Paying the lowest price is every property investor’s goal, so we’ve compiled a step-by-step guide to help you snag a real estate bargain.
Step 1: Get financed
Say you stumble across the perfect property investment – you know, the one that is underpriced and over-featured, with tenants lining up to move in and motivated vendors who want it sold, pronto? When you find this real estate holy grail, you need to be ready to act immediately.
So before you start looking for a property, you should make sure your financial ducks are in a row. This means creating a clear budget, so you know exactly how much you can afford to spend, and reducing or cancelling your credit cards and other personal debts. You also need to speak to your bank or mortgage broker for loan preapproval, so you have a set budget in mind when browsing the real estate listings.
Step 2: Sniff out opportunities
People have many different reasons for selling property – because they’re moving, downsizing, upsizing or just ready to move on. Or, it could be due to a divorce, deceased estate or mortgagee sale, in which case the vendor is generally looking to sell for as much as possible, as soon as possible.
These listings can represent incredible value as a buyer, but there can also be “much greater risks involved with a mortgagee sale than a normal sale”, warns Ian James from JPP Buyers Advocates in Melbourne.
“Chattels are not generally included in a mortgagee sale. This means carpets, light fittings and window furnishings can be removed,” he says. “If there are any legal entanglements at settlement with the finance company, they can sometimes defer settlement while these are worked out… If you are buying at mortgagee sale you want to make sure you get a bargain to offset the very obvious risks.”
Step 3: Negotiate well
“Buyers who want to snag a bargain need to learn how to negotiate, because everything is negotiable – and more often than not, it’s not all about the money for sellers,” says Nicole Marsh, a licensed buyers agent with Eureka Property.
Look for other opportunities to secure a price discount, perhaps by meeting the vendor’s settlement terms. If they’re financially pressed they may want a quick settlement, for instance, or if they’re building another home they may want a longer settlement, or the opportunity to rent the property back from you. Ask the real estate agent plenty of questions so you can be prepared with an offer that suits the vendor’s needs.