I put an offer and have agent come back 9k higher - need some opinions

[Piston Broke]

I've thus far ignored the expenses when calculating the rental yield. But I never knew people did? You must have some crazy deals to be able to get 7%+ yield AFTER expenses (or are you saying 5%+ is good after expenses - as long as it covers repayments after expenses?)

Most people ignore expenses because they are deducted off taxable income.
So for every dollar they lose they get back 42cents (or whatever tax % they pay) of taxes paid.
This includes depreciation which will also increase the losses.

I don't know the exact details of this particular property, all I'm saying is what makes this buy better than others?
Buy, hold, pay and pray takes decades, how does this property have above average potential?
What does it have that others don't and how does it beat the average?

I'll also quote an old post of mine

1. All debt is bad if it costs me to keep it
2. An investment earns, a liability costs.
3. Any liability should be turned into an investment asap.
3a. A future investment purchased as a liability should be ideally be funded by other investments, and preferably P&I loans.
4. If it is'nt CF+, then make it!
5. If you can't make it CF+ quickly, the market is too hot or you dont yet have enough $$$.
6. LMI is bad, and means your LVR is too high.
7. He who want it most, pays the most. He in a hurry always pays too much.
8. He who tells you to hurry usually gets a commission.
9. Equity = Wealth, Equity = Cash, Equity = ability to buy when others are going broke.
Equity is king! Long live Equity!

© Piston Broke

 

[VYBerlinaV8]

In the end, it is the sellers decision whether they accept an offer which is lower than their asking price. But you are under no obligation to "cover their liabilities" or offer anymore.

I would let the agent know that you intend moving on and looking at other properties unless your offer has been accepted by 5pm tomorrow. At the moment, you are letting the agent manipulate you into paying more.

I also dont think you should speak to the vendor directly. That is what the agent is there for.. to be a "gateway". We had someone come to our door and try to pressure us into selling to them after we'd already accepted an offer on our PPOR. It was a big turn off and we felt somewhat attacked by this person - it was an intrusion into our lives. It also made them look desperate.. I think you need to come across as being "cool" and detached from the sale.

and if it doesnt work out, there are definitely plenty of other opportunities in the current market.

I agree with this post. Forget their story, their liabilities, their problems. Work out what you will pay, tell the agent, put a time limit on the offer, and if it doesn't get accepted move on and don't look back.

 

[NedKelly]

I don't get why vendors have so much attitude even in this (apparently slow) market!

Apart from treating buyers like idiots, an agent spends most of his time managing the inflated expectations of the vendors. Some vendors still think prices are going up 10% a year! You say that "No way it will sell for that price." well if the agent meets a greenhorn it may very well sell at a ridiculously high price. I have walked away from properties where the vendor wants the listing price which is well over the top and they won't negotiate down, only to see them sell shortly after at that price. That is rare though.

 

[Jake D]

Just curious,
Are you sure the agent has taken your offer to the vendor? I know it's a requirement over here.
Is it possible that if he did, without trying to play you, then vendor might accept?
Can you ask to see their signature on your offer where they declined it?

 

[NedKelly]

Don't think speaking with them directly is possible.

Also at the moment negative gearing does not concern me. I want a few in metro before moving towards cashflow. The capital growth/equity in these will help buy others...It's a snowball effect.

I think you need to ask yourself why you want to buy this property. MIW touched on this with regard to the capital growth prospects, you don't get that by buying the best house in the street. The capital growth/equity in these will only help buy others if you can revalue and draw down on the growth. The rent yield is low and won't cover your loan. Have you thought this through?

 

[pennyk]

Just curious,
Are you sure the agent has taken your offer to the vendor? I know it's a requirement over here.
Is it possible that if he did, without trying to play you, then vendor might accept?
Can you ask to see their signature on your offer where they declined it?

I have never signed an offer when its been declined........ mostly done either verbally or via email.

 

[Jake D]

So you don't ever really know if the vendor has actually declined or the agent is dicking you about?

 

[Edge7]

That's right Jake.

And unfortunately, due to being the middle man, the agent is the most influential person in the negotiation because either side doesn't really know for sure what is being said or done.

 

[Jake D]

Gross.

And am i right in thinking that in WA, they are obliged to use the "offer & Acceptance" form, which does require responses from vendor to buyer in written, signed form? Or at least, thay are legally required to show all written offers to the vendor?

Could asking for this from an agent be a useful tool? or is it likely to get them offside/get you laughed at?

EDIT: didn't mean to curse, sorry.

 

[JWR]

Yes that is a big concern for me - and I suspect because my offers are so low the agents don't even present them to the vendor.

i.e. the other day I offered 120k on a 155k property (and its easily worth asking price) and the agent replied NO - so I said would you mind presenting the offer and he just replied saying that its worth the asking price and I wish you well in your future endeavors - I then asked if he would please present the offer and he didn't reply.

I have never seen a vendor decline in writing.

Is there any way around this to ensure every offer is presented?

