My first property purchase......

[propertylover80]

Hello,

In March last year I brought my first property and would really like your feedback in regards to my experience.

I brought a good sized 2 bedroom flat (no courtyard or balcony) in quite a large complex of 24 units with a car park on title.

The property was sold subject to a 12 month lease and will now become my PPOR. It was advertised for 195K by an agent who utilizes the Jenman system.

At the time, I was looking at 1 bedrooms for that price and the 2 Bedders were selling anything from 230k upwards, so I knew it was a bargain the moment I saw it.

When I viewed the property the first time I was told that the vendor had an offer of 193K, it was rejected so he was upping it. Thereafter, I had my my uncle (builder) and family friend (long time Investor) and subsequently went to the agents office the next day and put an offer in writing.

To be honest I was a little bamboozeld at this point. I was dealing with a different agent (my agent was away) and everything that I had learnt in the past went out the window (I didnt realise how different the Jenman system was compared to tradional agents).

After initially putting 197k on the Section 32, the agent rips out this "Buyers Declaration". This states something to the effect; that the offer you put down is your final offer and if there is a higher offer they will not contact you, hence negotiation is out the window.

I subsequently my crossed my 197k and made it 200k for fear of missing out on the property to the other buyer and that was the maximum I wanted to spend. I also put in the contract in the contract that I would pay a 40% deposit, prodominately to avoid mortgage insurance. At that point, I didnt realise quite the power that may yield.

My agent rang later and thanked me for the offer and said that all the offers were going to the vendor the next day.

I then got a call and was told I got it. I then asked the agent, as per the buyers declaration you only have one go at it, yet the other guy from the initial inspection offered 193k but upped it. I felt that it was unfair to me and cost me money because I only gave one offer.

Also, a few days later I asked the agent how far off the losing buyer was off my price.....At first they wouldn't tell me and said that they were not allowed to disclose offers from other buyers (even though the deal had been done?). Eventually they told me the closest offer to mine was 197k........

A year later, it has been the best thing I have ever done. However, I would like to learn from the experience. Even though I still feel and everyone has agreed it is a bargain, I hate being duped.



My questions are:

If (jenman system based agents) advertise something for eg: 195K, is this the asking price or just a figure that can go under or over?

Does it sound like the other buyer who offered 193k made only a verbal offer, hence he wouldnt have signed a buyers delaration yet? Subsequently, having more than offers than the one I got.

Can you negotiate with the Jenman system?.....did I take the buyers declaration more seriously than I should have? Should I have put in a lower offer and waited for them to negotiate?

Does a big deposit make an offer more attractive to a buyer? That is, can it "buy you the sale?" sometimes? How much power does it hold?

How do you really ever know whether there is another buyer?

Do the agents selling the property really take all the offers to the vendor and then the vendor makes a decision? There was no "sale before" date advertised....

Are Jenman agents allowed to disclose previous offers even once the property has been sold? Hence, would the 197k she stated that the closest person to my offer be real or just a lie to make me feel like I didnt pay too much.


Does the whole scenario sound like I have been played? Also, how could I do things differently in the future.

Thank you all for reading, your comments will be appreciated, I know there are heaps of questions but I want to learn as much as I can from the experience so I am wiser for it.

Thanks alot.

 

[s_t]

I'm not familiar with the Jenman system, but nobody could have forced you to sign that buyers declaration. Sure, they then might say that they then won't submit your offer, but with a 40% deposit I suspect they would have anyway...... Nobody is forced to play by their rules - you could have tried bending them and seen what happenned.

Not that it really matters???? 3k is only 1.5%. Though you did follow their system as they wanted you too, to say you were 'duped' might be of a bit strong a way of describing it. Perhaps you didn't negotiate as hard as you could have

 

[GZM]

Hey!

I signed one of those Buyer's Declarations last year too from an agent who subscribes to the Jenman system.

One of the important things in the document is that you essentially undertake that the amount you offer is the highest price you are willing to pay for the property - not one cent more... This is the statement that made me a bit uneasy.

