Common/ bizzare Buying Mistakes - what have you seen?

I get asked about buying mistakes a lot. So much I wrote a blog post about them. I thought a thread about the most interesting ones might flush out some useful info...

Here in the post are a selection from my list of most common buyer mistakes, to read the rest of my 21 most common that I see people making are in the blog post entitled "DREAM OR NIGHTMARE? 21 MOST COMMON PROPERTY BUYER MISTAKES THAT CAN DERAIL YOUR FINANCIAL GOALS (AND HOW TO AVOID THEM)":

1 Not having a plan – buying aimlessly is counter productive and owning the wrong property is a dead weight to your financial future. Real estate is lumpy, it is hard to buy and sell so it only makes sense to think twice before choosing what to purchase. Set long term goals, THEN short term goals & stick to them.

3 Being led by the media – In my 16 years of property investing I have seen articles saying that the market will crash by 50% and now is the wrong time to buy property EVERY SINGLE YEAR. This makes for great newspaper articles but most journalists know very little about real estate. Of course we need to understand the market and be smart but there are always opportunities to buy and most people would be better off if they purchase when they can rather than giving in to the fear based media.

5 Analysis Paralysis – research is important but at Precium we have seen many people send literally years searching for the right property only to miss an entire boom phase. This costs hundreds of thousands of dollars in lost opportunity. Don’t let fear (see point 3) drive your decisions. Picking a few key things to measure in line with your goals and moving forward each week using baby steps will create momentum and help you avoid getting stuck.

9 Not getting the right loan – paying too much interest or being stuck with a dodgy loan can impact property investors who want to build a portfolio. Getting good advice should help.

14 Not modelling the profit accurately if renovating or developing – this one is for the more advanced investors or those doing property development. Not fully understanding all the costs of renovating for profit or developing multiple units on a block of land can ruin you faster than a drunk week at a casino. Feasibility studies are essential to know what profit to expect before you make a single offer on a property.

15 Not negotiating well – we love negotiation! It is (in our opinion) the highest per hour work most people do in their lifetime. If in 3 phone calls I can change the purchase price of a property by $60k, then I have just made $20k per phone call. The trick is knowing what to say, when to say it and handling the pressure in between. It is a learned skill and a very profitable one, so learn it or get help from an expert!

19 Not keeping good records – your accountant will ask you for all the relevant records at tax time. The better your system for keeping those records the easier your tax returns will be. Set up a central filing system or computer folder to store it all, you will thank me later.

What do you think? What are your most embarrassing ones? What about "friends" mistakes?

 

Going to an auction in the same street and opening the bidding for fun......
Won the Auction !
One embarrassing phone call to bank manager for finance
It was $80-100k (15%) under market value though

 

I always go over my limit, not by much but if I feel if I have a chance, I ll throw in a few extra K as if it sells at $1k above my limit, ill feel like crap

 

I feel I don’t negotiate hard enough.

I placed an offer last night, owner paid $425k- property has been on market for 5 months, 2 agents, dropping price lower and lower. $415, $405, offers over $399, $389+

I’ve gone in at $378k and agent is treating me like I’ve screwed her and am being told it’s not even close and owner expects $400. But Feel like I’ve left money on the table by not leaving enough room to negotiate a win/win

I’m half expecting to just say no I’m not budging and let it go if so. Any advice team? I’m even thinking if we get the dotted signed. I use the B&P to negotiate a little more

 

ignoring the asking price, what its worth, if you feel its worth $390k (not what you want it for), and you offer $378k
thats a decent discount you could spend the $12k on some decent renovations

 

Not unusual in this market
Stick to your guns, don't feel hastled !
If you get it on your terms GREAT
If not then there will be another property
(I went through this recently and didn't budge, they persisted/waited and got $45k more. Someone overpaid)

 

Codie agents make the buyer feel like they must come up and the seller that they must come down. Agents only care about 1 thing - closing the deal for themselves. Nothing to do with the buyer or seller.

Dont let any agent pressure you. Know your market, determine what is value and a good price for you and that's it. Negotiate hard to get what you want. When you reach your bottom line for a good deal dont budge and let the agent know it.

One time selling a property my bottom line was $1,350,000 and after negotiating back and forth they came back with $1, 340,000. I told the agent even if they came back with $1,349,999, my answer is not a cent below $1.350. Deal closed at $1, 350, 000.

Stick to your guns and be prepared to walk away. Also, if the agent senses weakness in you and that you have room to move, they will use it against you. Let them know not a cent below your bottom line and they will likely then pressure the other side even more to meet your price. This of course depends on the market, competition etc.

 

agree, the agent is in it for them selves, their livelihood is based on a sale, it doesnt matter whether they get 1k less or more on the sale, their comission might be a few dollars extra,

sackie, the strategy of using this is my bottom price, backfired for my very first ever offer on a property!
I told the agent that my offer was the most I was willing to go, and then he shopped my offer and he sold it for $2-3k more, of which I would have happily matched

 

That's the risk that you lose it and you'll need to be prepared to walk away. I also put a time limit on my offer. I'm always prepared to walk and buy the next deal. For every deal lost there is another one round the corner.

 

Cheers all good advice. That’s precisely what I have done.

Agent rings, we actually have this in mind for $399+..
Me- well it’s been on the market for 5 months, even at a lower figure at $389+ and your telling me we can’t get a deal done today?

Agent- “Well we actually have another offer that’s come in higher than yours..

Me- “so your issuing a multiple offer situation and we both put our best foot forward then?”

Agent- “well we’re not actually doing that as there’s quite a lot of interest and ppl viewing tomorrow as well, do you want to think about increasing to your best and highest?”

Me- “Ok no worries I’ll send you an email pulling my offer, thanks”

I’m really just hoping she’s bluffing and there’s not another buyer

 

Haha I love REA's My standard to this one is - if the house is still on the market after the weekend, my offer will be $'x'000 less, so please ask the vendor if they're going to be gambling $'x',000 this weekend?

I did a REA course just to find out their tricks...works both ways

 

Damn that’s a good one! I’ve already gone aggressive and pulled the offer via email. Haha No response. If I was an agent and I’d been told by a buyer that they want to get a deal done today or pursue another property, with a pulled offer. wouldn’t you at least be throwing a counter offer back?

 

Look at it this way. If you're already at your price where you see value and not a cent more, then if someone offers more, let them have it. You move on to the next deal.

If it doesn't sell the agent will contact you again. That's when they are at their absolute weakest. Their bluff/plan failed. That's when you then offer 5k below your last offer.

Good luck mate.

 

Honestly it’s not my highest and I’d easily go $390. It’s a great property. However if I fold they will just keep coming back for more, I’d really rather see a counter. Cheers for all the tips!

 

I think your playing it well. Your leaving room for their counter. Cant be afraid to lose it. it's all part of the game.

 

that is brilliant, ive never actually actively thought about doing this,

however for my first purchase ever, the I offered $235k , it was initially declined due to a higher offer, and then a few days later the agent came back to me , so I lowered my offer to $233k, and the agent told me they werent very happy with me dropping my offer, and accepted it
It was the sale of by elderly couple whom the husband had just passed, and we agreed on early access, however they refused to give us access until settlement

 

Dont **** off the elderly.

 

Not a mistake. Happy blessing. If we didn’t go to visit my sister, her new swimming pool and her family, we would not have seen this home for sale.
Right place, right time...—> new home.
It was meant to be

 

Exactly.

We don’t like being “old” in the first place.

So you managed to get $2K off, from a grieving, elderly widow. Congratulations.
Marg