I’ve found 2 properties for sale that are side-by-side with good development potential. One is selling at a rental yield of 5% and is perfectly habitable but not glamourous. The other one is selling at more or less land-value-only and is quite run-down, worthy of a knock-down and rebulid. I’m interested and have got the finance to buy the two together but I’m afraid that my bargaining power may be weakened if the agent knows that I’m the potential buyer for both properties. What’s the best way to negotiate this deal? Or am I actually at a better bargaining position with the agent if I can get two properties off his book in one hit?
Hi Jenny
I agree – if the agent gets wind of your motivation then he/she will have the upper hand in negotiations.
I'd simply appoint another person (friend or family probably) to make the offers. You work on securing one property while they work on securing the other.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Thanks Jamie for your comment. I’ve had further thoughts on this one and wondered, if I actually say to the agent, I will buy only buy both or neither and I will not pay more than a certain combined figure then let him work the vendors, would that be a more efficient process? Afterall, I don’t HAVE to buy them… cash in the bank is not keeping me awake at night. I had initially intended on waiting til the new year when the FHOG for existing houses expires…
I would probably look at using an intermediary for one of the two sites – focus on the rented house, work on the agent that there seems to be alot of work to be done etc (good buying signs but also bargaining points).
When you have both contracts, check if it is the same ownership or just luck/timing. If it is the same ownership then you could show your hand as wanting both and will deal for the right price.
I disagree.
Agents aren't stupid (well most of them). They know people will be looking at development potential.Don't stuff around. If you can see it there will be others.
Did the advertisement mention development? If so there's no secret. That's how they are marketing it.
I’m fairly sure that the properties were owned by separate owners. (I lived up the road from the properties for 5 years). And no, although the properties are listed by the same agent, they did not mention anything about the adjacent property being also on the market and hence present the potential for development. I have to say, looking at the quality of the photos by this agent, including the ones posted for other properties under their listing, I’m not surprised that they didn’t even bother mentioning this crucial selling point: It is one crappy agent and they are really not serving their customer (the vendors) well at all!!! Which presents as an opportunity for me I guess…
This sounds a bit suss.
If it is the same agent selling both properties and they have development potential, due to overlays and zoning there would be a heavy push for dual purchase for development if this is the case.
If your looking to develop the key is not trying to get the cheapest price for both properties, but reducing cost of the entire project.
It may be worth negotiating a property option, vendor finance or jv, rather than obtaining the cheapest price possible.
Do a feasibility study, this is the most important factor for investigation.
Hope it all goes well, I’m performing a feasibility study on a similar situation at the moment.
Cheers,
Miikeupdate on the deal: after speaking to the town planner, I discovered that there’s a lane-way between the two properties which some smart town planner decided would be a good idea some 50 odd years ago. however, that lane way is leading towards a 6m cliff-face fall down to a major highway. Has anyone ever attempted or better still, succeeded in overturning an old council planning provision like that?
why not chat to council about buying the laneway?
Jacqui Middleton | Middleton Buyers Advocates
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JacM, that’s an interesting proposition… have you any experience in doing something like that?
No, but I've certainly heard of it being done before. Perhaps in your unit development you could propose that in that area, it will be only driveways and parking areas anyway, and not built upon with dwellings. That way if access was required by council for something or other, it wouldn't be a major big deal.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks JacM, you’ve certainly opened up my mind to a whole new possibility! Much appreciated!
Awesome!!
Jacqui Middleton | Middleton Buyers Advocates
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Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Jenny,
Hope your venture is going well?
JAC M has made a great point get in contact with the council. Another thing you should note to get this provision revoked is not going to be done for free.So give the council a call and im sure they will be more then happy to have a chat and also they may give you a guide line on what can be or not done.
cheers
Jpcashflow | JP Financial Group
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Thanks Jpacashflow for your comment. I had a look at the council website, it looks like a very doable option as they’ve specifically mentioned on the website that where council land is too small to have structures built on in its own right (eg. a lane way that’s proven to be of no benefit to the community), can be sold to the adjacent land owner which I’m hoping to be on both sides of the lane way. Never had any direct dealings with the council in this way… got some butterflies in the stomach… but I’m sure they can’t bite me…. not too hard anyway.
No Problem at all.
Call the council and speak to the town planning department most of them are very helpfull.
Also it would be a good idea to talk to a drafter who knows the area and hopefully they can point out any obstacles you may face.Some times the council may make it sound easy on face value but once you apply to do some thing thats when you see things turn.
Also is there anything mentioned on the section 32?
Jpcashflow | JP Financial Group
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Email Me | Phone MeYour first port of call in finance :)
As well as sorting out the Laneway issue you also want BOTH properties (with laneway) – or NONE
If you succeed with one but not the other, or the laneway purchase is not agreed to by council then you will not have made a happy purchase. I think at some point you are going to have to show your hand – unless you can get a cast iron agreement from council that they will agree to sell the laneway to an adjacent landowner (namely you and not the previous owner!!)…good luck with the council on that!!
Others on the forum might be able to advise but i think you can fill the buyer in as Mr Smith, or nominee. TO achieve a sneaky purchase. May differ between states?
You will need an out, for both contracts. And the abiltiy to push both sellers to signing before your get out clauses expire.
Good luck, curous to hear how it goes
Cheers Wobbly
"Others on the forum might be able to advise but i think you can fill the buyer in as Mr Smith, or nominee. TO achieve a sneaky purchase. May differ between states"
I would not advise this at all, Because at some point who will have to put your name on the section 32 and this means that once some thing gets amended the vendor has to sign over again as well.
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
Hard to know whether this will put you in a better or worse position. I know someone who bought two flats from the same company and asked what they could do if he bought both. He ended up getting them cheaper as he was buying two. But they were newly built so a different situation.
This is a toughie!
First of all, you need to sort out what is going to happen with the laneway between the two properties. You also need to get a good feel for whether development is going to be permitted. There’s no point buying them for development if you can’t develop them! Council planning offices are far more helpful than their reputations suggest…
Then it’s time to do some more due diligence and eventually make an offer. Tactically, I’d be more likely to let the agent know that you’re looking at buying both or neither. The agent wants to sell their properties (obviously – that’s how they make their money) and the commission that the agent actually makes won’t alter that much if you get them for, say, $10,000 less. (Remember 2.5% of $10,000 is $250. Once the agent’s company takes their share, it’s unlikely the agent will receive any more than a hundred bucks. Hardly something to squabble over!) Furthermore, you’ve said that the agent doesn’t seem to be great at looking after the owners, which could further benefit your position.
Finally, I think the biggest danger is that one owner says yes and then the other owner says no. You could then find yourself paying more for the second property. This being the case, make sure you have enough conditions in your offer to be able to pull out of this all-or-nothing deal.
Sometimes I think we over-think the tactics of buying a property – if you offer the right price, the sellers will take it!
Good luck! I’d love to hear how this goes
Cheers,
Den
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