TIPS TO ENSURE INVESTORS MAKE MONEY
WHEN THEY BUY
29th September, 2005
Negotiating the right property deal is simply
a matter of doing your homework and arming yourself with first-class
skills, according to Perth property buyers' agent Property Wizards.
Managing Director Liz Sterzel said the old adage
"you make your money when you buy" was paramount in
real estate investing, especially in the current market, where
there was a shortage of quality properties up for grabs.
"The only way to do that is to improve your
negotiation skills so you can compete with other buyers and
avoid paying too much," she said.
There are a number of tips to take into negotiating,
including:
#1 - Learn the Seller's
Motivation
Ms Sterzel said knowing the reason a property
was for sale could be useful in knowing how hard you can negotiate.
"Listen out for any hidden signs indicating
how motivated the seller is, or that the sale is urgent,"
she said.
"You can often gauge much about the seller's
determination from their counter offers during your negotiation."
#2- The Interest Factor
Ms Sterzel said buyers needed to be careful not
to appear too keen, as advertising the fact that you desperately
want a property could force the price up.
"On the other hand, if you're interested
and intend to make an offer, do let the agent know," she
said.
"If you're considering other properties tell
them that also, as it can often cause them to place more value
on your offer.
"And if they ask how much you intend to offer,
let them know you'll make a final decision shortly and will
confirm in writing at an agreed time.
"Even giving a general figure of what you're
prepared to spend is not advised as it can work against you
in the negotiation stages."
#3- The Selling Agent
has the Upper Hand
Ms Sterzel said investors should
remember that selling agents were trained professionals.
"Unlike most investors, they negotiate property
deals very regularly and have honed their skills over time,"
she said.
"It pays to remember that their sole purpose
is to sell the property for the highest possible price - to
be clear, they are working for the seller, not the buyer."
#4- The Game
Ms Sterzel said that while negotiating a discount
could provide real thrills, there was a real danger of chasing
the "buzz" at the expense of a great deal.
"If your research shows the property you
want is already under fair market value, snap it up," she
said.
"Attempting to haggle further or go in low
will probably just mean you lose the property because other
informed buyers grab it."
#5- The Offer
Ms Sterzel said knowing what to offer was not
an exact science, but there were key factors to consider to
avoid going in too high or too low.
"How you read the owner and agent's motivation,
how many other offers are on the table and your assessment of
asking price versus value all come into play when deciding what
to offer" she said.
"And if you're looking at other properties,
then placing an expiry date on an offer can be useful as it
can act as a signal to the agent that they need to treat your
offer with some urgency.
"But it won't work in a situation where you're
competing with other buyers."
#6- Terms and Conditions
Ms Sterzel said many buyers didn't place enough
importance on the terms
and conditions of sale, but that it should be remembered that
a seller's agent's obligation was to propose terms and conditions
to suit the seller.
"Paying attention to the terms and conditions
as a buyer can mean, for example, that crucial time is not lost
between settlement and finding a tenant for an investment property,"
she said.
#7- Professional Advice
Ms Sterzel said if the negotiating process was
too daunting, or investors wanted to ensure the best return
on their investment, getting advice from a buyer's agent was
a good option.
"If the seller has a professional on their
side, you probably should too," she said.
"Property buyers have the experience and
inside knowledge and know the tricks of the trade to help you
get the upper hand, thereby negotiating the lowest price and
best terms and conditions."
