Dealing with real eatate agents, any good advice/strategies to not play their game?

[Intrinsic_Value]

Realestate 'Brownie Points'
(a) you have done business before. The agent will already have a sense of you. If that sense has been positive, it will very much help in future proceedings.

(b) how you conduct yourself. If you cannot say what you mean, then you cannot mean what you say. And a gentleman should always say what he means.

(c) when dealing with new agents:
(c) i : use character references, if you have dealth with a number of other agents, give your character references (only with regards to other agents), tell them that they are free to call your references with other agents and find out what sought of person you are.

(c) ii: use unconditional offers with a time expiriery period. Hand over the 10% deposit attached to the unconditional offer. Make sure the time expiery period is not too long. This gives an opportunity for the agent to go to the other party but with a legal limited time length for execution of the transaction.

(d) understand the pyschology of the agent. The agent is not there for the buyer or the seller, but to act as a middleman and execute a transaction. The agent only gets paid if the transaction is executed. Please try to understand the agents position.

(e) relevant to the opening post. The agent doesnt own the property. The underlying primary concern is that the agent wants to 'transact' the property in an ethical manner. The agent cannot influence the ethics of the seller, since the seller is the owner of the title. Hence if difficulties, one needs to ascertain where the 'difficulty' lies. Dont blame the agent if the difficulty is with the seller.

(f) star wars: yoga: there is not try. Do or do not. There is no try. At the end of the day its your job to create a position that is financially advantageous to yourself. Sometimes this envolves creative thinking. Othertimes the deal just wont be achieveable. Achievement of the deal at all costs can result in a 'do not' because the end results do not justify te future returns. Conversely a 'walk away' can result in a 'do' if the end result is a sub-satisfactory future financial result.

 

[Chloe]

Unconditional offer? I wouldn't feel comfortable not making it subject to building inspection.

 

[wylie]

Other agents (that don't work there) have mentioned that anything in that area under 400 is an absolute bargain even if it needs work.

If the house wasn't going to collapse when we have our next storm then paying a bit more is totally reasonable but when there's major structural damage then the vendor needs to be realistic too.

Which is it... is it an "absolute bargain" because it is under $400K or is it the other quote "going to collapse when we have our next storm"?

If that second quote is really how bad it is, then don't even go there. If it was a bit of "poetic licence" then you need to add up the cost of underpinning and any other work and if that takes you to over $400K, then it isn't really a bargain after all.

Next!!!

 

[Chloe]

Wylie, a subdivided property in this suburb (it's a nice suburb but not amazing) that is nicely renovated will get around $450,000.
I estimate the costs to be around 30-40 fo fix it.

http://www.realestate.com.au/property-house-vic-ringwood+east-111858110

This is it.

 

[wylie]

Are you saying this property can be subdivided?

If you get this for $370K and have to spend $30K on it, it will have cost you $400K. Would it compare to the ones you are saying are worth $450K, and if so, then it would be worth paying $370K for, in my opinion, but I'm a bit rash when it comes to buying houses? Nothing wrong though with walking away at $360K and see if the agent chases you up.

If you are concerned that paying $370K and spending $30K will mean its value is likely to be $400K then I would walk away and keep looking.

Be mindful though that underpinning can be expensive, and a "guesstimate" of $20K could blow out further. Like most renovations, things will cost more and take longer than planned. Son had underpinners quote $15K and when they came back (uninvited) to measure up, that blew out to $30K.

P.S. I just clicked on the link and the ridge lines on both levels of roof look like parts have sunk. Is this part of the "fix" and has it been allowed for. (Maybe it is my eyes, but it doesn't look level.)

I'm also curious to know what the agent is lying about?

 

[Chloe]

The house is already subdivided, there's a unit at the back.
The house is 400m2.

The agent was lying about the problems with the house, he told me all houses move this much! Wanted me to make a counter offer against myself, that the building report was ok

 

[VYBerlinaV8]

You're obviously uncomfortable, time to walk away.

 

[buzzlightyear]

Other agents (that don't work there) have mentioned that anything in that area under 400 is an absolute bargain even if it needs work. The bank have done a valuation for the loan and land value alone is $300,000.......

So you believe REA agents here but then.....

The house is already subdivided, there's a unit at the back.
The house is 400m2.

The agent was lying about the problems with the house, he told me all houses move this much! Wanted me to make a counter offer against myself, that the building report was ok

are lying here?

If the agent is aware of any issues around movement, they have under their professional code of conduct (assuming they are a member of the relevant real estate institute), a duty to disclose this. How would they know? If the vendor discloses this fact. Of course, if vendor says to them, they are unaware of the issue and haven't investigated it, but the agent sees the large visible cracks but don't know for a fact on issues pertaining to movement, their response should be that you should make our own enquiries to confirm the nature of the issue. In this case, if the agent has downplayed these issues, then this is part of the language in advocating the property and to minimise some of the objections. I agree that this may not be the right way to communicate and deal with this issue, but they aren't your (buying) agent.

You also mention the intransigence of the vendor who isn't going to budge on the final $10k. If the asking price has come down a few times, then it seems reasonable that they are reluctant to go down even further. Your only ally at this time, is.......time. If indeed you are the only interested party, then you can only wait until the vendor is conditioned by the market. Of course you risk losing the property to someone else or indeed the vendor might never reduce their asking price. Maybe they have reached their floor price?

So is $10k worth missing out on the property? Only you know the answer to this. Good luck.

 

[Chloe]

Buzz, the $10,000 that i don't want to pay is because it's not worth it with all the work it needs.

So who buys these properties with structural issues? Just curious....

 

[Angel]

So who buys these properties with structural issues? Just curious....

