{"id":4259,"date":"2015-05-01T12:00:46","date_gmt":"2015-05-01T02:00:46","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=4259"},"modified":"2015-05-01T12:00:46","modified_gmt":"2015-05-01T02:00:46","slug":"how-to-win-in-a-sellers-market-cosmetic-reno-tips-getting-started-in-property-development-researching-dealing-with-banks-and-more","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/how-to-win-in-a-sellers-market-cosmetic-reno-tips-getting-started-in-property-development-researching-dealing-with-banks-and-more\/","title":{"rendered":"How to win in a sellers\u2019 market | Cosmetic reno tips | Getting started in property development | Researching | Dealing with banks and more\u2026"},"content":{"rendered":"

 
\nStrong competition for properties and rising prices has created a sellers\u2019 market in many parts of Australia. So how do property buyers tips the scales in their favour? In this week\u2019s show Michael Yardney<\/b><\/a> explains the 3 critical property negotiating pressure points at work in every negotiation; either you are applying them to the other party or they are using them on you.
\nAlso in this show, Jane Slack-Smith<\/b> runs through some quick cosmetic reno tips that will return high value, Josh Masters<\/b> tell us where you can go wrong when researching a market or a property and Nhan Nguyen<\/b> has some very helpful tips for you to follow when you are starting out as a developer.
\nMiriam Sandkuhler<\/b> explains how having a view of the end tenant you want in an investment property has helped her.
\nAnd Andrew Mirams<\/a>,<\/b> from Intuitive Finance digs deep and tells us some of his tips for dealing with the banks. Now that\u2019s worth listening to a broker on how better to deal with the banks.
\n <\/p>\n

Transcripts:<\/h4>\n

Michael Yardney<\/h3>\n

Kevin:\u00a0 <\/b>A strong competition for properties in rising prices has created a seller\u2019s market in many parts of Australia, so how do property buyers tip the scales in their favor? Well, let\u2019s find out. We\u2019ll ask one! Michael Yardney is one of the best-known buyer\u2019s agents in Australia from Metropole Property Strategists. He\u2019s also a regular guest on our show.
\nGood day, Michael.
\nMichael:\u00a0 <\/b>Hello, Kevin.
\nKevin:\u00a0 <\/b>How do you tip the scales in your favor?
\nMichael:\u00a0 <\/b>I believe negotiating, even in this hot market, can help savvy property investors get themselves a pretty good deal. What they really need to understand, Kevin, are the three critical negotiating pressure points.
\nKevin:\u00a0 <\/b>Okay. What are they, Michael?
\nMichael:\u00a0 <\/b>These work in every negotiation. Either you\u2019re going to apply them, or they\u2019re going to be used on you by real estate agents who have been taught well how to negotiate. The first one in my opinion is options. The person with the most options has the most power.
\nWhen you\u2019re buying a property, it\u2019s important to convince the seller that you have more options than they do because the power of negotiation, as I said, goes to the person with the most options. Look at it this way. If a seller has two buyers willing to offer him $500,000, you probably don\u2019t have the option or the ability to get your offer of $480,000 accepted.
\nHowever, it\u2019s important to realize that in negotiations, often perception is the reality. Agents will often tell you this other buyer is interested or they have better offers than you, and maybe it\u2019s not the case; it\u2019s just a pressure tactic.
\nKevin:\u00a0 <\/b>What sort of language can we use in this case, Michael?
