What’s going on guys Its Jordan de Jong here and today I want to talk about how to negotiate when buying a property, how a listing campaign should play out and how to deal with different types of real estate agents. Because there are low barriers to entry to become a sales agent 80% of new agents don’t last more than 12 months. They generally see real estate as an easy way to earn a large income, however, most new agents don’t have a thorough knowledge, and try to fake it until they make it. This results in roughly 25% of real estate agents doing 75% of the actual work, which means 75% of the industry is not making a living. Of the 40,000 RE agents in the country who had their name attached to at least 2 properties in a year, there where 80,000 only attached to one. There are so many agents coming in and out of the industry, this is why we have so much diversity in the quality of good real estate agents. The 75% that aren’t making a living are generally the ones giving you a bad experience, causing the negative connotation around real estate agents and the whole industry in general. The first step is to identify who the good real estate agents are, and you may be thinking, well I might be able to get lucky with and in-experienced agent. But the reality is, they don’t know what they are doing and may give you some false direction or misinformation. To find good agents, look at the recent sales history online and see which agents are commonly selling in the area you want to buy in. Start to go to open homes, talk to those agents, get to know them and you’ll start to realise the ones who know what they are talking about. The problem comes in here If none of these agents is selling the house you're trying to purchase, However, if they work for the same company they can generally get involved in the sale with you being their client. And even if they don’t work for the same company, It doesn’t hurt to ask them if they could approach the owners and try to do a deal for you. This can sometimes get a little messy between agencies so really ensure this is a property you potentially want to purchase. Secondly, know the area you're looking in, do your research, if you have area knowledge the agent has to respect you. If you go in blindly, you generally put your guard up against the agent and treat them like their trying to upsell you or take advantage of you. This can cause a bit of tension between you and the agent, so ensure you always speak to them how you would like to be spoken to. Ultimately, you want to be the buyer the agent wants to sell the property to if you're being hard to deal with they would prefer to help other buyers before you. Always remember the agent is employed by the vendor, they work for them, they aren’t there to do you any favours and by being easy to deal with it might greatly increase your chance to win the property. Now let’s talk about making an offer, you do generally want to start low so that you got some room to move. However, don’t waste an agent’s time and completely under quote or low ball an offer where there are comparable sales in the area much higher price than your offer. An agent might get 100 phone calls for a property, and there is only going to be one buyer, they get tired of people quickly, so show them the respect you would like to be shown. Every buyer always wants to pay the least amount and every vendor always wants to the most amount they can get for the property. The agent’s job is to find a happy medium between these two ranges that both parties are comfortable with if the offer is way too low it’s frustrating for an agent and they might not want to deal with you. It’s easy to let your emotions get in the way here, but just remember that a property is only worth what someone is willing to pay for it. So slow down, don’t let the agent control your emotions and set your spending limit before even put an offer in. You could be the only buyer, which you won’t know unless you rock up to the auction and you’re the only one bidding, so no matter what the agent tells you during the negotiations always stick you your limit. Given that you have done your due diligence, you’ve researched the area, the agents and the recent sale, done a building and pest inspection, had your finance approved we can proceed to make an offer. As a starting point, I would ask the agent which week of the campaign they are in which I’ll go into detail later on in the video. Ask if the agent has had any offers, they are legally required to tell you, and how many contracts have been sent out. This will give you a good gauge on where you sit in the current phase of the campaign if there are other parties interested in, and where the homeowner (also known as a vendor) is currently at with the sale. If there has been a lot of interest or offers the agent will try to get the vendor to hold out to auction, you will be able to sense this. The best position for you to be in is when the agent starts to fumble here and start talking about how many people are coming to the open home. This is trying to give you a false sense of high interest in the property and generally means you are the only serious buyer, so depending on the week of the campaign you can go in and make your first offer. A good tactic to use here is to make the vendor feel a fear of loss if they don’t take your offer, you can do this by putting a timeline on your offer. With the conditions that it only lasts for the next 24 to 48 hours otherwise, you are going to make an offer on another property. This works well when you’re the only one making an offer because the agent would rather you buy his property then another agent’s, so they will try to work with the vendor to get them to accept your offer. This is generally where anchoring happens, where the agent will come back to you and say, ok you’re at for example $480,000 but the vendor is a $500,000. What the agent is trying to do here is get you to make another higher offer. This is where the term anchoring comes from because they are trying to anchor you to the higher price. However, in terms of negotiation, it’s the vendors turn to make a counteroffer, so if the agent does try anchor you here, ask them what price the vendor is willing to sell at, and you want a counteroffer from them. The agent might repeatably come back to you trying to get you to increase your offer without getting a counteroffer from the vendor. So just note here that who-ever moves next is generally going to lose out, If you can’t get the vendor to move, you most likely going to pay a higher price. This is now the critical moment of the negotiation, where the agent works with both parties, there may be a series of counteroffers from both you and the vendor before you reach an agreed price. My best advice here is to stick to your limit, don’t let your emotions control you, if you are the only buyer you are in a much stronger position then you think you are. Hold firm on your offers, always ask for a counteroffer and never let the agent try and push your offer up, even if its $1,000, they are just trying to get as much as they can for their vendor. With all offers you should incorporate something called out clauses, these are used so that in the worst-case scenario if something unknown of goes wrong you can find a way to get out of this law binding contract. These include: Subject to finance Subject to Solicitor approval Subject to building & pest inspection Although these seem like get out of jail free cards, they are all very serious matters and I highly recommend you do all of them before you even put an offer in. Every state is different so do some research on what out clauses you can use for your specific state, be very aware that making an offer both verbally and written is legally binding. So, ensure you say and write these clauses with your offer and on your contract. You can then have everything thoroughly checked professionally before making the biggest financial commitment of your life. Also note that when making an offer, the agent might ask for a holding deposit, this is different for every state but is generally around several hundred dollars. Paying this holding deposit confirms you are a serious buyer by letting the agent and vendor know you are financially committed, however, is not always required depending on which state you’re in. This holding deposit is fully refundable if the vendor does not accept your offer or as soon as the vendor makes a counteroffer, meaning they have declined your original offer. Next, let’s go through how a typical 5-week listing campaign plays out: Week 1 – The agent will tell the vendor how many clicks on search engines such as Real estate & domain, how many came to the open homes and how much general interest in the property. Week 2 – If they have the right amount of people coming through the open home and showing interest, they will continue to leave the price as it is. If there’s not much interest the agent has to confront the owner about re-adjusting the price. I would try to watch out for this because if you see the price drop it generally means there hasn’t been much interest. Week 3 – The agent can adjust the price range and is now confidently quoting in a range a vendor will sell at, this needs agreement from that vendor that they are happy to change the price. Week 4 – Final confirmation of who the strong buyers are, if there aren’t many, agents prefer to sell prior to the auction. A good way to gauge this is to ask how many contracts have been sent out or how many registered bidders there are (certain states). This is the best time to make a pre-auction offer additionally adding In that you won’t be coming to the auction if the offer doesn’t get accepted, This forces the agent to try to get the vendor to accept so that the auction doesn’t get passed in. Week 5 – Is generally auction time and creates a deadline for the property to sell. As always, seek your own professional financial, legal and property buying advice for your current situation, these videos are just my opinion and interpretation of the negotiating process. Until next time, happy house hunting.

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