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From: Mike .


HOW IFFY ARE THESE PEOPLE
From: NOVICE HOUSEWIFE
Date: 03 Feb 2001
Time: 13:24:41

HELLO, Need some input from people. My friend who lives in QLD just bought an investment property in Logan. The woman she dealt with says the way it works is after working out your income and debts, they then recommend a property that suits your needs and budget. She acts as a property agent and receives her commission from the builder for finding him a buyer. Then everything is done for you including finding you a tenant, solicitor, property manager, accountant, the bank that will loan you the money with the best going interest rates.

It's all worked out for you, everything including the tax relief spread out over the year. At any point you can choose if you want to use these recommended people or use your own. My friend is very content with this set up and I was wondering what are the pitfalls of buying property this way when you have no idea what you're doing and someone is doing it for you?

That is the attractive thing for me as I thought that the first property bought, it was a good way to learn how to do it, maybe so that I would be more confident in purchasing a second property without this kind of assistance. But as I don't trust people in general when it comes to money I am of course suspicious.

Any input would be appreciated, as I intend to buy a property this year anyway but as I live in Sydney, buying one down here poses a dilemma as to what the bank will lend me and what I would get for the money in comparison to the better quality home in QLD...comments?
 
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Ross

Reply: 1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Ross (Gold Coast Buyer Agent)
Date: 04 Feb 2001
Time: 13:20:20

Hi NOVICE HOUSEWIFE

From your comments, it looks like you think the real estate agent is your agent. And that they're helping you. (Unfortunately, the agent is the seller's agent. And her job is to sell the property for the highest possible price.)

Legally, she can only show you through the property, write your offer on the contract and refer you to other professionals so that you complete the contract.

At no time, is the seller's agent able to give you advice about market value, they cannot negotiate for you, they cannot give you any alternative options, etc etc..

(And a seller agent cannot advise about property investment !!!)

But when I buy properties for people... I tell my buyer clients to ignore everything that comes out of a traditional real estate agents mouth. (Most of it is ### ####### #####.)

If you buy the traditional way in QLD... inspect the properties you've selected... go the department of natural resources to get a sales data print out or BLIN map. Then see your lawyer to draft the right special conditions... then present the offer to the agent... (or present it directly to the seller.)

Remember, when you buy... your on your own. (Unless... your get a Buyer Agent.)


Ross Sondergeld - Buyerside Real Estate

Save time. Save money. Get a buyer agent.

# Gold Coast today - Sunny and fine !!!
 
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Anon

Reply: 1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: to ross
Date: 05 Feb 2001
Time: 09:16:23

So the gold coast is sunny and fine! I'm not sure of that, these days what are the vacancy rates on holiday and residential properties? I looked in real estate windows last year and there were houses for sale at the 250 mark with 4 bed, pool and double garage around Burleigh.

We were interested as we were considering moving up there one day but work is always a factor. At one stage I thought about a unit up there but it scares me when I think of not being able to find a tenant/s. I am going up there in March again and I will try to to a bit more research.
 
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Paul

Reply: 1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Paul
Date: 03 Feb 2001
Time: 15:43:33

Novice Housewife,

Lot's of issues need addressing in your posting. In no particular order, here are some of my thoughts for you to consider:

Why are you considering buying a property in QLD when you live in NSW? How are you going to do your research, make sure everything stacks up etc.? Nearly impossible. Much easier to find out the real picture in your home town. Read anything about two-tiered marketers from QLD? They prey on unsuspecting people in the southern states, sell them overpriced property, and the poor client has no way of checking anything. I am not suggesting that your contact is one of these, I am just illustrating the point that it will be much harder for you to have the confidence in a QLD property if you haven't been able to check everything out from where you are. Sydney has some outstanding IP opportunities.

There are countless organisations that provide the services you have mentioned. In almost every case, they receive a commission from either the builder or the developer. If they are ethical, they should disclose to you how much they get. They may also get commissions from the financier, the insurance company, the property manager etc. It can be very profitable for them, and this is why there are so many of them. Some even disguise themselves as Clubs!

You have to be careful on a few fronts. Other than what I have already said, the single most important word is - VALUATION. Don't agree to buy anything until you see the sworn valuation. Even then you have to be careful, because a valuer will value the property the way he is instructed to. Sneaky developers can instruct a valuer to value the property a certain way which makes it seem higher than it should be. Ask for a copy of the valuation, then speak directly to the valuer if you can.