\nMichael:\u00a0 <\/b>I\u2019d let the agent know that you\u2019re interested in the property, but I\u2019d say something like, \u201cI like this property, but there are two others I have in mind. One is in a bit of a better location. One is maybe in not as good a location.\u201d You actually let him know that yes, you\u2019re interested, but not that much \u2013 because the person with the most options has the upper hand.
\nKevin:\u00a0 <\/b>Wow, that\u2019s very powerful. What\u2019s the other one, Michael?
\nMichael:\u00a0 <\/b>Time is another critical pressure point in negotiations. If the vendor is highly motivated, if they\u2019re under time pressures, you can find yourself a terrific buy. Now, sometimes it\u2019s hard to know the pressures on the vendor. Some agents will sometimes tell you, but other times, it\u2019s worth asking some questions, Kevin, to try and see what\u2019s really behind it.
\nKevin:\u00a0 <\/b>Michael, what sort of questions?
\nMichael:\u00a0 <\/b>Now, you may even know the answer to these, but what you want to know is what\u2019s going on in the background. I\u2019d ask questions like, \u201cHow long has the property been for sale? Have you received any other offers? By the way, how did the vendor come to his price? Was this your suggestion? Was it his suggestion?\u201d
\nKevin, I like to use time pressures when writing an offer. I put my offers in writing, but I tend to put a deadline. I put in an offer something like this: \u201cThis offer expires at 6:00 P.M. on Thursday the 15th of the month,\u201d but I give a reason why to make it make sense.
\nKevin:\u00a0 <\/b>What is that reason, Michael?
\nMichael:\u00a0 <\/b>Well, I say something along the lines of, \u201cI\u2019m considering purchasing this property \u2013 that\u2019s why I\u2019m going to give you an offer \u2013 but if it doesn\u2019t come off, there\u2019s another one I\u2019m looking forward to go to at auction this weekend. If the vendor doesn\u2019t accept my offer by Thursday afternoon, I really have to withdraw my offer because I can\u2019t have it remaining open and end up at the weekend possibly end up owning two properties.\u201d
\nKevin:\u00a0 <\/b>Yes, I suppose by explaining it that way to the agent, you\u2019re giving yourself a better chance for it to be portrayed in that way to the seller, Michael?
\nMichael:\u00a0 <\/b>You are. It\u2019s actually giving a reason for it rather than just being a bully.
\nKevin:\u00a0 <\/b>And the third one?
\nMichael:\u00a0 <\/b>The other big pressure point is knowledge. In negotiations, the side with the most knowledge will do better. The fact is that most property investors have done homework, have done research, and they really probably know more than the seller and sometimes even more than the estate agent, who may only know a particular segment of the market.
\nApart from researching the local market, you also have to find out a bit about the vendor, like we\u2019ve already said. Get yourself as much knowledge as you can. Be confident that you\u2019re therefore making a good offer at the right time of the property cycle, and this could create a win-win solution that\u2019s going to let you buy a good property at a fair market price.
\nKevin:\u00a0 <\/b>The thing that comes through for me listening to you, Michael, is that it\u2019s not always about just making a cheeky low offer as the strategy, is it?
\nMichael:\u00a0 <\/b>It is. You\u2019re right. There is some thought process to it, and most Australians are uncomfortable with negotiation. They\u2019re taught to be courteous and polite. While you can still do that, there\u2019s no reason why we can\u2019t negotiate hard. Remember if you don\u2019t, the other side will against you.
\nKevin:\u00a0 <\/b>It\u2019s always good talking to you, Michael Yardley from Metropole Property Strategists. Now, I know how you do it! Thanks, Michael.
\nMichael:\u00a0 <\/b>My pleasure, Kevin.
\n <\/p>\n

