In today’s show we get some more tips on buying a property below market value from Cate Bakos, buyer’s agent who works in Melbourne. Her agency is called Cate Bakos, and the website is CateBakos.com.au
Kevin: In a tough market like we have now for buyers where it is definitely a sellers’ market and sellers have control – particularly in the cap cities of Sydney and Melbourne, not so much in some of the other areas – if you’re looking at buying in a market where sellers definitely have the control, is it possible to buy a property below market value, which is what most people want to do? If so, how do you do it?
Cate Bakos has some thoughts on this. Cate is buyer’s agent who works in Melbourne. Her agency is called Cate Bakos, and the website is CateBakos.com.au
Cate: Hi, Kevin. How you going?
Kevin: Good. A tough one for you, Cate, but what tips would you have for someone who wants to buy in this market below market value?
Cate: There’s one overarching tip, and that is getting along with the agents, staying in touch with them, and being a bit more prepared to share what you’re looking for with the agents that you’re bumping into.
Kevin: The agents that you’ll be dealing with, though, are necessarily working for the seller, aren’t they? They’re not going to help you all that much, though, Cate?
Cate: No, they’re potentially not going to give you any free kicks on the properties they have listed. If it’s an auction property, then you’re not really able to do much to change the competitive circumstances. But what you will do when you tell an agent what you’re looking for is create in their minds an opportunity to have an easy sale, perhaps if they come across a vendor who needs to sell quickly.
Believe it or not, even in a seller’s market like we’re in right now, there are buyers who become vendors. When someone buys a property, they’re upgrading their family home, in a lot of cases, they might not give it a lot of thought and allow enough time to have a proper auction campaign or a proper sales campaign. In actual fact, they might have boxed themselves into a corner a little bit and need to sell quickly. That is an opportunity for any buyer who is decisive about what they want and they’re ready to go.
Kevin: That’s very good advice. Any other tips for us?
Cate: Exploring the off-market opportunities is one area where a buyer can be in dialogue with an agent to get that advantage but also pre-markets. When a property comes onto the market, if you can pounce quickly and see through that property, preferably on day one or perhaps even earlier – that means giving the agent a call and asking them if you can see it before its first official open – you might be able to tempt the agent and tempt the vendor with an offer that is a fair market offer.
In view of the seller’s market that we’re in, sometimes I consider a fair market offer and then after the deal is done, I might think to myself that it was actually quite an advantageous situation for my buyer because we might have bought a little bit below market given that we’re in a moving market.
Kevin: Sometimes sellers will, in fact, take a lower offer than normal if it’s on their terms – in other words, if they’re allowed to stay there for a bit longer. If you can really dress the offer up, sometimes you will get it at a fair figure.
Would it be also fair to say, Cate, that if you’re looking for this type of opportunity, you may have to make more offers? In other words, set your benchmark low if that’s what you want and be prepared to walk away.
Cate: Absolutely. If you’re going into an auction situation, or even a private sale, a competitive situation, you have to know when to hold and when to fold – at what stage you walk away and find another property. It’s an essential thing.
You mentioned earlier also being a little bit creative and understanding the vendor’s other terms. That involves chatting to the agent to really understand what you could do to sweeten the deal and take the focus off the price.
Kevin: Cate, how willing are agents to give you that information?
Cate: An agent won’t want to disclose their vendor’s vulnerable position, but if you’re asking enough questions about things that you could potentially throw into the deal that could make it sweeter for the vendor, an agent might be prepared to assist you with that.
For example, the vendor might want to rent back for a while while they’re looking for their next property, or they might value a super long settlement while they move out. There could be some kind of detail that just gives you as the buyer a bit of an edge and takes that focus off the price.
Kevin: Good advice. Always great talking to you. Cate Bakos, CateBakos.com.au. Thanks for your time, Cate.
Cate: Thank you so much, Kevin.