6 questions to ask a sales agent before placing an offer
About to place an offer on an investment property? Here are 6 questions you need to ask the sales agent before submitting your bid.
Before placing an offer to buy your next investment property there is some specific information you need to consider to ensure you’re positioning yourself to secure the best deal.
To gather this information, here are 6 questions you should ask the sales agent.
1) What’s the seller’s problem (i.e. reason for selling)
All sellers will have a problem they need solved. As a buyer, you’re more likely to secure the property if you can help solve the seller’s problem. Properties are sold for many reasons, such as divorce or a job transfer. To understand the best solution to the seller’s problem you need to know as much as possible about why they’re selling. For example, if the seller has purchased another house and is close to settlement, they may be under time pressure to sell their old property. If they don’t sell their old property they may face financial stress and therefore are more likely to accept a lower offer if you offer a shorter settlement.
2) How was the asking price determined?
The sales agent will mostly tell you that the price is based on comparable sales. If this is the case, ask the sales agent for which sales specifically so you can compare these yourself. If the sales agent has a justifiable case for comparable sales, then there should be no reason why they wouldn’t provide this information. In some circumstances, the sales agent might tell you it’s the seller’s price. It’s important to note their body language, mannerisms and comments as to whether they think it’s overpriced.
3) How long has the property been on the market?
If the property has been on the market for a long time, other buyers will automatically think that there’s something wrong with it and immediately discount it. Often the only reason the property hasn’t sold is because it’s overpriced. In these circumstances, the seller’s motivation level may change and drop their price if they haven’t received any offers. In these circumstances, you can place an offer on the property but if it’s rejected, tell the sales agent you’re interested and to keep you in mind should the seller change their price expectations.
4) Have any offers been made already and when?
This will help you form a price range that the seller may accept. For example, if the property is listed for $530,000 and the seller last rejected an offer of $500,000, then they’re not likely to accept a lower offer today. This is unless the offer was made some time ago, and the seller’s motivation levels may have changed.
5) Why do you think the property hasn’t sold?
If the property has been on the market for some time, ask the sales agent why they think it hasn’t sold. The selling agent may indicate that the property is overvalued, it isn’t presented well or there is a flaw with the property. The answer will most likely imply that the asking price is too high which will play into your hands when placing an offer.
6) What’s the lowest price that you think the seller will take?
Many sales agents will respond by quoting the advertised asking price however some may reveal that the seller is prepared to go lower. It will largely depend on the sales agent as well as the circumstances, i.e. if the property has been on the market for a long time and hasn’t received any offers.
These 6 questions will help you to gain a clearer understanding of the seller’s motivations, your potential competition and the property’s market history, which you can take into account when determining your offer.
By understanding these factors, you can place yourself in a much stronger position to secure a much more favourable deal and potentially save yourself thousands of dollars.