IN THE KNOW
The 10 questions you must ask before buying
KNOWLEDGE is power in real estate, but to get the edge sometimes you have to know the right questions to ask.
Real estate experts explain that buyers who do their research can buy better, especially in a hot market.
Applying that knowledge involves strategy, and sometimes that includes gleaning information from the selling agent.
Here are 10 top questions a buyer can ask a selling agent to help work out whether they can make a successful property purchase.
WHY ARE THE OWNERS SELLING?
Advantage Property Consulting director Frank Valentic said understanding the background of the seller could give buyers a clue of how best to structure an offer.
“Try and find out the situation with the sale. What would they take and have they had offers, do they have a particular settlement,” Mr Valentic said.
Property lecturer and columnist Peter Koulizos was more blunt: “If the people are desperate to sell there might be an opportunity to pick up a bargain or to get something below market price.’’
WHAT ARE THE PREFERRED SETTLEMENT TERMS?
A quick settlement might mean the seller was keen to offload the property and you pick up the sale relatively quickly, Mr Koulizos said.
“If they’re saying they’re not interested in any conditions then they’re obviously very keen to sell,” he said.
“The worst condition a buyer can put on a contract is ‘subject to the sale of my house’, because that could take months. But if the owner is willing to accept that, then they must be desperate to sell.”
Mr Valentic said not all negotiations were about price.
“Find out what’s happening in the seller’s life and it might lead to something where you can negotiate a win-win for both parties,” he said.
It could be a bigger deposit, released earlier, or a particular settlement date to allow the seller to move to new accommodation.
HOW MUCH INTEREST HAS THERE BEEN?
A buyer needs to know who they’re up against and whether they’ve had other offers.
Mr Valentic suggested asking how many interested parties there were, whether they were investors and what was the level of interest.
“If it doesn’t sound like they’ve got a lot of interest before auction, you might say let’s run this through and I hope that it passes in,” he said.
“Other times there might be stronger interest and I might just try and make a solid offer before auction.”
IS THE CURRENT PRICE THE INITIAL ASKING PRICE?
“If they’ve dropped the price, then that’s a good thing because you know they’re not totally against accepting a lower offer,” Mr Koulizos said.
“But if it’s been on the market for two months and the price hasn’t dropped then there’s probably not much chance to negotiate.”
DO THEY KNOW OF ANY ISSUES WITH THE NEIGHBOURS?
They probably won’t tell you, but depending on which state you are in, an agent can be obliged to reveal any issues if you ask a direct question.
“They can just as easily say you need to do your own due diligence,” Mr Koulizos said.
“You have to remember the agent is working in the vendor’s interests. They’re not going to tell you anything that’s going to detract from getting the highest price unless they have to by law.”
ARE ANY BUILDING REPORTS DONE?
A thorough buyer would get an independent assessment of the home to reveal any maintenance or structural issues and also make repeat inspections of a property.
But Mr Valentic said it was also a way to discover how many other buyers were circling. “If they’ve had five or six repeat inspections (it’s likely) you’re going up against two or three people, as 50 to 60 per cent of people generally drop off,” he said.
WHAT’S THE MINIMUM PRICE THE SELLER WOULD ACCEPT?
“Good luck getting anything out of the agent but it doesn’t hurt to ask,” Mr Koulizos said.
Agents should present all offers to their vendors, and in some states are required to in writing. “You just never know your luck. Somebody might be very keen to sell, especially if there aren’t many conditions, and say, ‘even though the money isn’t as good as I want, I’m going to take it and move on with my life’,’’ he said.
IS THERE ANY DEVELOPMENT POTENTIAL ON THIS PROPERTY?
A motivated selling agent will understand the development potential of a property and tell buyers, Mr Koulizos said.
“The more you know the more likely you are to make an offer rather than say, ‘oh cripes, I’ve got to ring the council about this. It’s too hard, let’s move on to the next property’,” Mr Koulizos said.
WILL THE OWNERS LOOK AT OFFERS BEFORE AUCTION?
A solid pre-auction offer could catch other buyers off guard and save having to compete in the heat of an auction, Mr Valentic said. But it needed to be enticing to stop the auction.
“The less conditions you can have in there you might be able to negotiate on price,” he said.
But sometimes the best question to ask was if the vendor would accept a formal offer you just presented to the agent on a signed contract.
“Just put an offer in and show that you’re serious,” he said. “It show’s them the money and that if they countersign the contract, the deal is done.”
CAN YOU APPRAISE MY PROPERTY AS I MIGHT HAVE PROPERTY TO SELL IF I BUY THIS?
This is a cheeky one from Mr Valentic. “If you let the agent know that and get them to do a valuation on it, potentially the agent will give you every chance to buy it, rather than giving it to someone else. They might prefer that you’ve got a trade-in to put into the equation,” he said.