Anyway, I signed the document and think I got the property for a steal ($361,001 for a two bedroom, 6 year old house (sort of duplex, but not really), within 2 minutes walk of Yarraville station).

I think that, as long as you know what you're willing to spend on the property, it represents a good opportunity to pick up a bargain. The "uncertainty" of the system may throw some potential buyers off and it's a very quick process (so some buyers might not get a chance to see it or do all their dd in time).

 

[twobobsworth]

Lets not forget that the agent works for the vendor, not you. Their aim is to get the maximum selling price or extract the maximum offer from the buyer then let the seller decide, which in you example is exactly what happened.

I'm at a loss to explain how you got 'duped'.

When we sold our PPOR last year we had 3 offers in the first week. 2 at full price. The agent told all parties to come back the following day with signed contracts & their deposits. We would review and make a decision. 1 dropped out, the second supplied a contract at full price, the third supplied a contract with 10K more.

What did you expect to pay, $1 more than the last offer??

 

[propertylover80]

Lets not forget that the agent works for the vendor, not you. There aim is to get the maximum selling price or extract the maximum offer from the buyer then let the seller decide, which in you example is exactly what happened.

I'm at a loss to explain how you got 'duped'.

When we sold our PPOR last year we had 3 offers in the first week. 2 at full price. The agent told all parties to come back the following day with signed contracts & their deposits. We would review and make a decision. 1 dropped out, the second supplied a contract at full price, the third supplied a contract with 10K more.

What did you expect to pay, $1 more than the last offer??

Twobobsworth, I used the word "duped"for lack of a better word. Of course I understand that the agent works for the vendor and no I wouldn't expect to pay only 1$ more, but how can you ever tell if there really is another buyer?

I was just wondering under the jenman system was the 195K an asking price (hence you know you can get or for that price) or is it a figure that can go above or below like standard ESR's as per other agents.

By taking your example it sounds like it is not uncommon for a property to go over the asking price, did you sell through a Jenman agent?

 

[twobobsworth]

No Jenman agent in our area. It was one of the big franchises. I don't believe in selecting an agent based on their name or the system they use. It's only ever as good as the individual agent that implements the system. I did buy an IP last year through a jenman agent. Followed their offer process and came up trumps. Could I have got it cheaper, maybe, would I have paid more, maybe. If you know what the market is like, know how much the property is really worth, and are prepared to walk away if it doesn't meet your criteria, it shouldn't really matter what agent is selling the property.

 

[marg4000]

"Of course I understand that the agent works for the vendor and no I wouldn't expect to pay only 1$ more, but how can you ever tell if there really is another buyer?"

You can't. Jenman system or not, you never really know whether what you are being told is true.

You can only offer what you are prepared to pay, and let the contract stand or fall. As it turns out, it appears you are happy with your purchase.

Could you have got it cheaper? You will never know.

We all want to get the bargain of the century, but it rarely happens.

A RE agent I know personally told me that he felt the perfect contract was one where the vendor thought he should have got a bit more more, and the buyer felt he had paid a bit too much.

We have walked away from properties when the agent tries to engage us in a bidding war with another (alleged) vendor.
Marg

 

[Dazz]

G'day PL80,

Nice story, I enjoyed reading it. Thanks for sharing. To your questions :

If (Jenman system based agents) advertise something for eg: 195K, is this the asking price or just a figure that can go under or over?

I reckon you should ignore the figure completely, complete your DD and then come to your own conclusion as to what the property is worth. You should not let the Vendor or their agent lead you by the nose.

As you progress up the property scale, more and more properties do not have asking prices....the onus is and always has been totally on the Buyer to accurately determine what the property is worth.

If your method of valuation doesn't progress beyond "Oh, I'll knock off 10 or 15K from their asking price and submit that", then when things get serious later on, you'll get crushed in the stampede.