Last bit of advice. The bank will lend you exactly the same in Sydney as it will in QLD (valuation, LVR and DSR dependent). This should not be a reason to purchase in QLD. I should add that I'm not bagging QLD property - I'm not. It's just that you're in Sydney and need to be more careful.

Hope I was some help. Going home now after a long day in the office.

Paul Murphy The Investment Institute
 
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The Wife

Reply: 1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: The Wife
Date: 03 Feb 2001
Time: 18:38:27

Actually Paul,

It does sound like your bagging QLD. Where are your investment properties?

I wouldn't buy in Logan at the moment, it's a dog, too many vacancies, however I'm sure someone might pop up and say they are doing fine there, but it's not for me at the moment, there are some much better suburbs in QLD.

May I suggest novice Housewife, that your friend who bought in Logan would not be a good source of information, most people try and upbeat their buys by saying how wonderful it is, even if its not doing well. Nobody likes to look like they made a mistake.

Novice Housewife, have you done all the footwork for QLD suburbs? Map out the rental returns for each area, Brisbane paper is http://www.couriermail.com.au

If you have a fax, call some agents, ask them to fax you the rental sheets for their area, look up what's for sale at what price, nothing beats your own homework.

Also be aware that there are a lot of townhouse developments that are half vacant, that don't advertise, they just stick a little sign out the front of their townhouses and they have onsite management.

I spoke to one of these people recently, I suggested the rent they were asking was to high, they thought I was a potential renter , and dropped the price by $10 on the spot. I stood there and looked at the man, I said nothing, it got uncomfortable. He finally said, OK, how about we knock $25 off the top, and you take a 12 month lease? I said no, he said what price are you willing to pay?

He was asking me to name my price!

Does this scream don't buy townhouses?? I think so.

I'm of to Brisbane Monday Morning, 5.25am flight, on a spending spree, I will be sure to post my findings when I get back.

I was in Brisbane a few months ago for 32 days straight, I had some good buys, and I have kept in contact with the agents of properties that the vendors wouldn't drop in price on. I'm revisiting them to see how their price is going as well as looking at some new stuff.

Wish me luck :eek:)
 
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Paul

Reply: 1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Paul to The Wife
Date: 04 Feb 2001
Time: 07:00:30

The Wife,

I wasn't bagging Queensland properties. You are obviously a very experienced investor who has been around for some time and had time to learn the ropes. You know your stuff, and you have the time, ability and resources to find out if a property is a good investment or no, no matter where it is located.

Novice Housewife obviously doesn't have the same level of skills as you at the moment, nor maybe the ability to do adequate research. For that reason I was suggesting she stick to where she knows.

If she was in Queensland and looking to invest in Sydney, I would be saying exactly the same to her.

As for my investments, every single property investment I have and have had has been in Melbourne. I have lived in Melbourne all my life and I know the market here backwards. I am less likely to make a mistake in my own backyard, and can spot an opportunity with far more accuracy and that's a policy I have always personally stuck to.

If, like you, you can contemplate investments all over the place because you have the ability and time to do your research and understand the market, then fantastic. There are always fantastic opportunities in most cities, so go get em Wife!

Paul Murphy
 
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Terry A

Reply: 1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Terry A
Date: 05 Feb 2001
Time: 00:23:10

Hi TW,

I agree in part with Paul as to why novices think they have to rush up to QLD to buy their first IP and are not looking in their own backyard. As a matter of interest where did you start, in your own backyard and then move further afield as you developed your knowledge and skills or did you buy sight unseen in another state?

Have a good trip to Brissie.
 
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Novice H

Reply: 1.1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Novice H to the Wife
Date: 12 Feb 2001
Time: 10:00:19


Thanks for the advice on Logan. I am curious myself how much good a buyers agent would be for me in my situation. I am going to Burleigh Heads for a holiday in a couple of weeks so we are going to hire a car and drive up to Brisbane and have a look around. Any suggestions that might be worth while before I go?
 
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The Wife

Reply: 1.1.1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: TW
Date: 12 Feb 2001
Time: 12:18:39

Wear flat shoes,

Take a bottle of water,

Set aside a whole day,

Have a road map,

Book in a few key properties for viewing and tell the RE Agent you are on a tight schedule and to have the keys and everything ready to go at the appointed time, or it won't work.

When ever you pass a RE Agent, take a rentals list.

