Negotiating with estate agents

by Mark Alexander

13:59 PM, 22nd May 2013
About 7 years ago

Negotiating with estate agents

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Negotiating with estate agents

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.



Comments

Winsome P

15:29 PM, 24th May 2013
About 7 years ago

You are approaching from the wrong direction. There is always money for a good deal - just makesure that the real deal is not the one you tell them about otherwise they might steal it off you.
An analogy - if you are going hunting for elephants take an elephant gun. Its wiser not to try and find the elephant then look for the gun.
So ask what financing your do need to buy in your area. What deposit what buying price, what yield, keep working through the spreadsheets.
Why? AT the end of the repeated process you will clearly know the difference between a marginal deal and a great deal AND WHY. Then ask and show the figures to backers for the deposit renovation costs etc.
Keep generating the resources because there is always money for a good deal.

Persistance is what pays in life, finally life gives you what you asked for!

craig singleton

16:00 PM, 24th May 2013
About 7 years ago

Hello Gavin, thank you for joining in on this forum. The thing is that I don't have any backers to put the money forward for me to be able to invest around my area. My limit is 80k as I have 20k to invest with. I no I can stretch abit further by getting a 15% Ltv. But I don't want to go above water. Thanks

Winsome P

16:04 PM, 24th May 2013
About 7 years ago

Again then you need to reach out to others, ask your mother or uncles who they know who might invest/have money/be a mentor. Make a real and actual business plan (there are templates online to fill in) thats what I did and then you have seen and worked out all the risks the angles and the upside downsides.
If it still comes up bad then you have to buy cheaper to have a good margin of safety (See Ben Graham for that definiation)

rav singh

22:50 PM, 24th May 2013
About 7 years ago

Hi craig
Take a bit of advice from everyone, take what YOU feel works for you. Any landlord who has a decent portfolio will tell you the first few houses are the hardest so be prepared for a roller coaster, because unless you have the luck of rich parents its a hell of a ride lol. Experienced self made people will know what I mean by that, only the toughest survive, take no advice from the talkers ie what we call bar stool people. Keep it simple, like someone else said look at the area you want within reason and if need be concentrate on saving the deposit for that. Save, borrow from cc, personal loans etc but ensure you know how to handle that type of borrowing.

You can keep asking people and then getting lots of different info, this in itself can be overwhelming. Get a rapport with a good estate agent in the area you want to invest in and ask them if you can speak to an experienced landlord. They will know someone and if you speak to them make notes before so you not repeating yourself and looking unprepared. Good luck and remember once you start keep telling yourself 'it could always be worse' all the best

craig singleton

0:29 AM, 25th May 2013
About 7 years ago

Hello rav, thank you for that information. I can't invest where I live due to the property prices being to high. Hence why I've looked at investing in either Coventry Birmingham Wolverhampton Nottingham and Walsall. My budget is 80k as I have 20k for the deposit. But I'm aiming to get a 3 bed house for the 60k mark. I need my first property to be bmv or atleast a property where I can release half of my deposit out in 6 months. So I can then top it up and buy another property and so on. But I just don't no where to invest for the best. If you have a good way of making my 20k grow then please do let me no. But I'm not sure wether the buy refurb and sell on is the way. I suppose it depends on the area really. Thanks

philip allen

1:29 AM, 25th May 2013
About 7 years ago

Craig, I said the last comment would be my last piece of advice but I have to comment again. You obviously don't realise this yet but you have already received the best advice there is available. You could spend thousands on seminars and get nothing like this. What I woud suggest is that you go back to the top of the link and digest EVERYTHING you have been told, starting with Mark's advice. For what it's worth, if you're starting with cash in your pocket, you're in a very privileged position. When I began investing in property I had a 40k credit card debt and I know other hardened investors who started even further back. Read the advice you've been given then re-read, re-read and absorb it, then go and act on it. The longer you spend whining about 'how little' you have the more deals are passing you by.

Jonathan Clarke

3:33 AM, 25th May 2013
About 7 years ago

Hi Craig
Good to chat yesterday. You have now and probably did have already enough information already to make a decision which is best for you. But naturally you want to keep checking that information off with others to make sure you havent missed anything. That is good it shows due diligence but there comes a point when paralysis by analysis may take over and procrastination will become your comfort zone. I hope not.

I have had conversations with one of my plumbers for 15 years now about the ifs and buts and maybes of investing. He has 100K he could have invested but hasn`t. He says he will one day when the time is right. But that was 15 years ago. You are no where near that time scale yet but there maybe is a danger you will reach that milestone if you do not self monitor your personality type. My plumber is destined always to be a plumber and there is nothing wrong with that.

Vanessa Warwick

10:03 AM, 25th May 2013
About 7 years ago

Before you start negotiating with someone, you should build some rapport and give some credibility and background to your offer.

Thanks to all these "get rich quick in property" seminars, estate agents are jaded by obvious newbies trying to negotiate huge discounts with them, only to find that the newbie cannot go ahead with the deal because they were trying to do a no money down deal structure, or some other "creative" financing strategy.

I wrote my top tips for negotiation here:

http://www.propertytribes.com/blog/top-10-tips-for-successful-property-negotiation/

I hope you find them useful Craig and good luck with your deals.

craig singleton

19:22 PM, 25th May 2013
About 7 years ago

Thank you everyone for all your help so far, I appreciate it so much. What do people think I should do with my 20k. Buy a single let property. buy a shared house property to generate more of an income per month. Or shall I try and make my 20k grow by buying refurbishing and selling for a profit. Get a residential mortgage with no early repayment fees. Do the property up as quick as possible and keep doing that until I've got abit more money to play with. A mortgage broker told me due to not being a home owner. I can buy one property at a time to buy and sell. And not have to pay any tax. What do you guys or anyone else think of that. Also if anyone has a better idea of how to invest my money in property to generate me more money then please do tell me. Thanks

19:31 PM, 25th May 2013
About 7 years ago

The first person to make a low offer rarely succeeds, but the second person to make an offer in the same low ballpark often does.

View and make your low offer. You'll probably be rejected

Then get an associate - a disinterested friend or colleague with a good pokerface - to view and repeat the same low offer a fortnight or so later.

In my case, it helps enormously that I'm married to someone of a different nationality with a different surname 😉

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