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Empower Wealth Blog post by Empower Wealth

The Value of Enlisting Property Specialist Help

Like other property specialists, much of our work, aside from researching and finding good property, is negotiating and bidding for my clients. We enjoy the task of establishing an estimate of the value, the future prospects based on historical performance and the gross rental yield, but most of all we like the agent-advocate negotiations. So much about the property’s sale campaign can be gleaned just by having in-depth conversations with the agent and when an agent know they are speaking with another agent – well let’s just say they know they can’t ‘try it on’ so to speak.

A recent purchase job we had was a case of buying a property for clients that was significantly under market value. The property in question was a well located, period property in one of Thornbury’s finest streets. The house needed cosmetic work but was in a reasonable state. We had established that the value sat within a $570-590k band based on the work required, comparable sales and current market sentiment. A Residex computer modelled valuation on the property showed a value estimate of $647,000.

In negotiations with the agent, he was a particularly busy guy because he spent most of his time actually managing rental properties (as opposed to selling property).

We commenced negotiations as soon as our buyers were satisfied with their building inspection. At this stage, they had finance pre-approval in place, had determined that the property had no structural defects, already had the contract reviewed by a conveyancer- and by all intents and purposes, were ready to buy without any conditions on their offer. After conversations with the agent regarding other interested parties, we submitted an unconditional, but time-limited offer.

Even with a higher offer on the property, the vendors accepted the unconditional offer of ours. Our clients purchased the property for $545,000. They had given us a figure of $580,000 to bid up to if required.

Aside from seeing our buyers purchase for $45,000 under their budget, we were also thrilled to see them acquire considerable equity in a short space of time and this amount of equity could be greater once the cosmetic works are complete (using the money we saved them). So our clients have now kick started their property portfolio beautifully – all by strategically enlisting my help and leveraging off our team’s experience and knowledge.

Another memorable and recent negotiation was the purchase of a single fronted period property in Footscray. The property was auctioned and despite the agent’s belief that the sales campaign had generated genuine interest, we were the only bidders. The property was passed in and the negotiations followed.

We often explain to our clients that one of the best outcomes can be when a property passes in to us. Unlike a private sale where negotiations are handled in a public forum by the agent, passed in properties can be negotiated exclusively by the vendor and the buyer with the agent facilitating the process.

This particular negotiation was exciting for our buyers because the vendors were motivated enough on the day of auction to drop their reserve by almost ten percent AND allow their contract to be subject to finance. In most cases we see, the vendor’s level of motivation to sell on the day of auction is extreme. It pays to make sure that you bid- whether the property has hit reserve or not. The right to negotiate exclusively is powerful indeed. After the event, our buyers were ecstatic because they had reduced their risk by having a finance clause and bought below budget. They were quick to tell me that they couldn’t have achieved the result themselves. We negotiate for property every day though so we should justifiably be able to achieve such results for my clients.

Negotiations are a delicate process every time and it’s often the case that each negotiation requires a unique approach. It’s fair to say that we never use the same negotiation tactics or strategies in combination each time.

If going it alone, make sure you understand the private sale and auction processes, methods of negotiating clauses, and understand how to make an ordinary offer compelling to a motivated vendor as a basis of your basic negotiation principals.

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