Use a clipboard to document the property you view, document EVERYTHING about the property.

Follow the agent in your own car, they dither about too much, and waste too much time, remember it's not a social meeting.

Ask the RE Agent, what suburb they live in before parting, and why.

Remember to look around you as you are walking about, look at what type of customer you will have.

Have fun!
 
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TBA

Reply: 1.1.1.1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: TBA
Date: 06 Feb 2001
Time: 21:03:30

To the Wife

As you are going to be in Brisbane you may as well call on The Buyer's Agent and experience the difference;

1) No vested interested to recommend particular property.

2) Access to the whole market from which to locate suitable property.

3) No conflict of interest in attempting the opposing needs of the seller and the buyer at the same time and in the same transaction.

4) Working for property buyers EXCLUSIVELY

In the event that you miss us this time round have a profitable trip

Regards, TBA
 
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The Wife

Reply: 1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: The Wife
Date: 11 Feb 2001
Time: 12:05:15

Tell me again what a buyers agent can do for me,

that I can't do myself?

I must have missed something somewhere.

I read TBA's post as well as all the other ones that seem to have found a new advertising outlet,

And I am still wondering how they could help?

So far I have come up with these thoughts:

A) If you are a person who is so busy in their day job, that you can't spare the time to go looking at property, you get the buyers agent to scale down the hunt for you according to your specifications.

B) You have a language problem

C) Your incredibly scared of doing it for yourself

Apart from that, how could they assist the average hack?

Do they get a great price? I would like to know, if it saves me having to deal with agents, I just might use one, But I get my own great price, can a buyers agent do better?.


The buyers agents all seem to be full of statistics, can they give us some stats on what kind of prices they get?

Can they give me a breakdown, like this

EXAMPLE ONLY:

House 4/2 DLU Market price $150K,

Negotiated price to $115K

Buyers agent cost $****.** ??

Real examples from buyers agents please, no names or street addresses needed.


Also I would like to know, if they negotiate price, what negotiating techniques they use?

Also what kind of advice do they give their customers?

Also if they deal with interstate customers, do they organise the valuations/inspections/finance, on behalf of the customer? If they do, what kickbacks do they receive from these individuals?

If there is a pack or something you buyers agents can email me, that would be great, goldtree@dynamite.com.au

I really am trying to learn, and find out what the fuss is about buyers agents, and why you think your such a good deal.

Also, do buyers agents think EVERYONE would need their services, or just SOME people, if SOME, then what kind of people are the SOME?

Cheers :eek:)
 
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Jacques

Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Jacques
Date: 12 Feb 2001
Time: 08:42:33

Hi TW,

You wrote: "A) If you are a person who is so busy in their day job, that you can't spare the time to go looking at property, you get the buyers agent to scale down the hunt for you according to your specifications.

B) You have a language problem

C) Your incredibly scared of doing it for yourself "

B) doesn't apply to me, but A) and C) certainly do, C) so much more than A). As a newbie, I am still struggling with getting out on a limb and jumping. When I first invested in shares, it was $3000. So I didn't worry. But in IP, we are talking of a few orders of magnitude higher! So I definitely want to make sure that my first IP is right.

That's also what prompted me to ask about a mentor. Someone I could bounce ideas of, and get advice from. On the other hand, I know that when I will have my first IP, I will have learned a lot, and I will feel more comfortable doing it on my own. If I use a buyer's agent, I would want to make sure that it is a learning exercise for me, not just a "hand over the money, and I will find you a property" exercise.

You also wrote: "Also I would like to know, if they negotiate price, what negotiating techniques they use. Also what kind of advice do they give their customers? "

I guess that would be asking them for their tools of the trade. I would also like to see more than just advertising from buyer's agents on this forum.

Cheers Jacques
 
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The Wife

Reply: 1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: TW
Date: 12 Feb 2001
Time: 10:30:53

But that's what I am asking,

IS it their tools of the trade?

DO they negotiate a good price?

I would like to see some examples.

Your paragraph Jacques, on learning by doing is great, power to you.

I want to know, do they have a standard formula ?

Do they say "Oh well, couldn't get the price down much, buy it anyway, it's a good growth area." I want to know if they dispense advice?

Come on buyers agents, answer some questions please.
 
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Mike

Reply: 2
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Mike
Date: 11 Feb 2001
Time: 23:51:20

Hi TW,

Thought-provoking stuff from you, as usual.

