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13:59 PM, 22nd May 2013, About 11 years ago 42
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Over 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.
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.
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.
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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Mark Alexander - Founder of Property118
23:28 PM, 26th May 2013, About 11 years ago
Hi Craig, bullish means optimistic, does that help?
Puzzler
15:12 PM, 29th May 2013, About 11 years ago
Craig, don't assume that because it would be your only house you would be exempt from CGT. The exemption only applies to Principle Private Residence which means, yes, you have to be living in it. See this link:
http://www.no-use-empty.org/case-studies/tax/sellingproperty
I agree with Mark, this is not a get-rich-quick idea. Some like Mark were lucky and got into a rapidly rising market but there is no certainty of that happening again or when.
If you are serious, do your sums, get an agreement in principle from a lender (most estate agents have a broker who will help), don't over borrow and go and look around some properties. Only when you believe you can't learn any more about an area, do you think about buying. I trust you suggest Midlands because you can get there reasonably easily from where you live. If you live in the south-east that would be feasible. But go and have a look around.
In a nutshell, do your homework and understand you will have to make an effort, it's not easy street if you want to do it properly and not come a cropper. No amount of advice is a substitute for that.
Good luck, let us know how you get on.
Puzzler
15:14 PM, 29th May 2013, About 11 years ago
Sorry that should be Principal Private Residence!
17:36 PM, 1st June 2013, About 11 years ago
stick it under the mattress mate.
craig singleton
18:17 PM, 3rd June 2013, About 11 years ago
Hello everyone, thank you for all of your comments and advice. I'm going to be buying either a 2 bedroom or three bedroom house. It's either going to be in leicester Coventry or Clacton on sea. I went to clacton at the weekend and the property is within my budget. And the rental is good for the property prices. I'm going to rent it out as a single let at first. Then once I'm happy and I've got more money to fall back on. I'll rent out each room. Hopefully that Will be around 6 months down the line. I'm hoping to release some equity 6 to 8 months down the line. Top it up with the rental profit I save and bit another property. But that is depending on whether I can release enough money or any at all. I will wait and see when that time comes. Thank you to everyone that has gave me information and help about all of this. If anyone has any other help and information for me. It will be much appreciated
craig singleton
18:18 PM, 3rd June 2013, About 11 years ago
Hello everyone, thank you for all of your comments and advice. I'm going to be buying either a 2 bedroom or three bedroom house. It's either going to be in leicester Coventry or Clacton on sea. I went to clacton at the weekend and the property is within my budget. And the rental is good for the property prices. I'm going to rent it out as a single let at first. Then once I'm happy and I've got more money to fall back on. I'll rent out each room. Hopefully that Will be around 6 months down the line. I'm hoping to release some equity 6 to 8 months down the line. Top it up with the rental profit I save and bit another property. But that is depending on whether I can release enough money or any at all. I will wait and see when that time comes. Thank you to everyone that has gave me information and help about all of this. If anyone has any other help and information for me. It will be much appreciated thanks
Mark Alexander - Founder of Property118
18:19 PM, 3rd June 2013, About 11 years ago
@Craig - check out this thread >>> http://www.property118.com/my-property-strategy-opinions-please/39958/
Andrew Taylor
23:24 PM, 10th June 2013, About 11 years ago
I tend to think the %off method is too unreliable. For what its worth I use the following fought process...
(1) What is the most the property is worth in good condition if I need to sell it?
(2) What will it cost to get the property to that condition?
(3) (1)-(2) is the most I can possibly pay for it and break even
(5) Take a profit margin / contingency off that and base my offer on that.
If the sums work I'll make an offer every time, as it builds up trust with the agents if you are making offers.
Mark Alexander - Founder of Property118
11:12 AM, 11th June 2013, About 11 years ago
@Andrew Taylor - that's a very good point and a very good negotiating angle too. I have a spreadsheet to help me make these decisions and we are hoping to create an online calculator based on that, similar to the Landlords Calculator >>> http://www.property118.com/landlords-calculator/40091/
Our "Viable Offer Calculator" will enable property investors to sit in front of estate agents with a smart phone or in front of the agents PC and work through their figures, based on the parameters you have explained in your comment above. This will demonstrate to agents that investors are both knowledgeable and keen to do business. If a deal does not stack up the agent will completely understand why. The result will be a much closer relationship and the investor will be likely to get a lot more calls from agents when the right deals come along. Agents may find the tool useful too when talking to sellers.
Watch this space 🙂
Andrew Taylor
14:47 PM, 11th June 2013, About 11 years ago
The only other thing I would add is that I only buy in the one area, I always pay cash, and I always use a local solicitor the agent will be familiar with.
Working in one area allows for you to build relationships based on regular communication. I'm always telling agents B & C what I'm buying from agent A. If I'm getting a lot of traction through one agent, I'll ask the sales director at the other local agents if there is a problem and remind them on how many sales they have missed out on. When I have has a few quiet times, I have put in some low offers that I know will not get accepted just to keep up the impression that I am still worth a regular call.
Always paying cash is a luxury I know, but cash does open up so many more deals. Waving the cash in front of a vendor, combined with the agent telling them what a solid buyer you are can be the difference in a competitive market. I deal directly with the banks and they do not care about waiting 6 months about adding a property to a portfolio mortgage.