Thorough preparation will allow you to identify overblown sales talk from agents and resist being swayed by persuasive banter.
“Agents will say, ‘it’s got a great rental return’, or ‘where else can you find a property like this for so cheap’,” says buyer’s agent Nathan Birch.
“I’ve had so many agents tell me it’s got a 5% yield, so it’s a positive cash flow property. But I know that interest rates make 5% nowhere near a positive cash flow and nowhere near even a neutral cash flow.”
Birch says doing your own numbers is extremely important because 95% of the time, what the agent says about numbers is wrong.
“They might say ‘get out of here, you won’t find a place like this for this price’,” he says. “If you have armed yourself and can say ‘hang on a minute, I just missed out on this property nearby for less’, then they know that you know what you’re talking about.”
Other questionable phrases you might expect to hear from an agent are:
“The sellers really don’t want to leave”
- Really, then why are they leaving? While this statement makes the place appear more desirable, if it is true, it may mean the seller is not motivated enough to consider your ideal offer.
“The former owner is a builder, so the place is well looked after”
- Wow, the world must be full of builders. Ensure you cast the same watchful eye over any so-called renovations in the property as you would in an accountant’s house.
“Bidding starts at $500,000”
- Not unless it’s an auction. At a private sale you can offer whatever you like and the agent is required by law to submit the offer to the vendor.
“We’ve just had interest from another buyer”
- Just as you were about to seal the deal? What a coincidence! This may be true and it may not. Stick to your own budget regardless and in many cases, the new buyer may mysteriously withdraw.
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