The art of the lowball

??? in regard to the falling in the lap ? if yes, nope, I can tell you *some* people have it very easy.

Person was known to have assets & property interests by many locals, a few people came and offered property way below market, saw it myself for a few of the buys, literally on a platter...

 

No chance...sniffing around a couple of those!

 

Yes...I saw this with my friend who casually bought a place in Northern Brissie off an incompetent agent for $285k...now rents for $340 pw.

 

I was low balling on Gold Coast property between 2008 and 2010 in the aftermath of the GFC and the last Gold Coast boom. It was pretty tough to get any bites but I was patient and starting 2010 reality really started to set in and I started snapping up bargains from buyers who really has bought at the peak and wanted out (also mortgagee sales).

Keep low balling, keep your offers open for limited time. Present a signed deposit cheque - the agent will be compelled to present the offer. Find two similar properties and lowball and play them off against each other. Lots of ways to do it.

 

I am totally in awe....what incredible information you guys have shared. Thank you so very much.

 

So when you guys offer lowballs, do you do B&P before the offer? Or is the offer subject to B&P?

I'm not sure about building rapport with agents, while simultaneously making lowball offers? If it's a numbers game, agents would see you and know that while you were a serious buyer, you wouldn't be offering as much.

How long do folks usually take before they settle on a lowball offer?

 

@SerenityNow - lowballing is over rated. Either you like a property or you don't. If it ticks your boxes and you are able to spot a good deal then go for it. It wastes everybody's time and acting smart may mean you miss the deal altogether. Agents are less likely to take you seriously as well. Come across as if you want to make deals happen, respect their time, put an offer only and only if you intend on completing the deal if/when it's accepted.

 

I tend to agree with you, in general. Maybe it's better to be in the market, purchasing at MV and holding an asset that gives you 30% or so ROE pa over a 10-year hold period (more if held longer).

On the other hand, it's easy for you to say that lowballing is over-rated

 

Agree with @MsAli. This is where you need to have all the facts before making an offer. If the vendor is not motivated, if the agent is not motivated, if the market is against you low balling will not work. If a property is already listed below the market would you risk losing to make a low ball offer?

 

This wasn't low balling. It was making sure:

• We knew the area/market like the back of our hand
• Knew what we wanted - our strategy - not Joe's strategy, not John's strategy, but our strategy on what ticked the boxes what didn't
• Taking action as soon as the relevant property came along

Note, at times it took months to find the right deal that fit the strategy, but I'd rather get the right deal than buy for the sake of buying; It also meant we had the ability to recognise it too

 

Fair enough!

But other than knowing your market, and taking quick action, the key thingamo was that a BMV property came up? Would you say then, that you spent a lot of time doing the research, knowing your numbers, first? Really knowing your market was key?

Were you looking at a number of suburbs/options, before a property that was a bargain popped up?

I hope this isn't asking for TMI, but in terms of properties that you find to be BMV, do they tend to require a bit of work/reno? Personally, I was thinking of getting relatively good-condition places since I'm lazy (and prefer working on my "day job" to reno stuff), and I don't think there would be that many bargains on near-new/reno'd places?

 

I am in your camp with this one.
Low balling is over rated, mind you how many posts on this subject

 

It's a lot like cold calling...the more dials you make the more sales you'll get. The more offers you make, the more likely you'll come across the cheap stuff. There's a lot of reasons why low ball offers get accepted...motivated vendors, inexperienced agents, agents who need to meet their monthly target and sells the vendor into accepting? who knows and who cares.... You'll only pick up good deals consistently if you put in solid effort, be flexible with your offer conditions and accept that 95% of your offers will be rejected. The other 5% is gold though.

And when people say agents work for the vendor and not you is complete bs. At the end of the day, agents don't work for the buyer, vendor or anybody but themselves and most agents will be very happy to sell a house for $50k off if it means they get their 2% sooner. Position your offers so that its easy for the agent to make their money and they will do what they can to convince the seller to take it

 

It works @MTR I dont mind peeving a few agents off once in a while if the rewards are well worth it. They are. my opinion.

 

@Simon L I may disagree with your POW on 'lowballing', but strongly agree with you on the above mate.

 

@SerenityNow, yeh, the key was the deal came up. Knew the area, had been buying in the area i.e. finger on the pulse means that you know the current prices and current rents - that way you can quickly work out if the listed property is in line with the market / below market / way above market. This way you can eliminate what is really worth your time.

No, I am a firm believer in buying in bulk. Diversification is good, but not to the extent that you have to learn a new suburb everytime you go buy a property. If it's not broken, why fix it? So if you say...buy $1m worth of property and...if it grows...

• 5% --> that's 50k without lifting a finger
• 10% --> 100k
• 20% -->200k
• 80% --> 800k

Now take a $2m, $3m portfolio or even $10m portfolio. If you buy well, time well (although the debate goes timing the market vs. time in the market), infrastructure is in place/going in and the cashflow ticks the boxes, there is more the reason for things to work out.

Also, as mentioned, cashflow was at the forefront to make the decision. Hadn't seen capital growth - first property cycle (of many to come), capital growth was the icing on the cake.

Fortunately, it was an ideal time to take action then and there and be the first one with the deposit cheque the next morning after it was listed. This is history, but then this is how the previous boom was prior to the current one that just peaked.

Nah, just a bit of tidy up. 2000's built townhouse with depreciation. If it needs work, you only need to project manage (which can be a bit of a headache). Things with value don't come easy (I think that anyway). There may be more work now and action lies in the present moment. Delayed gratification will yield results AND this reno may mean you leap frog on your portfolio faster - what if it lets you get into your next IP and the one after that?

It depends on your dream.

 

I have made 2 successful lowball offers in ard 2003-2004 when there was easing in the mkt in Melbourne . Cash offers and 28 day settlement with full 10% deposit upfront and signed s27 for early release of deposit . However in Melbourne's current climate especially eastern suburbs there is likely no chance every one is going to auction and will not entertain even offers prior. As mentioned I came out of an auction 0 out of 2 when 2 units were auctioned off half and hour after each and I lost in both auctions

 

U need to at least have a few target suburbs or areas u know well. For me it is south Melbourne, Doncaster, Doncaster east, clayton, Balwyn, Balwyn north, Maidstone, point cook

If u are not interested in Reno or sub division builds or devs then ur option for manufactured capital growth are limited as Melbourne has the most potential. Currently There is a massive gap in houses and old unrenovated units and villa prices in certain eastern suburbs and plenty of sub division or dual occupancy opportunities as well as Airbnb demand in Melbourne

 

Lol I feel your pain. Same thing happened to me back in March

Just wondering whether lowball offers have to be cash?

 

Well at least you probably had some good theatre for the evening..