Little white lies you've told to secure a property

[westminster]

I've put this under psychology because it's about playing the mind game to secure a deal.

As a rule I never ever tell a REA that I'm a developer and I also tend to tell white lies. Some may be grey lies

Case in point.

A development site came onto the market which I wanted, the price seemed a bit high for the risk profile (a rezoner not already zoned) and I wasn't prepared to wait to see if it would come down in price as I figured there would be other people willing to pay it.

Queue the white lies. I told REA that I wanted the site to build a house that could maybe have a home office in it. Put an offer in under asking price and mentioned it was over our budget but we would put the stamp duty on our credit cards. Put a 24hr expiry on the offer as the last place we had offered on took week of stuffing around and we still didn't get it.

To the REA I was a family who wanted the site, already stretched to limit and keen to secure.

Did I get it? Yes. I offered $50k under asking price and they counter offered at $15k under. I accepted (muttering something about selling a child's kidney)

Done and dusted in 18hrs.

Sometimes I play games, sometimes I offer no information at all. I felt in this situation that I needed to engender a relationship with the REA so he could say to the owner 'look I've got this really nice family who'd like the site, prepared to make a very simple offer but can't offer full amount. The offer is less but it's a short settlement and attractive conditions. I think you should take it'

 

[D.T.]

You can't really preplan this stuff. It's different every deal. You really just need to appeal to their wants/needs to get the deals across.

REA's do it all of the time with their crap about how they have 17 buyers lined up and multiple offers etc., so it's no different in our direction.

I like it though, it's a fun game

 

[MTR]

Every situation is different and is I believe dependent on the area, how hot the area is, whether its a rising market, the agent, how savvy they are. I get to know the agents in the areas and work out how to work it to my advantage. Sometimes I have a win sometimes I have to work harder.

Personally I like to develop a relationship with agents in the area of choice, little BS, just tell them I want the property and have the cash. Basically try to secure prior to the property hitting in the market, but generally I buy in hot areas. I don't care if I pay a little above asking price because I shoot my competition out of the water and I know its going to be worth more in 3 months time so trying to save pennies is like cutting my nose despite my face.

Then again if you get lucky and can source property through an agent who under prices all properties then the deal is sweeter, this does happen

MTR

 

[TMNT]

White lies???
- I have 30 properties
- I am a first time buyer
- I cant afford any more
- The price isnt an issue
- Ive got offers on 3 other properties
- Ive had another offer accepted
- Im looking to buy 3 more
- I ve got another one around hte corner
- I purchased another similar one around the corner last month
- That is my highest offer

and a few more....

 

[LeoT]

I've put this under psychology because it's about playing the mind game to secure a deal.

As a rule I never ever tell a REA that I'm a developer and I also tend to tell white lies. Some may be grey lies

Case in point.

A development site came onto the market which I wanted, the price seemed a bit high for the risk profile (a rezoner not already zoned) and I wasn't prepared to wait to see if it would come down in price as I figured there would be other people willing to pay it.

Queue the white lies. I told REA that I wanted the site to build a house that could maybe have a home office in it. Put an offer in under asking price and mentioned it was over our budget but we would put the stamp duty on our credit cards. Put a 24hr expiry on the offer as the last place we had offered on took week of stuffing around and we still didn't get it.

To the REA I was a family who wanted the site, already stretched to limit and keen to secure.

Did I get it? Yes. I offered $50k under asking price and they counter offered at $15k under. I accepted (muttering something about selling a child's kidney)

Done and dusted in 18hrs.

Sometimes I play games, sometimes I offer no information at all. I felt in this situation that I needed to engender a relationship with the REA so he could say to the owner 'look I've got this really nice family who'd like the site, prepared to make a very simple offer but can't offer full amount. The offer is less but it's a short settlement and attractive conditions. I think you should take it'

I actually don't see any issues. IMO what you have done/are doing is being a sophisticated negotiator. 1. You built rapport with the REA. 2. Present your self in a weaker position than you really are to gain empathy from the REA and ultimately (hopefully) the vendor). 3. Made an offer under your bottom line (as you knew they would most likely counter) with the added pressure of 24 hour deadline 4. When they came back with a counter offer, you hesitantly accepted (letting them think you had conceded more than they had). 5. Win-win scenario .

