Strategies BA use to beat competition?

Curious how are you sourcing deals? Its a tough gig

just met with re agent offer going in tomorrow as his too busy with other props

lets see, seems he is On my side?? But who really knows

 

You didn’t mention this one:

 

@MTR a good BA will have developed strong relationships with agents over time which may allow them to know about properties ahead of time. They will help sift through the dud properties to uncover sites with potential.

Some strategies to consider when buying in a hot market
1. Identify the key suburbs, use google maps and RP data to sort through the potential sites within each suburb and shortlist those with potential (and equity). Send each site a letter expressing your interest in purchasing the property, hand write the envelope (wouldn't bother sending to rented houses). 100 letters may get 6 response and one may pan out, its a numbers game.
2. Pull a list of the top 10 agents for each suburb from realestate.com and meet with as many as you can, building relationships with the most active first. Follow up weekly if not more frequently.
3. Find out who are the top rental agents in the area and chat with them about any investors who may be willing to part with their properties.
4. Check RE / Domain / Reiwa daily for the suburbs of interest incase a site slips past the gatekeepers (1 and 2 above). Its surprizing how some properties are only listed on one of these websites and have less exposure.
5. Be market ready to make a fast offer after due diligence has been satisfied. Pre-approval / cash shows strength to agent/seller that sale will transact successfully.
6. Solve the sellers problem/challenge. Find out what their critical success factor is (not always price). Some of the sellers I've talked to really responded well to extended settlements or limited rent back periods while they find their next home. In a hot market there is a genuine fear they may not be able to find a new home... how can you help them overcome this fear?
7. Read a) Never split the difference and b) How to win friends and influence people to boost your awesomeness!

Happy hunting!

 

@MTR we've been in this business long enough to know that agents are not on the buyers or sellers side, but their own. If their side happens to align with your best interests then so be it. But most important to the vast majority of agents is making the sale.

With regards to sourcing deals in current markets, I can only comment on my most recent buy in Sydney, my luxury apartment add value deal. And I was basically ready to pounce. I'd let many agents know what I'm looking for and to contact me first as I'll buy within 30 mins. All cash. And even then it wasn't below market comparables. Just not too much above. Since that sale, similar (I kid you not) has sold for 2-450k more. Just market moving. Fast.

When I bought it, I was more 'anticipating' a good add value buy, rather than based on the numbers at the time of buying. I feel like in current markets, you almost have to anticipate what might be a good deal now, when looked back on in 18 months from now. Yes higher risk possibly, but also good rewards to be had if you're correct. The risks for me were worth it so I bought.

Actually trying to buy a ' big discounted' deal in real time in current markets ( at least in much of Sydney) is just not gonna happen. At least not for the vast majority of buys. Inner and middle-ring Brisbane is also moving fast and competition is generally fierce.

Not sure about other cities.

 

We've been considering getting a buyer's agent as we haven't had much luck in the last 6 months. However the problem seems more to do with stock than negotiation or pricing. A couple of friends have used buyer's agents but haven't really felt they were worth their weight. I think if you are obsessive about keeping up with the listings, can price the market and negotiate - then the value add in this market probably isn't much.

I have to disagree with this sentiment about anticipation. I think you have to price current stock to historical standards (5-10 year trends) and be willing to pay a small premium (absolute max +10% of what your own model shows). You have to go by numbers and not get emotional or you'll pay later. Interest rates might stay low but they will rise in time. I am still seeing people who overpaid in previous markets not sell in the current market because they want to make up for that bad deal in the past (seems almost unbelievable given how hot this market is).

Also to note - Back in Feb, the market was even hotter. We were seeing crazy auctions and pre-auction offers where prices were going 20-50% above pricing based on historical trends. What i'm seeing now is a lot of that exuberance gone because those people have already bought properties. I've told my wife, even if the market goes up another 10%, we will still be paying less because we aren't fighting with people who were willing to pay 20%+ above MV 3 months back. We've seen enough auctions in the last 3-4 weeks to see the market calm down alot. Many people have either given up or stopped looking. In fact I would say that you're more likely to pay within 10% of market value (based on historical trends) now than you have been since the start of the year.

 

Some very good points

I like to find out what the seller wants, similar to what you are saying. For example could be long settlement etc. Anything that makes it sweeter for the seller

 

My point on 'anticipation' is based on a calculated decision. Not emotions.


The stock that I bought was based on certain factors.