Andrew Mirams<\/h3>\n

Kevin:\u00a0 <\/b>I received an interesting e-mail from Stephen, who writes about the session I did recently with Andrew Mirams from Intuitive Finance talking about mortgage broking. What he asks in the question \u2013 and Stephen, thank you for that \u2013 is he just wants to know some tips on what Andrew thinks about the best ways to deal with the banks.
\nAndrew joins me. Good day, Andrew. How are you doing?
\nAndrew:\u00a0 <\/b>I\u2019m going well, Kevin. How are you?
\nKevin:\u00a0 <\/b>Do you have any advice there for Stephen and anyone else who may be thinking about the same subject?
\nAndrew:\u00a0 <\/b>It\u2019s really interesting. If you just keep it in the broader context of tips for dealing with your banks, it probably depends what you\u2019re doing with them about \u2013 if it\u2019s opening an account or getting your Internet banking set up or getting a credit card or actually then going in and asking for a loan. We could probably allow the context of that to run off in a whole different range of ways, but let\u2019s keep it in the area of expertise and in the lending side.
\nKevin:\u00a0 <\/b>I think that\u2019s pretty much where Stephen was talking. It\u2019s a truncated e-mail, but he does actually say he\u2019s looking at talking to the bank about future financing. What would be your advice to him?
\nAndrew:\u00a0 <\/b>My first tip would be to seek independent advice, and that would be to find a good mortgage broker. Obviously, we\u2019d love to help Stephen here at Intuitive Finance. But going in and dealing directly with the banks, often their primary goal will be selling them what they think is the best. They don\u2019t have the range of options as mortgage brokers do.
\nIf you know specifically what you want, etc., then you have to go in and be very open and honest with them. But it depends. If you\u2019re really just shopping around, then I wouldn\u2019t go into just one bank and say, \u201cThis is what I want\u201d and \u201cYes, I\u2019m happy with that.\u201d
\nKevin:\u00a0 <\/b>I guess it\u2019s a key point not to rely on just dealing with the one bank. Shop around at several. This is probably the reason why brokers have become so popular, because you guys actually don\u2019t need to talk to the bank managers because you know what the current deals are.
\nAndrew:\u00a0 <\/b>Absolutely, yes. Brokers now are representing more than 50% of mortgages across Australia, and for some of the banks, that\u2019s even a higher figure. We\u2019re experts in that field. We can generally ascertain what our client\u2019s needs are first and then match them to the right bank and the right product.
\nWhen you go and you talk about tips on dealing with the bank, often people go in and they don\u2019t know, they rely on the bank manager, and bank managers have a wide range of experience \u2013 from a first-timer who might be someone out of university to your long-term banker. It really depends on the relationship you have and the advice you\u2019re getting as to what you\u2019re going to get, whereas a broker will generally be an expert in their field and know exactly how to match the client\u2019s requirements with the end outcome.
\nKevin:\u00a0 <\/b>If I have a good relationship with my bank manager and I\u2019ve spoken to him and I believe I\u2019ve driven the deal as far as I possibly can, is that a good point to still consult a broker and say, \u201cThis is what I\u2019ve done. Is it a good deal?\u201d \u2013 in other words, getting almost a third person\u2019s input into the deal.
\nAndrew:\u00a0 <\/b>Absolutely. Banking and finance is all about relationships, because at the end of the day, all the lenders are selling basically the same thing. They all do things a little bit differently, they all have features and niches that they all do, but in broad terms, they\u2019re all doing the same thing. They\u2019re looking to lend money.
\nIf you have a great relationship with a manager in a bank, we often will say, \u201cWe don\u2019t want to step on the toes there. Make sure you do that.\u201d But I\u2019m happy as a third party just to come in and say, \u201cYes, that\u2019s a really good deal,\u201d or \u201cI think they can do a little bit better,\u201d or \u201cLast week, we got a better deal so go back and see if they\u2019re willing to do that,\u201d etc., and give them some advice.
\nIf then the manager is not willing to do that, that\u2019s when the ball comes back into our court and we can show the client how we can do it maybe better, maybe cheaper, maybe with access to more funds, depending on what their requirements actually are.
\nKevin:\u00a0 <\/b>Do the banks actually like having a broker in the middle of the deal? Obviously, this has been the trend. You said over 50% of loans are now done through brokers. The banks are obviously encouraging that?
\nAndrew:\u00a0 <\/b>Yes, absolutely, because it\u2019s cheaper for them to pay a third party \u2013 as in a mortgage broker \u2013 a commission rather than have to have all the infrastructure in place with a branch network and paying wages and things like that.
\nThe approval rate is very strong with the mortgage broking industry. The loan reuse <\/b>rate is very low in comparison to what the banks do in general themselves directly. The banks recognize that brokers are professionals in their field and are able to present deals in a much better fashion that gets a higher approval rate and a much lower reuse rate.
\nYes, banks really enjoy dealing with brokers. But that\u2019s not to say all the managers and branches \u2013 because they have their own sales targets \u2013 enjoy it as much as the actual CEOs might, but yes, as a rule, banks like dealing with brokers.
\nKevin:\u00a0 <\/b>Stephen, I want to thank you for sending the e-mail into us. It\u2019s a good question. It was great to have it on the table, and it was good for Andrew to address it so directly, too.
\nAndrew, thanks for your time. Andrew Mirams, of course, is from Intuitive Finance. You can find them through our website on the homepage. They are one of our supporters, and we thank them for that. Andrew, we\u2019ll talk to you again soon.
\nAndrew:\u00a0 <\/b>Thanks, Kevin.
\n <\/p>\n