 

[Propertunity]

Is there any way around this to ensure every offer is presented?

3 ways:
1. Put your offer in writing in an email to the agent and ask for the vendor's response. (still not a guarantee)
2. Stop dicking around with low ball offers and if it is easily worth the money, offer something close.
3. Put your offer in writing to the agent, but also drop a copy off to the vendor's letter box, the vendor's solicitor, or the vendor's address (if they are not living at the property). All contacts are on the contract of sale.

 

[JWR]

I do write in emails the offers.

Will present offers to the vendors/solicitor's etc... if agents screw me around.

Will keep offering low amounts as there is plenty to choose from

Thanks for the help

 

[pennyk]

We've just sold a house, and we told the agent that we wouldnt accept any offers below $***K and not to even bother telling us, because we were getting lots of low ball offers. My understanding from him is that he was obliged to let us know about every offer regardless... which he did, even when they were way below that price.
But he did have authority from us to knock back offers below our "reserve" price.

What makes you think agents arent passing on offers on properties? Do you know that it actually happens? I cant see that the agent gains anything by not passing on the offers, even if they are low.
If you are offering "low ball" offers, you have to expect that mostly they are going to be knocked back.

 

[lizzie]

I think one thing that we forget - as seasoned buyers and sellers - is that the majority of people with properties have only ever bought 2-3 in their entire life.

I often buy/sell that in one year.

So, we usually cut to the chase, know what we are doing, and why, and get annoyed at others dicking around because, to us, it's just another property in the cycle ... but we forget that the others (buyers and sellers we are dealing with) are dicking because it IS a big deal for them.

We have been accepted on our verbal offer to buy our next PPOR - after negotiating the vendors down $40k - we only saw it on Saturday. Spent the day running around the entire area, plus some - looking at everything - drove down every lane - went to an impromptu auction we passed - didn't have time for lunch ... walked thru this property, saw potential, knew location, done deal.

Looks like I've bought myself another reno - I promise - one day I will build!

Whereas, we are currently selling ... oh the dicking and dithering!

I guess - the reason for this waffle is that the OP's sellers are elderly, they probably don't understand what things are worth, the merits of selling (they can move on) and are being led 100% by the agent instead of making a decision for themselves. If the agent is is only going to hinder - and not going to assist in the obtaining the sale in the vendors best interest - then I would move on.

The one we've just bought - I explained to agenty why we offered the final price that we did ($20 more than initial offer), the favourable conditions in the contract, the fact that the vendors are wanting to move south to be closer to family, similar for sale/sold in the area etc - and she sat them down and explained all this to them.

She was working for both us and the vendor to procure a sale that benefited us both.

 

[knightm]

The one we've just bought - I explained to agenty why we offered the final price that we did ($20 more than initial offer), the favourable conditions in the contract, the fact that the vendors are wanting to move south to be closer to family, similar for sale/sold in the area etc - and she sat them down and explained all this to them.

She was working for both us and the vendor to procure a sale that benefited us both.

$20 more than the original offer. You are a hard negotiator Lizzie

 

[kathryn d]

Penny, I'd feel the same!

The reason AlmostBob (Rob) mentioned to go to the vendor, was because we bought a place where the REA didn't want us to buy it. His friends were putting in lowball offers, and he wanted them to get it.

We had offered full price, with interesting conditions (Vendor Finance)
and it was rejected.Not even a counter offer. That is what made us suspicious.

It turned out when Rob called the Vendor, he had no knowledge of the offer.
That REA agent no longer works in real estate, and we have gone on to buy another property from this same vendor...same terms..only this time we bypassed the REA.

Not everyone is honest.
We always put our offers in writing, with a deadline.

PS...how many lies have you caught them in already?

 

[Rolf Latham]

It turned out when Rob called the Vendor, he had no knowledge of the offer.
That REA agent no longer works in real estate, and we have gone on to buy another property from this same vendor...same terms..only this time we bypassed the REA.

Hey guess what..................this happens a BUS load more than I would like. Not for the same reasons, but this is surprisingly common.

ta
rolf

 

[lizzie]

$20 more than the original offer. You are a hard negotiator Lizzie

haha - nothing like forgetting a "k"!

We lowballed - got them to come down, then met then halfway from there.

The point was that the agent was working for on behalf of both of us to get a done deal that benefited both. I can pick an agent like that from a mile off nowadays ... and would run from any other types (unless the deal was so unbelievably good in present form).

 

[JWR]

What are some of the characteristics of these lazy agents Lizzie?

I've found if they are out of town agents, house been on the market ages, only one picture and general poor presentation of the house, not stating land size, advertising as 3 bedroom when there's a huge rumpus for example (making it a 4bdr) etc...

Its very surprising I can make a totally low offer with one house and get a 'I will try to get the vendor to come down' and others who tell me to F-off.

 

[lizzie]

Easier to pick the good ones - ones you gain a quick rapport with, who listen and discuss, who ring back to keep you in the loop even if no decision has been made ... also a lot of gut feeling about people.