I've been on the forum for a month now, and it's been a real eye-opener to see so many newbies struggling with their first IP purchase. Many of them are nervous about buying interstate due to the prevalence of rip-off marketers. Hence questions about this suburb or that suburb, or, this marketer or that marketer.

This tells us that lack of familiarity with the market is a major concern. The other concern is how to source a suitable IP without having to endure high-pressure sales tactics.

If the buyer's agents can help in this regard, and negotiate below market (which would cover their fee) then the chances of a quick, stress-free, and successful IP purchase are enhanced.

TW, while I have your attention, could you recount for us your first long-distance or interstate IP purchase. Were you hesitant, how did you source the property, and how well did you negotiate the price? I'm only guessing here based on what I think a newbie's comfort zone is, but I'd say that most newbies wouldn't negotiate hard, if at all. If this is the case, then another reason to employ a buyer's agent.

Any response, welcome.

Regards, Mike
 
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Jacques

Reply: 2.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Jacques
Date: 12 Feb 2001
Time: 09:37:42

Hi Mike,

You wrote: "I've been on the forum for a month now, and it's been a real eye-opener to see so many newbies struggling with their first IP purchase. Many of them are nervous about buying interstate due to the prevalence of rip-off marketers. Hence questions about this suburb or that suburb, or, this marketer or that marketer."

Spot on! Lack of knowledge, way down on the learning curve, uncertainty... And then the elation at finding a forum like this where newbies like myself can read what gurus have done and are doing!

You also wrote: "If the buyer's agents can help in this regard, and negotiate below market (which would cover their fee) then the chances of a quick, stress-free, and successful IP purchase are enhanced."

For me, it would be: let's get help for my first IP (no mentors hanging around :) ), learn heaps in the process and then do it myself. The worry is: will a buyer's agent actually let me learn?

Cheers Jacques
 
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Mike

Reply: 2.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Mike
Date: 12 Feb 2001
Time: 12:55:12

Hi Jacques,

Before responding to your question, here is a thought-provoking article on the same theme that came through the e-mail today.

"Why don’t people invest in property?"

"The answer can be many things, but mostly it’s human nature. People claim they have lack of time or knowledge or confidence. The reality is that 90% of the world’s wealth is in the hands of 10% of the worlds population – those 10% being the one who have overcome the lack of time or confidence and do something about it."

Me again: Note well the words, "lack of time or knowledge or confidence". As the article says, 90% of people are unable to overcome these obstacles to wealth.

If buyer's agents can address these issues, why not give them a go? What is the alternative? Probably further procrastination and possibly self-guilt. I agree with you that the first one is the hardest because of the amount of money involved, and so newbies desperately want the first one to be successful to get their confidence up to take the next step.

To your question: "For me, it would be: let's get help for my first IP (no mentors hanging around :) ), learn heaps in the process and then do it myself. The worry is: will a buyer's agent actually let me learn?"

I can't speak from experience but I do know that according to the conditions in their agreement they will, "work exclusively on our behalf, to Locate, Evaluate and Negotiate the purchase of an acceptable property, accurately described in the Property Profile Questionnaire which forms part of this agreement..."

In their Declaration they say the nature of the advice is general only and not to be taken as investment advice. The general advice should be regarded merely as incidental to describing the features of a particular property.

The agreement also says the level of service to be provided by the buyer's agent can be negotiated.

So put all that together and it reads, "you get what you pay for". If you just want them to locate property and you do the rest, negotiate a lesser fee. Add in Evaluation and Negotiation the fee will increase. Add in the "teach me" factor, ie professional consultations including observing negotiations, probably up the fee again. This last issue I don't really know. You need to ask, but everything's negotiable.

If it were me, I would explain to the buyer's agent that for my first IP purchase I'd like them to handle all the steps but that I want to also use it as a learning experience so that in subsequent purchases you engage them to handle part of the process only while you do the rest.

It may turn out that you become proficient in locating and evaluating property but feel that you still need their negotiating skills to complete the deal.

I think this is worth a try if the buyer's agents are willing to "play ball".

Anything has to better than the current state of affairs that the 90% figure suggests.

Regards, Mike
 
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Jacques

Reply: 2.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Jacques
Date: 12 Feb 2001
Time: 13:20:59

Hi Mike!

Thought provoking stuff!

You wrote, quoting an article: "The reality is that 90% of the world’s wealth is in the hands of 10% of the worlds population – those 10% being the one who have overcome the lack of time or confidence and do something about it."