Jane Slack-Smith<\/h3>\n

Kevin:\u00a0 <\/b>You might recall a few weeks ago, I spoke to Jane Slack-Smith from Your Property Success, who is also a mortgage broker with InvestorsChoice.com.au. Jane created \u201cThe Ultimate Guide to Renovation,\u201d which is currently underway, and a number of people inside that program now are really enjoying the benefits of that decision they made to join up.
\nJane joins me. Hi, Jane.
\nJane:\u00a0 <\/b>Hi, Kevin.
\nKevin:\u00a0 <\/b>A great learning experience, not only for the people inside the program but for you, as well. You must be picking up some great tips on what\u2019s really working with renovations.
\nJane:\u00a0 <\/b>It\u2019s wonderful. Every day, I get to open up my e-mails and someone comes back and says, \u201cOh my goodness, that last module I learned something new,\u201d and in the private Facebook group, people are sharing what they\u2019re doing straightaway. They\u2019re applying things, which is great, and for making a profit from renovation quickly, sometimes it\u2019s just the little things that you need to do that can change everything.
\nKevin:\u00a0 <\/b>Help me. Let\u2019s have a look a couple of reno tips that you\u2019re picking up on that are actually working that we make some money from. Can you give us a bit of an idea?
\nJane:\u00a0 <\/b>I think amazing number one renovation tip is more of a macro tip, which is get the location right. You can start with something that needs a bit of the paint job, but if it\u2019s in the wrong location \u2013 there\u2019s no pricing disparity between renovated and unrenovated properties \u2013 you\u2019re not going to make money. Just getting the location nailed and the right property ripe for renovation is my number one thing that I\u2019m seeing people coming back with.
\nKevin:\u00a0 <\/b>Yes, that\u2019s a very good tip. What about some of the renovations that are actually making some money, too?
\nJane:\u00a0 <\/b>It\u2019s funny. One of the students in the course had done over 15 renovations, and he was in the middle of starting a new renovation. He was going through the modules, and he said, \u201cIt never crossed my mind that I didn\u2019t have to rip out the bathroom.\u201d
\nI talk about refresh, repaint, repair. Maybe you don\u2019t have to replace. He sat back and said, \u201cYou\u2019re right, I can resurface the bath. I can paint the tiles. I can put a nice vanity in here.\u201d Instead of spending $5000 on a bathroom, he\u2019s out of it for less than $500 and it still looks fantastic.
\nKevin:\u00a0 <\/b>I was going to talk to you, too, about ways to maximize the value of your property. You\u2019ve probably given us a really good tip there that you don\u2019t always have to go and buy something brand-spanking-new. Look at what you already have, because it might just have very good bones, Jane.
\nJane:\u00a0 <\/b>Absolutely. It\u2019s funny. We can apply that to people with existing portfolios, as well, because often, you may not have maybe the servicing ability to get more money out to buy new property, but you might have enough money to go into one of your existing properties and refresh it and be able to get more rent.
\nKevin:\u00a0 <\/b>It\u2019s marvelous what a difference just a fresh coat of paint will make, as well.
\nJane:\u00a0 <\/b>Absolutely, and that\u2019s not just inside. A lot of people miss the kerbside appeal. When you\u2019re trying to make a first impression, maybe a bit of work on the landscaping and rather than put up a new fence, push up the old one, paint it up, make it look good and sturdy. Just give people that first impression when they walk up that it\u2019s a property that they want to rent or buy. I think a lot of people spend a lot of time inside and they forget the outside.
\nKevin:\u00a0 <\/b>Jane, what about those big-ticket items, like the kitchens and bathrooms? Is that where the focus should be?
\nJane:\u00a0 <\/b>Absolutely. It\u2019s where you\u2019re going to spend your most money, but it\u2019s where the most value can be demonstrated, as well. As I said, you don\u2019t have to rip things out. Maybe just getting in there and replacing or repainting the benchtops in the kitchen and making it light and bright. Just make sure that you\u2019re not renovating to your personal taste, but to what the market wants.
\nUnderstanding what the market wants is always my prime concern. Get out there and do a bit of detective work and find out what others in the market or your competition have on the market at the moment. See what people are after, and then try to reproduce that yourself.
\nKevin:\u00a0 <\/b>Congratulations on what you\u2019re doing with \u201cThe Ultimate Guide to Renovation.\u201d I know many, many people inside the program are enjoying those benefits. Will the program be launched again at some stage in the future for anyone who may have missed out this time?
\nJane:\u00a0 <\/b>Yes, we\u2019re really concentrating on our current students. But at the end of the year, we\u2019re going to be opening it up again, so watch for it.
\nKevin:\u00a0 <\/b>That\u2019s fantastic. Look out for it. It\u2019s called \u201cThe Ultimate Guide to Renovation,\u201d and you will hear about it through our program.
\nJane, once again, thank you very much for joining us. I look forward to catching up with you again real soon.
\nJane:\u00a0 <\/b>Thanks, Kevin.
\n <\/p>\n

Josh Masters<\/h3>\n

Kevin:\u00a0 <\/b>The best advice we could ever give any investor is to make sure that you do your homework. But just doing your homework doesn\u2019t necessarily mean to say you\u2019re going to buy the best property. Let\u2019s have a look at where some people go wrong with their researching when they\u2019re looking at either a market or at a property. A man who is experienced with this is Josh Masters from BuySide.com.
\nHe joins us. Good day, Josh. I haven\u2019t spoken to you for a while, but it\u2019s nice to have you back on the show.
\nJosh:\u00a0 <\/b>Thanks, Kevin. It\u2019s nice to be here.
\nKevin:\u00a0 <\/b>Now, where in your experience do people go wrong with their researching?
\nJosh:\u00a0 <\/b>We really take a top-down approach to research. We start with the area and then look at the property. In terms of looking at the area for research, I find most people really base their findings off opinion rather than facts and figures. They\u2019ll be standing around the barbecue or they\u2019ll talk to a friend and they\u2019ll get their opinion on where they should be investing rather than really looking at the data and the research that comes out.
\nThere are a couple of key indicators that we look at that are quite critical that anybody can find, and most of them are free. But here are some of the probably key ones that I would look at:<\/p>\n