Highly emotional first home buyers who think they can fix the problems for less $$$ than just going elsewhere and buying a structurally sound house. People will buy this house because they think the decor is cute. Many FHBs will buy something with structural problems because they think that the prices are going to increase any day now and they will never get another chance to buy something. Time is always on the side of a person who is savvy with their money.


Honestly Chloe, you mentioned before that you have previously removed your offer because of a bad building inspection. Does that mean you have already had it done? DO NOT rely on any reports unless YOU pay for them.

To make things easier for yourself, either choose a different suburb that you can comfortably afford to buy into, or buy something that is structurally sound regardless of what the kitchen, gardens and bathroom look like. As a beginner, what are you thinking? Underpinning, no way.

 

[pav]

Propertunity the reason i wanted the property was for the location and i'm on a budget.
In my budget I'm going to get something that is either on a main rd, railway line, flat roof, near powerlines, badly sudivided, like just plonked in someone's backyard etc.
This one at least is none of these things but needs all of the things i mentioned previously. I offered $360 and she wants $370. At first she wanted 400!!

If you are so interested and you think there is something you can really get on a long run... then why don't you negotiate with the seller for a delayed settlement of that $10k.
Or you can negotiate that include the stampduty in that price and let the seller pay the stamp duty than you (that will work out to the result you are looking for).
Or If you are not in a real hurry then let some time pass by and go back to the seller and see if they are interested in your original offer (as you said they don't have any buyers)

 

[Chloe]

Angel, yes I absolutely paid for the builder's report. There is no way that i would go by one provided by the agent or owner!

Pav, time definately is on my side but i'm going to look elsewhere. If the price comes down again and i've found nothing then i may relook but i doubt it.

Thanks everyone for you advice, much appreciated.

 

[Aaron_C]

Unless it is a development site I would be very wary of purchasing something if a significant renovation is needed (for a PPOR). In the building game it always costs more than what you budgeted for, and the time factor really kills it as well.

 

[Chloe]

I found another property. This one is 1 suburb away, on about 800m2 BUT it's in a part of the street that is not allowed to be subdivided. See!! There's always something.
Because I'm looking for a PPOR and have no intention of subdividing, would you see this as an issue? Especially when you go to sell it?

 

[b simpson]

If its for a long term ppor then it might be subdividable in 10 years time?

 

[JennD]

I found another property. This one is 1 suburb away, on about 800m2 BUT it's in a part of the street that is not allowed to be subdivided. See!! There's always something.
Because I'm looking for a PPOR and have no intention of subdividing, would you see this as an issue? Especially when you go to sell it?

What do you want in the PPOR? Buy wisely, but if subdividing isn't part of your investment strategy then stop worrying about it. If you intend to be pulling equity out to buy your next one, that's when you need to be thinking of the potential growth and renovation possibilities etc.

It's very rare that all the stars align and it's perfect.

And remember, the real estate agent works for the seller, not for you, and they're doing it right by doing things in the interest of the vendor. I don't think that makes them a dirtbag but I see what you mean, and I know how it can feel!!

 

[Spades]

I found another property. This one is 1 suburb away, on about 800m2 BUT it's in a part of the street that is not allowed to be subdivided. See!! There's always something.
Because I'm looking for a PPOR and have no intention of subdividing, would you see this as an issue? Especially when you go to sell it?

Hi Chloe,
You could always add a second storey when funds permit to add value.
Clear trees etc for better views.
Cheers Spades.

 

[VYBerlinaV8]

Buzz, the $10,000 that i don't want to pay is because it's not worth it with all the work it needs.

So who buys these properties with structural issues? Just curious....

I have. I bought a block of 3 units with structural issues back in 2009, and got a discount of 1.5 times the estimated repair cost.

Still own the units, and plan to hold for some time.

 

[wylie]

Buzz, the $10,000 that i don't want to pay is because it's not worth it with all the work it needs.

So who buys these properties with structural issues? Just curious....

Our son and his partner did. They bought a house for $450K that had major cracking to the brickwork and had failed a building report. We didn't bother getting another report. Blind Freddy could see the huge cracks. The contract that fell over was for $490K ans without the cracks, that seemed a pretty cheap price.

They knew worst case was underpinning. Initial quote of $15K increased to $30K or 35K (cannot recall). I think they smelled money behind the young people, and thought they would "try one on"... tried a bit of "scare tactics".

Someone from this site (thanks Brian) gave us excellent advice about drainage to stop the movement. Hubby dug deep ag pipe and rubble drains across the whole of the back of the house and down the sides to stop 50 years of water from moving the house any more. We asked an old friend who is an underpinner his advice and he confirmed Brian's drainage advice, and said with soil drying out, the movement may not cease but may "change" and it could move again. They will wait and see how things stabilise and once all is secure, they will render the bricks, but only when they know all movement has ceased, and any further issues are dealt with properly.

So... with some knowledge, advice and remedial work, a house that is rejected can end up being bought at enough of a discount to enable worse case work to be done.

In our son's case, they got it with enough discount to pay for the (possible) underpinning, but didn't have to do it. Lucky really, because that discount has allowed them to do a new kitchen and bathroom that they would have had to wait several years to do had they needed to do the underpinning.

Just make sure you go in armed with firm quotes and a good knowledge of what needs to be spent.

 

[Chloe]

Thanks guys.
There has been a quote that we have seen that was done by a remedial builder that the agent uses. Apparently he said it was overkill but quoted 15,000.
I emailed the report with the pics to a underpinner, he thinks sight unseen that $15,000 would be a ballpark.

If needs attention in other areas such as the shower as it's almost like a dark closet. No pantry, no built in robes etc. if this was all I had to worry about then fine.