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The sub-$700k playbook: Investors’ guide to negotiating in a crowded market
As negative gearing reforms push investors towards popular, lower price brackets, they’ll have to refine their negotiation tactics to get the edge over competitors, or risk losing out on a good deal. Here’s how to do it.
Recent tax reforms have been driving investors into cheaper property markets as borrowing capacity tightens and positive cash flow becomes a bigger priority, intensifying competition at the lower end.
According to Pinnacle Buyers Agents founder Michael Lezaja, tighter affordability will continue to increase competition in the $650,000–$700,000 market, making strong negotiation skills critical to securing a good deal.
“A lot of investors are looking to just buy whatever stock they can get at that lower entry price point, and they’re being less picky just to get in the market,” he told SPI.
He said that to achieve solid deals, investors will need to stand out and demonstrate preparedness to agents, hire a buyer’s agent, find off-market deals, and avoid auctions.
To reduce their competition, Lezaja said investors should turn their attention to fixer-uppers with minor renovations, as first home buyers and many owner-occupiers were often deterred by properties.
“They may need a coat of paint or some new floating floorboards, or might need the gardens redone, or an aesthetic renovation where that would turn off a first home buyer or an occupier.”
“You could literally smash that below market value, not overpay, and just do the renovations yourself and get that equity uplift.”
When a good deal comes up, Lezaja said it was pivotal for investors to move quickly to ensure they were ready, not only having their pre-approval and building and pest report organised, but their mortgage broker and conveyancer sorted.
“So when you talk to the agent, you’ve got your full team organised so that at the drop of a hat you can go to contract and proceed.”
Lezaja also said some properties were listed by agents who favoured first home buyers and owner-occupiers, advising investors to try to avoid such agents, and instead seek out those who just wanted a fast transaction.
“If you can find that agent, that is your best chance as an investor to get the best deal.”
Additionally, during negotiations, he said that investors should ask agents whether the vendor had specific terms on settlement.
“Look for a vendor that has committed elsewhere, already be looking for a faster settlement, or they may also say, hey, I’d like a delayed three-month settlement because it’s going to take me time to pack up and move interstate.”
Lezaja said if a seller placed a high importance on the sale’s timing, there was an opportunity for the investor to achieve a good deal, as the vendor may not mind if the price was $10,000 lower or so if the terms were met.
“The selling of a property is a stressful time, so if you can assist with helping the seller move within their timeframe, you can gain an advantage over another buyer.”
Now more than ever, Lezaja said, the use of a buyer’s agent will give investors an edge, helping them build a rapport with agents and appear more credible.
“A good buyer’s agent’s job is to convince the agent to take their client’s offer over anyone else’s.”
“They will help you get that deal now as opposed to going at it alone, missing out, and then waiting a few more weeks and paying a little bit more for the next deal.”
Lezaja added that specialised buyer’s agents can help to source off-market properties, helping investors avoid competition and increasing the chance of obtaining a good deal.
On the other hand, he said if investors did not have a buyer’s agent, they should try calling the top 10 agents in the area and ask them directly about the listings that weren’t public.
Contrastingly, Lezaja warned investors to stay away from auctions as much as possible, as they were often at a disadvantage against owner-occupiers who may be willing to pay more due to being emotionally attached to a property.
“The last thing you want to do is compete against them and end up overpaying for something that’s really not worth what you paid,” he concluded.
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