Hey Everyone,
Ive just recently made an offer on a property located in sydney for my first investment property. The property is listed for 270k on the website which i found it on and has been for the last month or so. After three visits to the property i made an offer of 260k to the agent i was dealing with.
Two days after making the offer, the principal of the agency calls me up and informs me that if he was to sell the property at 260k the vendor would have a shortfall of 22k on his existing mortgage, therefore i would need to make an offer of at least 280k (ten thounsand more than the listing price on the internet). After venting my frustration to the pricipal he agrees to speak to the vendor and call me back. Several hours later i receive another call back by himself telling me that he would do me a special low offer of 275k by not charging the vendor any commision. I was so furious that the agent actually expected me to pay more then the listing price dispite being the only interested puchaser. I explained to the agent that i had a budget of 270k that i didnt want to exceed in the first place which is why i made took my time to analyse and make visits to this property. The agent then advised that if i wasn't willing to make that kind of offer, then he is going to take it off the market.
The analysis of this property involved three seperate trips to the apartment (which is an hours drive away) , a desktop valuation from MYRPDATA which cost me $196, and many hours at home calculating costs asociated. I had put so much time and money into the property. I am so furious with this agency that i want to take it further to the real estate institute of NSW or wherever it must go. If he had advertised the property for that ammount origianly then i wouldnt have made such an effort in purchasing it, and i would have dedicated my time and money elsewhere.
can a real estate agency do this kind stuff and get away with it? What actions can i take from here? I dont know what to do. This is my first investment property dealing and its leaving such a sour taste in my mouth. I have had many other bad experiences with real estate agencies but this tops it off.
PLEASE HELP!!!!!!!!!!!!!!!!!
agent games, just wait a bit longer and they may come around.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
TarikG
As TerryW suggests, its probably an agents game. Just advise them of your offer and say its open for one week and don't call the agent.
Unfortunately, you have had a bad experience, its very rare for this to happen. Also the price listed is not a fixed price , you look at it as can go down, but , it can go up, especially if two or more people are after it and have the wives liking the paint job in the laundry! Just a joke.
Don't give up on property just yet, give it time. Your early frustrations are common as you start out into property, but it fades with time and experience.
The more interest you show in the property the more the real estate agent will try it on.
You must be prepared to pass on this property and use your time to look for a better deal. If you can get over your anger and move on to looking at the next deal that will come up.
You can then tell this agent you have made a mistake and have now changed your mind and will look else where to buy and the offer is withdrawn .
You might find the agent will accept this and let you slip through their fingers but you never know they might realize they are losing a sale and might make you a better offer.
You could make an offer of $260,000 with a two week sunset clause that the offer is only open for two weeks and after the two weeks move on.I increased an offer once by $5000 to allow the vendor to pay off their mortgage but they had got stuck in a housing commission loan repayment scheme where 15% of their wage was used to pay off the loan. After 10 plus years the vendor ended up with a higher loan amount and also they were on a higher fixed interest rate.
If you can always ask the agent what the reason for selling is. You can be lucky and get an honest answer and then be able to structure an offer around what helps the vendor.
As an example say the vendor was an investor and wanted to sell to have money for a holiday then a quick 30 day settlement would suit them more than getting the most money from the sale.
This is kind of similar to the position I and my vendor are in (gf's mom) she paid $290k for the unit we are in and was willing to sell it to us for $275k (with a $15k proviso if we sold it within 5 years) at the time the $275k was her remaining mortgage and legals.
Unfortunately she fixed the mortgage for 5 years out of fear while it was going up only 6? months ago.
They now want $17k break costs if she sells so our new price is $289k (with no proviso) which I still think is pretty good for where I am here in Surry Hills (studio with car space) simillar units in this building sell for $290k without car space to $340k with and should be easy to rent out at aprox $350-400
The real danger is if our loan does'nt get approved soon and rates go down before the change over then her break cost will be worse.