Does it sound like the other buyer who offered 193k made only a verbal offer, hence he wouldnt have signed a buyers delaration yet? Subsequently, having more than offers than the one I got.

Mate, you don't know and will never know if this other character even exists....no point dwelling on anything to do with that.

Can you negotiate with the Jenman system?.....did I take the buyers declaration more seriously than I should have? Should I have put in a lower offer and waited for them to negotiate?

One can negotiate anything at all. Whether it's with the Jenman system is unknown for me, as I've never purchased anything through that "system". Although having read his book, the system encompasses the very simple philosophy of extracting the highest offer from each Buyer and choosing the highest. All the system does is stop the constant argy-bargy between Buyer and Seller, creating non-productive work for the Agent, and forces the Buyer to ;

a) Know what the value of the place is.
b) Put the Buyers best foot forward every time, instead of phaffing about.

Does a big deposit make an offer more attractive to a buyer? That is, can it "buy you the sale?" sometimes? How much power does it hold?

No, a big deposit makes it attractive to the Seller.

A powerful contract - by definition - is the one that most closely resembles what every Seller is looking for. There's three things ;

1. Highest price as possible.
2. Condition free.
3. Shortest settlement time as possible.

The closer you get to satisfying those three goals will usually be taken more favourably by the Seller.

How do you really ever know whether there is another buyer?

You never know and have zero control on it, so don't worry about it. As stated before, put your best foot forward first time around....based on thorough DD. If it's good enough, all well and good. If not and you get pipped at the post by someone from left field, oh well....move onto the next one.

Do the agents selling the property really take all the offers to the vendor and then the vendor makes a decision? There was no "sale before" date advertised....

Who knows. That's the murky area of REA's. You'll never be able to definitiely pin them down with solid irrefutable facts....you've got no control in that regard, so move onto the areas you have control in.

Are Jenman agents allowed to disclose previous offers even once the property has been sold? Hence, would the 197k she stated that the closest person to my offer be real or just a lie to make me feel like I didnt pay too much.

Don't worry about feelings. They play no part in the legal transaction. You're scratching around in hearsay and maybe / ifbe / couldbe's. Concentrate on the facts that you have control over and don't get distracted by the REA's games and trickery.

Does the whole scenario sound like I have been played?

You are the Buyer. The Seller has 100% control in the selling process. You are played every step of the way. The only things you can fall back on are good solid DD, and wise selection of legal verbage with your written offer.

How could I do things differently in the future.

I reckon you did pretty good. If you've experienced strong CG since the purchase, that's the only verification you really need. Well done.

Looks like the baptism of fire is over. Onwards and upwards to the next one I suppose.

 

[propertylover80]

Thank you all for your responses, particularly Daz for his indepth response, cheers mate.

The baptism is certainly over. I think I have been over analysing the whole deal trying to learn from it as much as I could. But it seems it was not all the smoke and mirrors that I percieved, it's just the way the game is played.

Thanks again guys, much appreciated!!!

 

[sailor]

PL80...it is not unusual to do a bit of soul searching and retrospective analysis after a purchase. We all want to make certain we got a great deal and did not get ripped off...so to speak. I think that process just gives us some peace of mind.

Ofcourse hindsight is no substitute for foresight, except when we take it as a learning experience, and milk that learning experience for all it's worth. Cos next time....and it sounds as though you are already thinking about a next time...you will be better prepared and more aware of the IP purchasing routine.

In essence, sounds like you got a pretty good deal. And now you are asking all the right questions, and building up your knowledge for the next one. Good on you!

 

[MarkB]

PL

In late 2006 we got into a multi-offer situation (effectively a blind auction) on a property that was listed for $160k.

We offered $165k and we got it. The best valuation we got was $163k.

To this day I still feel kinda hacked at one particular real estate agent who we dealt with on that occasion.

But everytime I drive past his house (he lives about 150m down the same street) I do so with the knowledge that 16 months later I have a $250k property.