1. Many, many people are fast becoming, if not are already priced out of semis/houses for the suburbs I'm targeting. The suburbs I'm targeting are extremely high demand, low supply markets in Sydney's East.
2. The only other stock to buy which gets you a similar lifestyle and is big enough for a family is X stock which I was targeting.
3. I am able to add a lot more value than cost, especially in Sydney as it's the place I have most contacts.
4. The stock I was targeting has a gap in price when compared to semis/houses anywhere from 50 to 80%.
5. I 'anticipated' that demand will very likely increase for high end renovated stock of what I'm targeting, which would still be very price competitive when compared to houses/semis and in some cases, be even larger in size. Importantly, many families/friends in the areas targeted will not want to leave these suburbs. So they'll be forced to compromise to stay in the areas.

I knew the value of what stock I was following intimately well, so I was happy to pay current market value, knowing the add value opportunity as well as my risk tolerances. It's already (in this case) turned out to likely be a good decision as similar to what I bought is now selling for a few hundred thousand more.

 

Got to love rising markets..... but Sydney is insane

 

Yeah, given the numbers that most of Sydney is playing with now, it's likely that most people playing in Sydney markets will be Sydney folks. Very few folks from other cities will have the buying power to frolick around in many of Sydney's playgrounds.

 

Good luck with that approach. You'll likely not be able to buy much in current high demand markets in our major cities/coastal areas if you stuck to that approach.

I foresee many places will hold their current value and possibly even higher than current prices, into the future as the dust settles.

At the end of the day, always stick to your own risk tolerances and not extend to a position where you'll get in trouble with no life raft.

 

Totally agree.

The first thing one learns in Negotiating 101 is NEVER bring negotiations down to one criteria and NEVER, NEVER, NEVER make that criteria price.

I have bought properties in a hot market where my offers were NOT the highest but I offered a long settlement time, the option for the sellers to rent back, ...

I have sold property where I did not accept the highest offer. A recent one was second highest in price, cash, no B&P vs highest price, subject to Finance, subject to B&P, ...

Only newbies believe it comes down to price

 

I guess we'll agree to disagree. We've already helped my parents negotiate and buy in the 4 mil range in the lower north shore in recent months using this exact strategy. If someone is missing out in the market using this strategy it's because their historical modelling is wrong. At least half the properties we've seen sold have fallen within 10% above what we priced it at. The problem now is more stock than price.

Whether the prices being realized now will hold or not - only time will tell. For the North Shore I think house prices have probably reached close to the peak for the time being. I'm seeing less buyers with less money. It's hard to see that change when interest rates start rising in a few years time. Whether this holds true for other areas of Sydney I have no idea and don't want to make predictions outside my circle of competence.

This is good advice that I only recently gleaned from a certain podcast. Certainly helped with negotiating that we did recently. In the Sydney market right now though, you're getting a lot of cash offers and B+P already done by vendor upfront. It almost feels like maybe one strategy is to be upfront really aggressive with offers if their expectation and your valuation are in line with a good offer.

 

Tell potential clients that they have access to "off market" properties that the buyer wouldn't be able to just find on RE.com

 

So markets within markets....? So some hot, and others at peak

 

If it's working for you then fantastic. I think it depends on which suburbs you're looking at, price point and type of stock. Also, there are no doubt sellers who may sell for prices lower than comparables for a few reasons, though it doesn't happen too often.

Many markets in Sydney are just growing so rapidly that I really don't see most buyers being able to get any kind of great price discount at the point of buying.

But if they can (while still purchasing value), then more power to them.

 

100% agree. For me, it's all about overall value at the time of buying.

Many people focus too much on price and often miss the big picture. Not saying price isn't important, but there are quite a few other factors to consider too.

 

Another lesson from Negotiating 101 is ALWAYS believe one is in the strongest negotiating position (even if one isn’t).

Years ago, I was in a room negotiating a business “deal of a lifetime”. Before entering the room, I had convinced myself I was in the strongest negotiating position (in reality I had no idea).

I felt things weren’t going my way (as least not as well as I was hoping). So, I stood up, thanked everyone for the opportunity to present my case/offer and started to walk (slowly) towards the door.

I got a far as the door and put my hand on the handle to open it. I truly thought my gambit had backfired.

As I was opening the door, the head negotiator asked me to close the door and come back to the table.

The power shift was amazing (one could just about taste it).

The deal was completed on terms that I had hoped for/could live with. But I did need a clean pair of undies. That transaction yielded me $M’s in the following 10 years until I sold the business and retired.

 

Oh, and also inform the potential clients that "the market is heating up, very few good buys so need to act quick".