's guide to negotiating, by John Potter. Before I go into any negotiation (after doing my DD) I have what I call my Action Sheet, basically its a piece of paper taking me step by step though this negotiation. What I need from the deal, what I can afford to concede (always hesitantly in their view), what is my bottom line, etc etc. Though as @See Change said, practise, practice, practise.

 

Agree with most of what's already been said here. In my hundreds of purchases the best results have been:

Below Market Value Purchases

#1 Out of area agents;
#2 Desperate Vendors
#3 Off market properties through agent relationships
#4 Properties with encumbered titles or strange easements where creative solutions need to be devised.
#5 Counter cyclical purchases​

Cheap property myths:

#1 Renovator's delights
#2 Deceased properties sold via state trustees
#3 Bank repossessions​

*Note that the above myths are all options that are advertised online. However you can buy well with those three; for example, I just bought a deceased estate today for 6.5% below all other comparable sales off market - this is due to a strong relationship with the selling agent.

If you're committed to buying a property for less than the market value spend time hustling with the sales agents. Drop into their offices with a coffee once a week or fortnight and go over their listings with them.

 

Love it

 

Thanks Leo.

Good buyers will understand that investing $50 in coffee for agents to pay $X,000 less for a property makes sense.

 

Understanding real estate agents motivations can be very helpful. At the end of the day and despite all their talk about achieving high prices for their vendors they care far more about a quick / hassle free sale than getting a slightly higher price and you have to wonder how much info they don't tell the vendors.

Case in point the other day someone I know was competing on a property and she was willing to pay $30K more than then other buyer but she needed some time (only 2 days) for her solicitor to review the strata report and get her depoist cheque ready. The agent went with the lower price for an on the spot unconditional exchange. Do you think the vendor was made aware of this? Doubt it.

 

100% agree. Great post and honest insight.

Its all a game. The best players often get the best results.

 

Look in a suburb that shares its postcode and name with another suburb, but where the name is prepended by North/East/South/West. Sometimes agents don't list these properly and they don't come up in searches. Helped me get a good property for almost 10% under list during a time when everything was selling for well over list.

Near identical apartment in the same building was listed properly not long after and sold for >30% more.

 

We've never bought REA's a cup of coffee , but we tell them what we're doing so they know we're serious buyers and don't have an issue with finance , and we're not going to stuff them around . Helps if you know all the lingo .

Cliff

 

I think probably one of the main things, if not THE main things the REA wants to know (the good ones will be qualifying you from your first point of contact) are:

1. Is this a genuine buyer here and now
2. Does he have the finance ready to rock and roll


For me, that is probably the first two things I establish with them in my first conversation. I want them know right away that A) I am definitely buying, no ifs no buts, B) I am finance approved and have no intention of wasting their time. C) I am also looking to build longer term relationships with them for future buying.

Everything else will flow on from that.