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Here are some top tips and techniques for adding to your property portfolio in a seller’s market.
Blogger: Jarrad Mahon, Investors Edge Real Estate
The old adage still holds true: buy low and sell high. Usually, though, the market is going one way or the other – it's a buyer’s market or a seller’s market.
Currently, we are in a seller’s market. However, that doesn’t mean that you can’t shave a few dollars off the buying price if you present your offer in the right way at the right time.
He who takes action first, wins
In a seller’s market, you have to be ready to take immediate action. This means getting pre-approved financing and knowing exactly how much money you have at your disposal. It means doing your “due diligence” quickly and effectively so you uncover traps and know what price you are prepared to pay. If you find a property you like, be ready to make an offer on the spot.
Make a realistic offer
In a buyer’s market, it is possible to bully a seller with lowball offers. In a seller’s market, all you will do is anger the seller or the seller’s agent. Once again, do your due diligence and make a realistic offer. It doesn’t have to be the original asking price, but it shouldn’t be an insult, either.
A lot of prospective buyers make conditional offers, such as “contingent upon financing.” Make sure you are pre-approved and if you are comfortable with the risk, you can choose to make your offer unconditional. You may get away with a lower offer, and it will certainly get you over the line if there are other offers within a close price range because your offer is that much more certain for the seller.
Keep in mind that this does not leave you an out and will have real consequences should your finance be declined. The seller would keep your deposit, and then they can re-sell the property and if they got less, they could choose to pursue you for any difference in price.
If you are comfortable with making an unconditional offer, you can look to combine it with a deadline. This is one of the few situations in which a buyer can actually gain leverage in a seller’s market. Make your offer a fair price and then, give the seller 24 hours to accept it or move on. This puts them in the position of having to choose between an unconditional offer they can have certainty with or the hassle of trying to find a higher one that will be subject to finance. A bird in the hand, is worth far more!
If you like a property that is scheduled for auction, make an offer before it goes to auction. You can do this at an open inspection or sometime during the week before the auction. It’s similar to the deadline. The seller gets to choose between a sure thing now and an uncertain result later.
Networking for the silent sale
If you have networked with enough real estate agents, you can often find properties that are sold silently before ever going to market. Believe it or not, there are agents who make a living solely on silent sales. If you don’t know one, though, don’t despair. Just find a buyer’s agent who does. Take advantage of their network of peers.
When I was first starting out I bought two properties by doing a flyer drop to houses I identified as my target property types. I used a headline such as “I’m Ready to BUY – call me now for a no fuss, quick sale”. Dropping these off was a great way to get some exercise while learning the area I wanted to buy in.
A motivated seller
Find out if the seller is working with a deadline. You can often get them to accept a lower, immediate, unconditional offer.
Be nice to the seller’s agent
The seller’s agent can make or break your offer. By getting them on side and liking you, you can then encourage them to do their best to get it over the line.
About Jarrad Mahon
Jarrad is the director of Investors Edge Real Estate.
Jarrad thrives on helping hundreds of investors every year formulate a clear plan to get the best returns from theirproperty. This requires a carefully thought out and innovative approach to understand your situation and help you to make the right move at the right time.
His renowned personalised "Property Success Plan" takes you step by step through how to make thousands of extra dollars and avoid the costly mistakes that Jarrad has learnt the hard way by investing himself all around Australia.
Over the last five years he has used his engineering background to build and refine a unique property management, sales & investing process that is sure to impress while getting you real results.
A sales and marketing expert, Jarrad combines the latest technology and cutting edge sales strategies to sell homes across the whole of Perth metro area.