I think you did it like clock work! I believe all serious investors should spend time to focus on learning more/developing their negotiation skills/tactics. I never go into any negotiation until I have what I like to call my "war plan". I work out everything I can about the vendor, their possible motivations, how much they paid for it etc etc. then I write a list of 5-10 issues that might be on the negotiating table and I rate them of least to most important and which ones I will concede (hesitantly in their eyes) and which ones are a must for me to win. By letting them get the unimportant stuff (but let them think its real concessions I made) when the important stuff comes they are usually more flexible/soft. Through using various tactics I have found that you can consistently come out ahead and save a shitload of money and sometimes more importantly get better terms of contract, but the overall feeling is win-win.

Anyway I think what you demonstrated WM is sophisticated negotiating.

 

[Catalyst]

LeoT,

How do you work out the vendor's motivation?

 

[Scott No Mates]

LeoT,

How do you work out the vendor's motivation?

Profit, greed and fear. They're the only ones which count.

 

[MTR]

You ask the RE agent ... what does the vendor want to make a deal??, agents are snakes, if you work them they will spill the beans most of the time, especially if you dangle a carrot.

Also, if you are buying in a Trust, which presumably most investors do, this is a dead give away that you are an investor, at least that is what I think??

Also, agents can access information to find out what properties you own, its not hard. Not that they would be bothered I guess, but something to consider. Not all agents are fools, the best ones to deal with are the lazy ones that are out of area who under value properties and work for the buyer not the seller.

WM, my guess is you did not pull up in your porsche I can give you my MIL red cute car if you ever need it, and I'll look after your porsche

 

[pinkboy]

I never lie.

Im an angel.

pinkboy

 

[LeoT]

LeoT,

How do you work out the vendor's motivation?

Well obviously its hard to know their exact motivation (unless a stupid REA tells you the truth, which happens) but I have found there are ways to bet guestimate their possible motivation.

1. Obviously try and get as much as you can from the vendor
2. I use RP data, and it lets me see the ownership, weather is single person, husband and wife, or whatever.. This helps in the sense you know your most likely dealing with 1 vendor
3. Rp data also shows when they bought it, and how much they bought it for. Obviously this is great info to have. If you know they bought it 3 years ago for 500k and now they are only asking 550k or less, most likely the sale is by a distressed seller for some reason (if you can find out that reason by putting 2 and 2 together from all your analysis then even better).

4.I have found a lot of REA's are really not that bright and often they will give you vital info if you listen and ask the right questions. Also, REA DO NOT work in the best interest of the vendor (only fools believe that), they work in their best interest. If you know how to pat them on the back now and again and insinuate that by making this deal happen their interests will be best and quickest looked after, then your 80% there. With a combination of all the above, I have found it to work miracles!

 

[LeoT]

Profit, greed and fear. They're the only ones which count.

Love it!

 

[Deltaberry]

I've pretended to be a buyers advocate trying to secure a deal win win for everyone, when I'm actually the buyer looking for an outright victory.

REAs also lie. Some make up lies about having offers.

 

[westminster]

Well obviously its hard to know their exact motivation (unless a stupid REA tells you the truth, which happens) but I have found there are ways to bet guestimate their possible motivation.

1. Obviously try and get as much as you can from the vendor
2. I use RP data, and it lets me see the ownership, weather is single person, husband and wife, or whatever.. This helps in the sense you know your most likely dealing with 1 vendor
3. Rp data also shows when they bought it, and how much they bought it for. Obviously this is great info to have. If you know they bought it 3 years ago for 500k and now they are only asking 550k or less, most likely the sale is by a distressed seller for some reason (if you can find out that reason by putting 2 and 2 together from all your analysis then even better).

4.I have found a lot of REA's are really not that bright and often they will give you vital info if you listen and ask the right questions. Also, REA DO NOT work in the best interest of the vendor (only fools believe that), they work in their best interest. If you know how to pat them on the back now and again and insinuate that by making this deal happen their interests will be best and quickest looked after, then your 80% there. With a combination of all the above, I have found it to work miracles!