I guess what I am saying is that for lots of silly investors that fixed at the wrong time the break costs are a problem at a time when they need to sell, it basically means that if they want to sell it has to be at a loss or break even if they are lucky as the market has been a little flat, but I don't think it will stay flat forever,
maybe retry your calculation, if the new numbers work for you then consider going ahead, if not walk away.
One further tip, probably avoid telling them what your budget is. Just tell them "if the price is right, I will buy it" because he will try to squeeze more out of you.
It sounds like total BS that he is selling it for no commission. Agent's authority agreements can vary, and just as an example, sometimes they might have a target price of $260,000 but the agent gets 30% of anything above this.
Understanding this can go a long way to explaining agent's behaviour, because if he was a dodgy agent and was working on a flat 2% commission, he would have sold it by now for $250,000 and moved on to the next listing.
PS. I'd have given you RP Data for free.
Hi, I'd like to share my experience as a seller so you have something to ponder about. My sister wanted to sell her house, very proud we were of it too, & the agent advised auction. This was a long time ago, in a buyer's market. Not much interest, it was a dreary auction & the house went back on the open market.
Many people came & liked the house. No offers. 6 months later, one of the 1st groups of people made an offer. Asking price was $239900. Later I checked. My sister paid $239500 & put in the garden, the driveway, the curtains & automatic roller doors.
The prospective buyer offered $225000.
I told my sister I'd save her agent's fees & paid her $225000 which was the last offer price.
It rented immediately at $300 pw.
From there, we know that the true value of the house was nearer $250000. I later sold it for $395000 after the bank valued it at $360000. Today [sold in 2004] it'd cost $450000 to build one like that.
Try to determine the replacement value, not just use the asking price. Does the asking price reflect a discount? When my sister was selling, she didn't put in the discount %, just what she would accept. We now know better.
That's why i don't think property prices will plunge 50% as some suggest. Unless a lot of people die & houses are empty.
Good luck with your house hunting,
KYDid you offer in writing? Ignore the agent. If it’s in writing,
regardless of what the agent says they have to show the owner. It’s up
to the owner in the end in terms of what they will accept. Even better,
if you want to get it at “your price”, sign a contract with a 0.25%
deposit. The agent has to show them! If they do not accept your offer,
well you get your deposit back. No loss to you at all. Let us know how
you go.I agree, agents games. Without a great deal of effort he got you to say you could increase your offer by $10K. If you are serious about investing, sorry but the facts are there are costs associated with it and sometimes they are costs to find out what NOT to buy. Time, yes that is also a fact of investing. Be prepared to walk away if the property is going to cost you more than you wanted to pay. There are always more deals out there, dont get suckered in because you spent less than $200 on a report. $200 is a lot less than $10 K if you regret the purchase later.
Take a breath, have a coffee and go over it again, hold your ground and be prepared to walk away.
All the best and welcome to the world of investing, it is a harsh taskmaster for those that let emotion ride along.
MickTry this, Get hold of the vendor and see if there was ever an offer put to him/her. Iam thinking maybe you made an offer and gave the agent a deposit now there playing games with you to increase the purchase price. Its happend to me before and after contacting the vendor myself and talking to him i had a signed deal the following day and the agent dropped a large amount of his commision because he new he was not allowed to do this and he can get in alot of trouble.
But your deal maybe genuine and maybe the vendor does want more money for the property but to me it sounds fishy the way the agent dropped his commision and you would think the vendor would no how much his mortgage was before telling the agent how much he wanted to sell for, But you never no with some people.
Do your figures again and see if its worth buying because theres plenty of property's on the market for sale. so i would walk away if its only an average buy.Thanks everyone for your comments, (besides scamp)
I told the agent not to call me back unless he wanted to discuss a sale of 260 or less (which even in that event i will reduce my offer to 240 – 250). I have continued my research and decided to forget this property. If i cant get my emotions under control now, how am i gonna cope with 10 – 20 properties?
Scamp, please dont make any more contributions to my posts. The title of this forum subject is 'help needed', therefore if your not here to help, DISAPPEAR!!!!!! Your comment was useless and wasnt worth the time it took me to read it.
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