Maybe one day I'll tell him to stick it up his @rse, but even if I don't I've still had the last laugh.

M

 

[propertylover80]

PL

In late 2006 we got into a multi-offer situation (effectively a blind auction) on a property that was listed for $160k.

We offered $165k and we got it. The best valuation we got was $163k.

To this day I still feel kinda hacked at one particular real estate agent who we dealt with on that occasion.

But everytime I drive past his house (he lives about 150m down the same street) I do so with the knowledge that 16 months later I have a $250k property.

Maybe one day I'll tell him to stick it up his @rse, but even if I don't I've still had the last laugh.

M

Haha, well done Mark, time heals all wounds as they say, especially in RE.

As per your story; that was why I felt a little bummed with myself about it. Although two months later an upstairs place sold for 215k which made me feel a lot better.

At the time, I just hated the fact that I paid more than the asking price, I have never known anyone I know that has and felt that I may have paid too much. But now, as per Dazzling's post I feel that I paid a good price and am wiser for the exercise.

Mark did you get the banks to value your place or agents?

 

[MarkB]

At the time, I just hated the fact that I paid more than the asking price, I have never known anyone I know that has and felt that I may have paid too much.

You may not always realise it at the time, but some properties are worth paying more than the asking price (and even more than the valuation).

I'd rather blow a few thousand at the start than miss tens of thousands of dollars in CG for the right property (in this case the property has subdivision potential).

...did you get the banks to value your place or agents?

A registered valuer.

M

 

[GIDDO]

In late 2006 we got into a multi-offer situation (effectively a blind auction) on a property that was listed for $160k.

We offered $165k and we got it. The best valuation we got was $163k.
Mark B



A real estate agent asked me to participate in one of these things.

I got fired up about it and refused.
I then just put in my best offer and told them it was my final one.
I ended up with the deal; so I don't know where the other people in the blind auction went.

 

[casper007]

How do you know the asking price is correct anyway?

There are always examples where a vendor and his agents list a property below what it is really worth... for many reasons.

It all comes down to this ...

A property is worth what the vendor is willing to let it go for and what a buyer is willing to pay.

Once the transaction is done ... neither party should ever look back and question their decision.

Yesterday we sold a couple of fridges (4 years old) and my wife said she could have sold them 10 times from the amount of interest at her work place ... translation: we gave them away too cheap ...

Had she sold them to just one interested buyer ... we'd feel lucky and priveledged that we managed to off load them.

As Dazz sain ... these are feelings and have no place in any financial transaction.

Bottom line is ... we achieved our goal and sold the fridges at the price we set... and both buyers are happy with their decision to buy ... WIn/Win

 

[Bandita]

Hi Propertylover,

We've purchased a property through a Jenman agent before, and one of the ways we avoided the "dutch auction" as they tend to call it was to put an offer in subject to acceptance by the end of the business day. Basically the owner either accepts it or not. It's very difficult to get other potential buyers to make offers within a couple of hours. If you do not put a timeframe on your offer, you're keeping it open to be "trumped" by anyone - and, legal or not - you know the agent is going to tell other potential buyers your offer.

When dealing with a Jenman agent, tell them this is your offer and it's off the table at 5pm same day. If that's the price the owner wants, youll get it.

Cheers,
Jen

 

[redsquash]

Everything is negotiable. You just have to try. Who knows how flexible they may or may not be.
eg would they reject your offer if it was $5 dollars below or $50 below ,or $500 below what they wanted ?Its up to you to do something . The seller isnt going to hold your hand.
Caveat Emptor.....................let the buyer beware

An advertised price , is an invitation to treat. It s not an offer in the normal sense of the word.
you make an ''offer '' and the acceptance then occurs by the seller.
Its all a big game . Do you even know if the agent was telling the truth in the end or was he just appeasing you. Any reason why he would want to be your friend and divulge this information, which he initially declined.

I suggest don't take salesman at face value unless you have had as long history with them and know them intimately
Sorry but I cant help with the other stuff