Well, by hook or by crook I will get into that 10%: that is my goal, and I will damn well do what needs to be done to get there!

You also wrote: "If buyer's agents can address these issues, why not give them a go?"

I am in the process of selecting a buyer's agent. Even if there is no explicit proviso for learning in the contract, I will make sure I get everything I can. I'll just keep asking questions! And questions. Until I get an answer! :)

Cheers Jacques
 
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Sim

Reply: 2.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Sim'
Date: 12 Feb 2001
Time: 18:46:24

Question to those considering the use of a buyers agent.

What if they recommend you buy a property that turns out to be a dud ?

Are you prepared to shoulder the responsibility (you made the ultimate decision to buy !), or will you forever resent the agent... lose sleep about lost opportunity and maybe even sue ?

Will you learn as much from the mistakes if you had made them all yourself ?

Will you know what mistakes you made if you let a buyers agent do all the work ? Will you know if you did it yourself ?

I'm not for or against buyers agents... just asking some questions that people may want to think about !

If one can be satisfied as to the integrity and supposed usefulness of a buyers agent, then surely using one to purchase an IP is surely better than not investing at all ?

If you initially purchase an IP through a buyers agent and intend to purchase many more IPs will you still take it upon yourself to learn enough to eventually do it all yourself and do it well in order to maximise the personal and financial benefits from doing so, or are you just wanting someone to do all the hard work for you so you never have to think too hard and never grow in sophistication as an investor hence always being at the mercy of someone else's judgement and damn that's a long sentence and it's time to take a breath now ?

;-) Sim'
 
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Jacques

Reply: 2.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Jacques
Date: 13 Feb 2001
Time: 12:16:22

Hi Sim'

Wow, am I being challenged to think! :)

You wrote: "What if they recommend you buy a property that turns out to be a dud ? Are you prepared to shoulder the responsibility (you made the ultimate decision to buy !), or will you forever resent the agent... lose sleep about lost opportunity and maybe even sue ?"

As I make the final decision, the buck stops with me. If I find later that the buyer's agent concealed information or mislead me, then I may have to consider action (starting by spreading the word about the lousy service. And word *does* get around!)

You then wrote: "Will you learn as much from the mistakes if you had made them all yourself ? "

Hopefully there will be fewer mistakes than if I made them all myself. My reasoning is that by using a buyer's agent, I will learn and make less mistakes. As I mentioned in a previous post, I will be asking questions until I get answers!

You continued: "Will you know what mistakes you made if you let a buyers agent do all the work ? Will you know if you did it yourself ? "

To be truthful, I don't know. But in both cases I would do my best to find out what went wrong so that I do not repeat the mistakes!

And then you wrote: "If one can be satisfied as to the integrity and supposed usefulness of a buyers agent, then surely using one to purchase an IP is surely better than not investing at all ? "

Precisely: I need to get myself going, to start the process, and to get out of the books and into action! A buyer's agent is a help (as I still haven't found a mentor) to minimise the mistakes. Having said this, my biggest mistake would be to pick a bad buyer's agent. But there is a risk for anything. Nothing ventured, nothing gained!

And you finished off with (take one deep breath): "If you initially purchase an IP through a buyers agent and intend to purchase many more IPs will you still take it upon yourself to learn enough to eventually do it all yourself and do it well in order to maximise the personal and financial benefits from doing so, or are you just wanting someone to do all the hard work for you so you never have to think too hard and never grow in sophistication as an investor hence always being at the mercy of someone else's judgement and damn that's a long sentence and it's time to take a breath now ? "

It is clear in my mind that if number one priority is to get me going with a 'reasonable' first IP (bearing in mind the risk of mistakes, etc), the second one is to learn as much as possible. As I wrote earlier: questions will be asked until I get the answers! If I were not ready to learn, I wouldn't be reading IP books, and reading what people write on this forum!

Cheers Jacques
 
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Sim

Reply: 2.1.1.1.1.1.1
From: Mike .


Re: HOW IFFY ARE THESE PEOPLE
From: Sim' - Jacques
Date: 13 Feb 2001
Time: 17:19:42

Well Jacques, I think the answers you gave to my questions would be the same (or at least similar) to the one's I personally would have given as well, were I in your position...

Sounds like you are at least thinking things through quite thoroughly... all the best which ever way you go and keep us posted !!

Sim'
 
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