BUYING PROPERTY CAN BE A MIXED BAG

A background

There are many participants in a property transaction. There are the formalities and informalities of the process that can get quite involved. Buying property is about people, emotions, temperaments, and process coming together in a transactional environment

As a buyer’s agent, I focus on the preparedness of a client – this is foundational. When a Buyers Agent engages on a target property Sales Agents typically know immediately, that they have a serious contender. Why – Because they know they are prepared, their clients can perform, and the Buyer's Agents won’t be wasting their time.

The Property

The property is the target and deserves due diligence around pricing or fair value in the market, are there any contingent liabilities, or risks such as additions that are non-compliant, poor build workmanship, or is it subject to flood, bush fire, or development, or zoning issues? The real focus is what is the Fair Value to pay for that property in that location in the given market conditions. Is there any deserved premium for location, (zoning), street, quality, outlook, aspect, development, or amalgamation upside?

Inspecting the property and having conversations with neighbors can provide some valuable insights. This builds the intelligence required for a good negotiation or to unearth some of the property weaknesses. For example, I always like to understand the water flows on and around a property and the potential threats this can cause. These weaknesses become leverage points in negotiation. Remember it is only a problem when someone else owns the property, when we purchase it then becomes our issue.

Quality is subjective and objective – is the property well designed, is there good light, what is the quality of materials and the workmanship, does the property have a good ‘vibe’ or not, Is there great street and entrance appeal, what direction is the aspect, what is the storage, etc and the list goes on…

When a lot of property is researched and viewed a good property tends to stand out, then it is about the value, the numbers, and how the property can be acquired. This is where a purchaser must be ready. Good properties always have someone right behind you recognising the same qualities.

Agents and Vendors

We are all different and so are the vendors and the Agents who represent them. This is the same with purchasers. They are individuals brought together in a transaction. It is a mistake to categorise and pigeonhole any of them. Understanding their temperaments, their motivations, and what they want or need to achieve can give critical insight into getting traction and credibility in any negotiation.

There are agents who you would buy through and others you would sell-through. Understanding this difference and their method of transacting can be very insightful as well. Have you noticed the Agents who offer and close deals quickly? Or perhaps run the Auction campaigns but would sell 95% of the property pre-auction? Or those that purely go to auction? Understanding the Modus Operandi or their process is paramount. Often you will have no option but to go to Auction, especially in a bullish market – the market speaks on Auction Day it is often a final true market insight into the property’s value.

If there is an attempt to engage in negotiations pre-Auction going through a discovery pre-sale can be very advantageous. Is the owner realistic? What do they need to achieve and why? What is their motivations and timings? Regardless understanding the lay of the land is essential and the feedback from potential buyers is all part of the Vendor conditioning as the Agents update vendors.

The Sales Agents themselves often need solid feedback to condition the vendor to be realistic or to align with the market. When dialogue starts you may have increased your chance of being able to make an early Offer successfully.

When dialogue has started and potential offers discussed there will be some point in the negotiation where the tide turns where the engagement paradigm with the agent shifts… from adversary to ally working with you to close the deal. After all, time is money and they ultimately want to realise their commission while getting a good price for the owner. Understanding this dynamic and its timing is also a critical awareness and negotiation skill.

A critical mistake many purchasers make is listening to the Agent and having absolute faith in them, (no disrespect intended), however, what if you had a professio

l third-party value assessment of the property and the negotiations focused on Fair Value and what supports that value versus what an agent is “saying”. Many buyers fall into this trap and end up competing with themselves in a negotiation.

Closing the pricing gap can be an art form. It is very much about being tactile and understanding the needs and wants of the participants. How many contracts are issued is often irrelevant, a better question would be “who has spent money” on due diligence – pest and building reports engaged a lawyer, read, and revised contracts, or who has submitted an Offer.

The Agent is the gatekeeper for the Vendor, protecting the Vendor from adverse and unruly people, inspections, and criticism, handling the marketing and open houses, etc. The Buyers Agent is the opposite – they protect the interest of the Buyer. In both cases, Agents remove the emotional component (and often irrational behaviour or bias) from a transaction. A buyer’s Agent continually protects clients from themselves – acting as a property coach, mentor, and unreasonable friend at times as they go through the process. Having their best interests at heart is critical. Understanding their brief and having the open-mindedness to look at alternative solutions if they have potential.

The vendors often have fears and concern themselves about a transaction. The behavioral patterns of the vendors can have a substantial impact on the way a property is marketed and how negotiations ultimately transpire. There are always drivers behind the sales process. They could be the usual - birth, death, marriage, and divorce often coupled with down downsizing, financial distress or health issues. Regardless unique pressure can be transmuted into the property transaction. Navigating and working on this can be a key part of the acquisition strategy.

Some vendor considerations to keep in mind:

Firstly, about problems they have lived within the property, sensitivities that if understood will get an acknowledgment or concession from a vendor or their agent.

Secondly, they have the property on the market for a reason – understanding these drivers can give you an edge. Is the property well presented, well maintained, and congruent with the marketing? is their distress or lack of care. Have they bought elsewhere, are they going interstate, and why?

Thirdly, how solid is the buyer – are we confident they can deliver and have they got the money? If I take their offer, how do I know haven’t sold myself short. Can they complete the deal? Have they got the money?

These are some of the considerations within the transaction that should be considered and daily navigations for the Buyers Agent.