By Rich Harvey, CEO & Founder, propertybuyer.com.au
Property buying involves myriad elements – strategy, psychology, networks, negotiations… the list is extensive.
But at its core, purchasing real estate is ultimately about information.
Good information enables informed decisions that result in less risk and more benefits, and a primary source of information in any real estate transaction is the selling agent.
The selling agent is your conduit to the buyer. They are the public face of the transaction.
An experienced agent will be well informed about the property they’re selling and circumstances that brought it to market.
So, what questions should you ask an agent when you’ve unearthed a hot prospect?
1. Why are they selling?
The agent may want to answer, “None of your business,” but hear me out – you must frame this question in a way that demonstrates you’re seeking a mutually beneficial outcome with the vendor.
The answer can reveal the seller’s state of mind and it could help you put forward an appealing offer.
For example, they might be moving interstate on a certain date. This tells me they have a fixed time frame for completing the transaction. Now I can offer a settlement date that will suit them.
They could be selling because they bought somewhere else. This means a cash unconditional offer will be very attractive – you might even get a healthy price discount compared to a higher offer that’s conditional on finance.
Knowing the reason for the sale means you can respond accordingly.
2. What do they want other than price?
Asking this question demonstrates your flexibility to the agent. While most sellers are looking to achieve the highest possible price for their property, there will be considerations beyond the dollars that can help get a deal over the line.
For example, some sellers need to retain residency up until a certain date. Maybe they need time to secure a new home, so an extended settlement with a leaseback arrangement will suit them.
I’ve even seen situations where investors will choose a slightly lower offer if their excellent long-term tenant gets to remain in the property.
3. How long has it been listed and what’s been the response?
A double barrel query that can reveal how the market feels about the listing and its price. The theory is that there’s a buyer for every property subject to price. Even secondary positions or unappealing homes can find a purchaser if they’re cheap enough (not that I would advise any of my clients buy a substandard home).
If the property you’re looking at appears to have all the right features for your needs, but it’s been on the market for an extended period, they’re probably asking too much money for it. Overpricing a home can burn off the bulk of interested buyers in a few weeks.
Under these circumstances, it pays to approach the selling agent with an offer below market value to gauge whether the owner has become desperate to sell.
You should also ask if they’ve had previous offers and what stopped the buyer from accepting them. Again, you might learn it’s not always about price.
4. How did you determine the list price?
This question encourages the agent to detail the comparable evidence they’ve adopted when pricing the home for sale. These comparable can form the foundation of your due diligence.
If the sales are true arms-length market transactions, and the comparisons the agent made seem reasonable, you can have some confidence in the list price. I always find that the sales agent will pick the highest priced sales in the area – even ones that aren’t directly comparable to your property of choice – to help pump up the number!
Of course, you should always do your own due diligence on price and never rely solely on what the agent is saying. They will want to provide evidence that bathes their listing in the best possible light.
5. Is there anything else I should know about the property before I make an offer?
Agents are required to tell you about any matters affecting the home that may influence your offer.
This can include structural issues, environmental detriments or other undesirable elements. For example, some buyers will avoid homes where there’s been a violent act or even a death. The agent should be disclosing this sort of thing to you prior to accepting an offer. In NSW this is referred to as “Material Fact” and failure to disclose certain information can result in heavy fines or loss of licence for a real estate agent – things such as major water damage or a being the scene of a serious crime.
Acquiring information from the agent is key to securing a great property. Asking the right questions, in the right tone and interpreting the results (i.e., reading between the lines) is a skill buyers’ advocates acquire over many years and numerous transactions.
If you’re unsure how to query an agent, then engage a buyers’ advocate to ask on your behalf. The right questions will get you into the home you want on the best possible terms and conditions.
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