I love RPData - you can guestimate a lot from it.

Plus a 5 of being nosy
Next door to the site was a small mechanics who was open so I popped my head in and asked them if they owned the place next door. I was in luck and scored the workshop owner and he told me they didn't own it but had leased part of it from the old bloke who owned it for extra parking for awhile. The old bloke died recently and the daughter inherited it. He told me all about the things the guy hoarded etc.

 

[westminster]

I've pretended to be a buyers advocate trying to secure a deal win win for everyone, when I'm actually the buyer looking for an outright victory.

REAs also lie. Some make up lies about having offers.

I love this idea. I'm adding it to my repetoire

You ask the RE agent ... what does the vendor want to make a deal??, agents are snakes, if you work them they will spill the beans most of the time, especially if you dangle a carrot.

Also, if you are buying in a Trust, which presumably most investors do, this is a dead give away that you are an investor, at least that is what I think??

Also, agents can access information to find out what properties you own, its not hard. Not that they would be bothered I guess, but something to consider. Not all agents are fools, the best ones to deal with are the lazy ones that are out of area who under value properties and work for the buyer not the seller.

WM, my guess is you did not pull up in your porsche I can give you my MIL red cute car if you ever need it, and I'll look after your porsche

I don't think a Trust is a dead give away unless your trust name is IMA DEVELOPER WITH MONEY TRUST. I have explained a Trust away by saying that it is a SMSF; husband is lawyer and likes the structure (add an element of fear); I'm a psychologist and don't put property in my personal name so patients can't find where I live etc etc

No I didn't pull up in my porsche. In fact the REA and I never even met on that deal. All done over the phone and email.

Due to land tax issues there is only 1-2 properties per trust so if they look it up they'd have to do some digging and I think most are too lazy

Profit, greed and fear. They're the only ones which count.

too true

 

[MTR]

Actually I think that is sometimes a good way, don't even meet the agent.

If buying East though most in Melb and Syd go to auction unfortunately. However, I do know some smart investors who buy prior to auction, but usually it would need to be a very good offer for this to happen.

Also, notice more auctions in Perth now, damn it, we tried to secure prior to auction, the sellers played real 'dumb' they were anything but and played it to the end.

 

[LeoT]

I love this idea. I'm adding it to my repetoire

PLus 10 for the BA. I have used it on many occasions and it works very well. I sometimes make it as though there are 2 or 3 clients buying together and 2 agree and 1 doesn't, unless a certain condition is met.. so the REA thinks hes almost there.

 

[Catalyst]

1. Obviously try and get as much as you can from the vendor
2. I use RP data, and it lets me see the ownership, weather is single person, husband and wife, or whatever.. This helps in the sense you know your most likely dealing with 1 vendor
3. Rp data also shows when they bought it, and how much they bought it for. Obviously this is great info to have. If you know they bought it 3 years ago for 500k and now they are only asking 550k or less, most likely the sale is by a distressed seller for some reason (if you can find out that reason by putting 2 and 2 together from all your analysis then even better).

Do you constantly subscribe to RP Data? From a quick look at the site, they have a 3 month subscription for investors $79.95..

 

[Catalyst]

Also, if you are buying in a Trust, which presumably most investors do, this is a dead give away that you are an investor, at least that is what I think??

Hmmm....learnt something new again. Got to go learn about Trusts. Did you set up one before you started buying your first IP, MTR?

 

[MTR]

No, always in personal names when started investing but as progressed realised the tax advantages etc and now with developing property we always by the land/houses in the Trust and have another company for the build/project management.

I highly recommend you get the right structures for your particular scenario, this could save you $ and also reduce risk.

 

[MTR]

PLus 10 for the BA. I have used it on many occasions and it works very well. I sometimes make it as though there are 2 or 3 clients buying together and 2 agree and 1 doesn't, unless a certain condition is met.. so the REA thinks hes almost there.

I like it too, but does not work too well when you find out you are competing against your real BA, now that's another story