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

[JWR]

I am looking for the corrupt ones who will screw their clients to get the quick sale for a lower price!

I had one agent in Toowoomba tell me that I am not getting a bargain from him but he will help me 'screw every other agent in town'. Hasn't worked yet but we are a tag-team working on getting some good deals.

And another in SA I offered 115k on a 142k property and the agent said that there's been 3 failed contracts on this one due to finance and that he just wants it gone so to just give him 'a few days to condition the vendor down'. He said he will pretend the offer is 110k and pretend I keep upping my offer by a little bit while he hopes to bring the vendor down bit by bit. He only got them down to 120k so said to wait a few weeks and will get back to me. I wait in hope...

 

[Jake D]

I like how you think JWR.

 

[JWR]

I'm not looking to screw pensioners or widows etc... just other investors who need to liquidate quickly or those moving interstate etc...

And the only reason I need them for such a good price is because I am on a low income so need them cash positive (which by definition in the areas I look means I need to buy them below market value). It also limits the downside risk and adds a margin of safety (very very very important).

 

[Ed Barton]

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.

one wants a trophy and one wants a commission.

 

[MsAli]

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

Thank you Piston. That was so informative. Where do you finds these deals? It may be a challenge to find these in the Sydney suburbs (west/south west). I'm sure you can do a big reno on cheap houses in the west. However, I need to heavily rely on equity and saving up before I do one of those. Hence the move to purchase something with equity - can do a smaller renovation however.

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.

I actually put two offers early this year. One was a 2 BR villa - deceased estate. That stunk due to the stench of cigarettes. Needing around 7k-10k reno (may be I'm over estimating, but it adds up) and the second was a 2 BR townhouse. The townhouse was very spacious and had a potential to have another bedroom added. It needed at least 10k reno. These were listed for $219k and $245k. They apparently sold for $212k and $235k

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.

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

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

Interesting experience Kathryn! He has told the usual lies like "there is a higher offer of $232k", "vendor spent a lot of money renovating the property".

Yup I made a written offer...I believe he did take the offer to the vendors otherwise why wouldn't he pursue the $232k offer (which apparently doesn't exist!)

The agent actually called me this morning to ask me if I had a chat with my family and what decision I intend to make. So I told him that that property wasn't the last property on the market and my offer is as per comparables in the market. To which he said it's the best one in the complex and AGAIN the best they will take is $235k. So I said, I will let him know if I changed my mind. I was a bit silly to say that I had to buy more and hence wouldn't want to overpay - he was laughing at that!

It's really hard to say about potential capital growth and won't be ideal to have no equity (given for now I have to rely on equity to move forward). At the same time I don't want to regret it down the track...

 

[MsAli]

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?

Yep NedKelly, hence the hesitation to buy...

The one we've just bought - I explained to agenty why we offered the final price that we did ($20 more than initial offer)

Lizze, how did you pull that off? How could anybody be happy with $20 extra dollars? You could get a KFC family bucket with that.

 

[JWR]

What I always do is find one that has gone under contract that is comparable and pretend I have just exchanged on that house (for around the same price as the real one I am trying to pursue.) And I always say I bought it for a lot under the asking price to condition them that the house I really want is worth a lot less than asking price.

It makes them think I've got lots of money but am only willing to spend a certain amount on their one.

And I always tell them I am looking at many others so they get back to me pretty quick usually.

Have you asked Nathan to look for a run down house in the West for under 200k? I think that's a much better buy than this for 230k or even 200k!

 

[MsAli]

James, I have $26k to play with. I don't think I could do a big renovation....Even with a 5% deposit.

 

[JWR]

200k house.

5% deposit is 10k. Costs = 7kish (legals/building/stamp)

Reno = 9k (easily achievable if its only cosmetic)

Then revalue and buy the next (or more preferably get a granny flat out the back then refinance again)

Easy!

 

[MsAli]

So I've decided, this is not a good buy As we are all aware. If the vendor had accepted $230k I may have signed the contract already. Thank heavens they didn't and it gave me a bit of time to ask here about it.

Thanks heaps everybody. I have learnt A LOT here!

 

[JWR]

Great - you just made 50k effectively!

 

[NedKelly]

Thanks heaps everybody. I have learnt A LOT here!

You can learn more here than any paid seminar or course you might attend that costs you $thousands.

 

[MIW]

You can learn more here than any paid seminar or course you might attend that costs you $thousands.

Or inaction can cost you more......