Real estate agents are experts in their field. They are engaged by the vendor to get the highest sale price possible, and their commission is based on that sale price.
There are some awesome agents out there, that do a great job and are really good to deal with. Often, it seems like they’re on your side. They’re friendly, the tell you about the house and the neighbourhood. They tell you of the other interest in the property, recent work that’s been done. Sometimes they’ll even point out a couple of parts of the property that could do with a little work, or the potential if you were to invest in renovations. They might even tell you about developments or changes planned for the suburb. But their job is to get the best result for their client – the vendor.
As the potential purchaser, they need you, or someone like you, to buy the property. So they want you to like them and they’re usually very likeable people.
But don’t be caught off guard. If you’re planning on making an offer on a property, you need to prepare by doing your own research and homework.
Here are a few tips to help you out:
- There are reports publicly available that will give you the history of the property you’re interested in, and data on prices within the area. Make use of them. Find comparable properties that have sold recently, do a drive-by to check them out from the front, see if you can find a floor plan and compare it to the property you’re interested in.
- You can buy a report from CoreLogic or Residex that will give you the sales history on the property. This is useful to see how many times the property has sold recently and the sales prices.
- This is probably the most important tip – compare, compare, compare… Find three properties that are appealing and on the market during the same month (or weekend). Ideally, they would have comparable features but slightly different price points. Take a look at all three, and compare the value of each. One might seem slightly underpriced, one might be overpriced, one might seem to be right on the money. Decide which one you like the best and, based on the pricing of the other two properties, decide on what you think market value should be on the one you like, and make an offer based on that.
- If they come back with a counter that is unreasonable, be prepared to walk away and keep looking.
- Don’t disclose your budget to the agent. You need to keep this close to your chest so you have some bargaining power.
- You want to get a good feel for the market value before you start negotiating.
If you come back to the agent with comparisons, sales history, facts and figures, they’ll know they have a serious buyer on their hands with the capacity to negotiate well.
A good, fair negotiation is a win, win for the vendor, the buyer and the agent.
Good luck and stick to your budget.