Negotiating with estate agents

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Negotiating with estate agentsOver the last few days a newbie property investor called Craig has been picking the brains of myself and Mary Latham by email. Yesterday we got talking about negotiating with estate agents and the advice we shared with Craig is well worth sharing here so that others can benefit from it too in my opinion. Between us, Mary and I have 64 years of experience in buying property as an investment. This number will grow massively as others share their opinions and as more questions and answers are added to this thread.

Negotiating with estate agents

Having viewed properties which match your requirements in terms of attracting the right tenants – a good agent will always call to you to ask for feedback. When they do, tell the agent that you really liked the property and would love to buy it but you think it’s priced too high for you to want to make an offer.

At this point you need to SHUT UP – do not speak no matter how long the silence goes on for.

They will ask “how much too high is the asking price” or they will say something like “the seller is open to offers”

You reply “I don’t want to insult you with a low offer” – then you SHUT UP again. The first to speak is the loser – play the game!

The agent will push for an offer.

You say that it is just what you are looking for and your finance is in all in place but you need to keep looking as this price just isn’t right for you on this one.

The agent will again push for an offer

You laugh and say, well if I was pushed I would probably offer in the region of £xxxxx to £xxxx (NOTE this should be 25% – 20% below the asking price) but I know that’s probably not going to be enough is it?

The agent will either try to pin you down to the top of your offer range or tell you that the seller will not go that low.

You will end up with one of two things 1) a property at 20% below the asking price or 2) an agent who knows that you have money and want to buy but just not this time …….

Whichever way it goes, always be respectful to the Estate Agent.

How to decide what to view?

Craig emailed me again this morning asking for advice on what I think he should choose to view.

My advice to Craig was this ….

Start by finding properties which you know you can afford to buy and which will always attract good tenants and good yields, then do exactly what we have advised above in terms of negotiating with estate agents.

Use Rightmove and Zoopla to select which properties to view. Stick to the area you live in if at all possible, or at least one you know well and don’t mind visiting whenever the need arises.

If you see the words “Guide price” chances are the property is being sold by auction.

Forget auctions for now, they are no place for an inexperienced property person.

Also forget agents who don’t use Rightmove or Zoopla. As a general rule they are dodgy, not always but most are!

Finally, don’t get sucked in by the guru’s offering get rich quick property training courses, otherwise you will spend your savings with them and end up with nothing as so many new landlords before you have done.

It’s a numbers game

Craig is going to have to learn to deal with a LOT of rejection using this strategy.He may well view and make offers on 30 or more properties before somebody says yes. He may just get lucky first time around, only time will tell.

I have created this thread so that Craig and any other newbies can post their questions and so that anybody can answer the questions in open forum. The more the merrier in terms of people posting and answering questions in my opinion. This is a far more effective way for Craig and other newbie property investors to get free advice from a variety of landlords and it’s also a better way for myself and other experienced landlords like Mary to share our knowledge with a wider audience.

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Comments

  • I agree silence can be golden…. As long as its used in the right time in the right place with the right agent. Some agents whom I know well would be annoyed if I played this trick on them especially while they are trying to play it on you too .

    I will sometimes have a more open and honest conversation with them and as a result they call me next time around as well. Too many no hope very low offers put in and you get a reputation of being a tyre kicker and the calls to you dry up.

    But I agree the agent is your friend not your foe. Its not so a much a battleground as an unlikely alliance. You both want the deal to go through. They get their commission and you get 3 times their commission and some as built in profit.


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  • Hello Jonathan, thank you for your comment. I’m a newbie property investor. I’m looking to buy a property this year some time. I’ve had a chat with Mark and mary latham. I’m abit stuck as where to invest for the best. My limit on a property is around the 80k mark. I’m not sure if to buy my first property and rent it out as a single let. Or to rent it out as a shared house renting oit 4 rooms to generate more of an income. I don’t want to go down the hmo route just yet. It would be a maximum of 4 rooms rented out. Regards craig singleton


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  • Hi Craig
    Thanks – I got your e mail as well – sorry I havent responded as yet. If you could mail me again with your number i will give you a ring and we can chat through some options.
    Thanks v much
    Jonathan


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  • Paul Barrett Member Profile Deleted says:

    A 4 bed house would be deemed an HMO for licensing purposes though not needing HMO fire protection measures as the tenants would not be tenants they would be lodgers!
    Any more than 2 households is considered by most councils to be an HMO and nothing to do with storeys etc.
    Each council has a different take on these property types.
    You need to ascertain how the council in your area of the property perceives what an HMO is.
    I have a 2 bed purpose built flat which if there were more than 2 households would be a HMO!!


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  • Hi Craig,
    Just to clarify a point made by Paul. Not all councils require a license for HMOs. Swindon Borough Council, for one, do not issue licenses unless the property is more than two stories high. Good luck with your endeavours and well done for asking advice from the people who have been doing this for many years.


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  • Hello Paul and Phillip, thank you for your replies. I no about councils having different rules. And I think most of them you don’t need a Hmo licsense unless. They’re more than two storeys like you mentioned Phillip. A question for anybody willing to give advice on this issue. I have 20k to iinvest in property. But I’m stuck as to where to invest for the best. My main key is buy my first property to rent out as a single let. But I need to buy a property where I can release atleast release 10k or more after 6 to 8 months. So I can then top it up and buy aanother property. Like I said I’m stuck as to where to invest for the best. I’ve looked at Coventry Birmingham Wolverhampton and nottingham. As my limit is 80k. But I would like a property around the 50k mark. A three bed house is what I want. Thanks


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  • Hello Paul and Phillip, thank you for your replies. I no about councils having different rules. And I think most of them you don’t need a Hmo licsense unless. They’re more than two storeys like you mentioned Phillip. A question for anybody willing to give advice on this issue. I have 20k to invest in property. But I’m stuck as to where to invest for the best. My main key is buy my first property to rent out as a single let. But I need to buy a property where I can release atleast release 10k or more after 6 to 8 months. So I can then top it up and buy aanother property. Like I said I’m stuck as to where to invest for the best. I’ve looked at Coventry Birmingham Wolverhampton and nottingham. As my limit is 80000. But I would like a property around the 50k mark. A three bed house is what I want. Thanks


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  • Hi Craig,
    Already you appear to be prepared to ignore good advice. Mark suggested you stick to your area, if possible. For what it’s worth I started with buying my next door neighbour’s property and I now live ‘financially free’ overseas with all my income from just 3 streets in the neighbourhood I once lived in.
    My last bit of advice to you is, listen to what the experienced investors tell you….or stop wasting their time.


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  • Sorry, also if anybody has a better idea of how to make money with the 20k I have. Then please do tell me your ideas etc. I did get told by a mortgage broker to buy a property with a 10% deposit where the lender don’t require an early repayment fee. Or only a 1% fee. Do the property up and sell it on for a profit. As I’m not a home owner so I won’t pay any tax on my profit. What do people think about this. Thanks


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  • Hello Phillip, I’m not ignoring what people say at all. Sorry if you got the wring idea. But I can’t afford to buy where I live. A three bedroom house is 210k minimum. Even a studio flat is 80k. I wish I could buy where I live I really would


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