Research the property and neighbourhood
The selling agent works for the seller, not you. What Queensland law says, what to ask the agent and what to keep to yourself before you make an offer.
I think real estate agents are in general friendly people, and while they will try to help you as much as they can in the home buying process you need to understand who is working for whom.
Clever home buyers understand that it is the real estate agent’s job to work for the seller of the property, and not the buyer.
Understanding the selling agents role can help with your negotiations and get you a better result.
Now I don’t want to sound cynical against the real estate agent industry, I have friends who are agents, but the fact is that a selling real estate agent can’t work in the interests of both the seller and the buyers. In Queensland, the seller appoints the agent, and the agent must act on the seller’s instructions and get the best price they can for the seller. That’s their legal job, not looking after you. It doesn’t mean they can mislead you, though. Agents still can’t make false or misleading statements to buyers.
I’ll be honest, I’ve made this mistake before. I trusted the agent and shared a bit too much. On one occasion I told the agent I only had a small 5% deposit. And while I could never confirm that’s the specific reason I missed out on purchasing that property, the fact that the real estate agent knew that could allow them to prioritise an offer with a larger deposit (larger deposit means a higher chance of getting the loan approved) over mine.
Either way, by misunderstanding the real estate agent’s role and giving them too much information I missed out on that property. With all that being said, it’s worth remembering that real estate agents can still be a good source of information.
Remember, a good agent works hard to get the seller the best price, and most are paid commission when the property sells. As harsh as it sounds, they won’t spend much time on buyers who seem unsure or unwilling to commit.
You need to put your best foot forward, and by asking the right questions you can quickly identify potential issues on the property, get a better idea on the value of the property and the seller’s motivations, and make an offer that will put you way ahead of your competition
1. Why are they selling the property?
This is a great starting point and gives you a solid understanding of the seller’s timeframes. Some real estate agents might not be comfortable discussing these details with you, but any information you can gain here gives you a better idea on what type of seller you are dealing with, and what items might help position your offer stronger than others.
For example, a seller who has bought another property might be keen to sell their old property quicker and are less sensitive on the sale price. You could offer a slightly lower price with shorter conditions to stand out. Just check with your broker first that the lender can meet a shorter finance date. If finance isn’t ready by then, you can end up locked into the contract without approval.
2. How long has the property been for sale?
How long a property has been on the market will influence its price. When a house is first listed, agents and buyers are most interested in the first 14 to 21 days. If the house hasn’t been able to find a buyer after 60 days, it becomes stale and is generally much harder to sell because there is limited interest, there could be issues with the property or the price being asked is too high.
For this reason, take the time to find out why the property has been on the market so long. Have other buyers struggled with finance? Have there been problems with valuations?
On the other hand, some others are happy to wait years for an unrealistic price, while other sellers could be desperate to sell and may accept a low offer. Also ask how long the property has been listed with this agent. In Queensland, a sole or exclusive agency appointment for a home can run for a maximum of 90 days. If that’s close to ending, the agent may push the seller harder to accept a reasonable offer. Just remember they’re still working for the seller, not you.
3. What was the original asking price?
It is worth asking the real estate agent what the original price range was on offer and getting a bit of a history on the sales campaign so far. You can ask them how many offers are made, and the prices being offered. If they were declined by the seller, or if they were accepted, why the deals fell through?
Investigating these areas gives you a clear idea of what the seller is expecting, and how much the previous interested buyers thought the house was worth. Asking these sorts of questions will present you as an informed buyer rather than a first timer!
4. Are the sellers ready to negotiate on price?
You might find a home you really want, and that’s great. Don’t feel bad asking the agent if the seller is open to a lower price. Their answer can tell you a lot before you make an offer. The gap between the first asking price and the final sale price is called vendor discounting. It moves with the market and differs by suburb, so check the current figure for your suburb in a free property report before you decide how hard to push.
5. What’s the lowest price they are willing to accept?
It’s worth asking, but don’t expect a straight answer. The agent can only share what the seller has authorised. If the home is going to auction, Queensland law stops the agent giving you a price estimate at all, although they can give you recent comparable sales if the seller agrees. The real value in asking is what you learn about the seller. If you do get a figure, say around $500k, you need to know straight away whether you can afford it. A free assessment with us shows where your budget sits before you start negotiating.
We come back to these questions when it’s time to make an offer.
We’ve put together the ultimate property research checklist to (1) research your suburb and surrounding area, (2) determine potential weekly rental and (3) calculate the property’s value. At this point, it could be worth obtaining a bank valuation prior to the auction, which Hunter Galloway can assist with arranging.
Before you speak to the agent, get your pre-approval sorted and know your number. That way you can ask the questions above without giving your position away. Send us the property and we can run the numbers properly before you make an offer.
