How to Avoid Getting Ripped Off Buying Property
How to Avoid Getting Ripped Off Buying Property
When buying property you’re spending the largest amount of money you will probably spend in your lifetime, yet many prospective purchasers are totally naive about the games real estate agents play.
In this article I outline how to avoid getting ripped off buying property:
- Real estate myths busted
- How to inspect a property
- How to do your home work
- How to control an auction
- How to spot a dummy bidder
- How to use auction bidding strategies
- What to do when a property passes in
- How to negotiate private sales
- Other ways to buy property
- Understanding real estate jargon
Here is how to avoid getting ripped off buying property:
1. Real estate myths busted
After many years in my own business in real estate it was easy to see that the winners in real estate are the agents and vendors; the buyers are pretty much at the mercy of their machinations. Not only that, real estate bodies and legislation have been weighted heavily in favour of vendors, with buyers being left to their own endeavours and often coming out of their transactions all the poorer for it. In the late nineties I decided it was time to look after the buyer, and thus the concept of the buyer’s advocate was born. My business partner Christopher Koren and I set up a business to act exclusively for the purchaser, as opposed to agents, who are really acting for the vendors, because that’s where they make their money. We used our years of experience and contacts to drive prices down.
REALas.com is all about arming buyers with the ground rules and exposing the myths of real estate to give them the edge. Buyers can learn these ground rules and turn the tricks estate agents use against them to their own advantage. They can learn to control an auction and effectively negotiate their own private sales.
Unfortunately, real estate businesses are not necessarily conducted in the same way most businesses are. What you think is a straight road heading for a certain destination often turns out to be a very crooked indeed. It is a fool’s paradise to believe anything you are told or see along the way, because it can easily turn out to be a mirage created for you in the imagination of the real estate agent. The myths of real estate begin with false impressions; often on the part of the vendor, who may actually believe that their own dreams and price expectations will come true and that they have already imagined their own outcome. This is further fuelled of course by the agent promising the vendor the world in order to secure the right to sell the property and thus achieve a fat commission.
2. How to inspect a property
Every weekend I see couples going through homes at open for inspections and, after listening to their conversations and talking to them, I soon realise that many people have very little idea what they are actually looking for. Here is how to inspect a property.
3. How to do your home work
For real estate, knowledge is king. Lack of knowledge will cost you money because your inexperience will encourage you to pay more than the property value. There are four steps for how to value property.
Once you have investigated how much the property is worth in dollar terms, you need to work out what the emotional value of the property is for you. Here is how to calculate a property’s emotional value.
When doing your homework on what a property is worth, don’t just rely on the sales data. Here are more ways of working out how much the property is worth.
It is important to carry out some research on the real estate agent (and their company) selling the property. Here is how to profile a real estate agent.
4. How to control an auction
Before you arrive at an auction it is important to understand the stages of an auction.
You will only be able to understand the auction process after you have attended lots of auctions. At every auction people ask me what I am going to do and I can honestly tell them that until a minute or two before the start of the auction, I could not say what I am going to do.
Auction strategies depend on what the auctioneer does, how other people bid, if there are other people bidding at all, what the level of genuine bid interest is, and, of course, how many dummy bidders there are. Here is how to gauge the level of interest in a property.
I cannot understand why people stand at the other end of the street at an auction. Here is why you should stand close to the auctioneer.
At any auction, you have two adversaries: the first is the vendor/auctioneer team, and the second is the other bidders. How do you manage this and how do you slow down an auction?
Your bidding strategy should be based upon what you have learned from your research. Here are three auction bidding strategies.
Interact constantly with the auctioneer. Don’t let them take control of the auction process. Here is why you should interact with the auctioneer.
5. How to spot a dummy bidder
A dummy bidder is a false bidder. They are used during auctions to create the illusion that there is a lot of interest in a property. Legislation to curb dummy bidding has reduced dummy bidding, but it will never be eradicated totally from the auction scene. Here is how to spot a dummy bidder.
6. How to use auction bidding strategies
Once you have carried out your research on the property, you can sometimes work out that you are probably the only person interested in it and that the vendor has a very high price expectations. Here is how to tell when there is only one genuine buyer.
When faced with competition at an auction you here are property auction strategies to put yourself in a winning position.
Sometimes in an auction you will strike aggressive bidders. In this case it’s no good if both parties keep throwing in bids aggressively. Here’s how to deal with aggressive bidders at auctions.
Other times you will get a situation where two people with strong egos both want the same property. Here’s how to win in a clash of the egos.
One of the most effective strategies is to upset an auction before it actually takes place with a pre-auction offer. Here’s how to make a pre-auction offer.
7. What to do when a property passes in
You have done your research on the property, used the appropriate auction strategies, and the property has been passed in to you. The first thing the agent will say is, ‘Come inside.’ Do not go into the house! Stay outside and let the auctioneer or agent go back and forth to the owner. Here’s how to negotiate passed in property.
8. How to negotiate private sales
Private sales or private treaty negotiations are the simplest form of buying real estate. The longer you can draw out negotiations during a private sale, the more information you will be able to get, and the more desperate the agent will become. Here’s how to draw out negotiations during a private sale.
Buying property by private sale is hard work because you need to be able to understand the agent’s position, but time is a wonderful negotiating tool. Here’s how to use time as a negotiating tool.
When buying property by private sale, find out how good the estate agent you are dealing with is as a negotiator, here’s how to review a real estate agent.
Thinking outside the square can make or break any private sale negotiation and it is fundamentally what ultimately saves you money. More importantly it makes the deal happen. You have to always be one step ahead of the estate agent, which in turn makes you one step closer to the owner. For example, you need to focus parts of your negotiation on what you think are some of the vendor’s needs, and marry these up with your own needs to secure a better deal. Here is how to negotiate private sales.
9. Other ways to buy property
Buying property off the plan is where the property is purchased ahead of its construction. Should you buy off the plan?
Expressions of interest in real estate are used to gather offers for properties without disclosing the price for which the vendor is prepared to sell, thus protecting the vendor from exposing to the public exactly how much interest there is in a property. Here’s how expressions of interest work in real estate.
10. Understanding real estate jargon
Ever been confused by real estate jargon? Here is a real estate jargon glossary.
Real estate agents have their own language, that can often amuse, bemuse and confuse, leading to unsuspecting buyers up the garden path to misunderstanding. Here’s how to decode real estate agent speak.
– David Morrell
REALas predicts property prices
REALas predicts property prices – Australia wide including auctions and private sales.
Between April 2016 and May 2017, the median accuracy of REALas predictions was within 5% of the final sale price. REALas predicts potential final sale prices for properties currently advertised for sale.