The first step in the process is to ascertain the market value of the particular properties that you’re interested in.
To purchase property for a price under market value, you first “need to find to areas that are on their knees, at the bottom of the cycle,” says Paul Giezekamp, director of property advisory and buyers agency Property Secrets.
“It’s harder to buy property that’s under market value in places that are booming, because properties in those locations sell in a day, or even in an hour,” he says. “As an investor, I don’t like to go to places that are booming because I’ll be paying top price, and I don’t get a bargain. It’s also usually an inflated price, because everyone’s going there.”
“I normally use RP data to start with, but what I would do as well is check out www.domain.com.au and www.realestate.com.au, and look at all the addresses in the area and see what they’re selling for,” Giezekamp explains.
“Another thing I would suggest, which is a bit tougher for people investing interstate, is to possibly even go to the postcode itself and have a look at the pricing, and see what the properties actually look like – their facades, their aspects, the landscaping, things like that.”
Once you have thoroughly researched the area, you should have developed an understanding of the local real estate market and have the ability to estimate the market value of various types of properties.
Regardless of whether the local market is booming or flat, there are several signs that indicate that the property could be vulnerable to negotiation on price:
Long period on the market: You should be looking at properties that have been on the market for a longer period, because the agents and owners will usually be more open for negotiation.
Real estate signage: If there is more than one ‘for sale’ sign out the front of the property, it shows that the owners are probably desperate to sell.
Switching agents: If you are watching the market closely, you will notice when a property moves agencies, say from Professionals to Raine and Horne. If you see this happen, that’s a good time to offer a low-ball price. Another strategy to help you acquire the property for less is to offer attractive settlement conditions, adds Giezekamp. “If you offer a quick settlement, for example, that can help you to negotiate a lower price.”
