The Golden Rule for Buying Real Estate


18/02/2018

Monopoly

(Printed in Escapologist - Port Phillip Publishing)

By - Catherine Cashmore

Have you tried or considered buying a property recently? There’s a little more to it than property spruikers and mortgage brokers have you think.  

They say it is more stressful than bankruptcy, divorce, and bereavement.  And let’s face it – who enjoys dealing with real estate agents?

I thought not.  

That’s because the real estate sales industry is full of traps, trickery and deceit. I should know – I’ve worked in it for over a decade.

As a buyer advocate, I negotiate on two to three properties a week - year in, year out. There’s not a sales trick in the manual I’ve not encountered.

When I first started out, I worked as a sales agent.

At the time, I could not understand why investors and homebuyers would employ an agent to purchase on their behalf. It seemed like a waste of money, and few people used one anyway.

I quickly learnt why.

Don’t Dive Alone into Shark-Infested Waters

By the end of my first year, I couldn’t understand why people did not employ a buyer advocate.

I saw many taken to the cleaners.

They frequently over-payed for poorly located housing they would inevitably want to offload no more than a year or so later.

Paying a buyer advocate fee would have saved them thousands of dollars and hours of heartache.

It didn’t take long before I switched sides professionally.

When it comes down to it, the sales sector of real estate is about little more than ‘churn and burn.’ It’s also highly competitive.

If an agent does not list and turnover enough properties to cover their retainer and bring the agency a sizeable profit, they will lose their job to the next agent that can.

Therefore, don’t expect them to be wholly transparent about their vendor’s expectation, current buyer interest – or anything else for that matter.

Rather, it is not unusual to be pitted against other buyers. You’ll be cajoled into wasting time, money and energy on under-quoted properties you have little chance of ever buying within budget.  

Gazumping, dummy bidding, scare tactics, (such as 'white lies'' about other offers to get you to pay more)…the list goes on.

As a result, you’ll risk making an expensive mistake on the biggest purchase of your life.

So why use a buyer advocate?

The bottom line is that the sales agent is working for the vendor.

It is the sales agent’s job - by law - to get the highest possible price for their client.  

They’ll be full of smiles and niceties when you attend the open home. However, they’re not there to assist you as a purchaser.  They’re there to get you to pay more.

And when you’re competing with a skilled sales agent, you’re dealing with someone that has a good deal more knowledge of the industry than you.

With that knowledge, shrewd agents will lull you into a false sense of security.

If you find yourself signing contracts without a licenced conveyancer or solicitor checking them first, or being rushed into making a hasty decision, you know you have fallen into this trap.

Quite simply, the sooner the agent gets you to meet their vendor’s lofty expectations, the sooner they can pocket the commission and move onto the next listing.

By employing a good buyer’s advocate, you need never risk this or even talk to a real estate sales agent again.

There’s more…

They will do all the legwork when it comes to searching, assessing, and brokering a deal.

They will protect you from over paying and conduct all the necessary due diligence required. All you need to do is say ‘yes’ or ‘no’ when it comes to making a decision.

Of course, not all buyer advocates are the same. There is good and bad in every industry.

But…

You need a buyers advocate to implement what I call the ‘golden rule’ for buying real estate…

Make Sure You Know This Golden Rule

The more information a buyer knows about the vendor’s circumstances and expectations, the easier it is to manipulate the deal to their own advantage.

Therefore, one thing a real estate sales agent will never, ever do, however, is allow you (the buyer) access to their vendor.  The vendor has the single piece of information buyers can benefit from – their reserve price.

Instead the agent will be evasive about their vendor’s preferences – with comments such as “we’ve not yet set a reserve.” In reality, the agent knows the vendor’s ‘wish price’ from the onset.

This is why the most important key to successful negotiation is to place a buffer between you (the decision maker) and the real estate agent.

In the many articles and seminars I have undertaken on negotiation tactics, rarely – if ever - is this one golden rule mentioned.

If you show any emotional or physical reaction to a question or statement from the sales agent, you give away valuable information the agent will use to their benefit when brokering a deal.

It can be as subtle as a glance to your partner, a raise of the eyebrows or the tone of your voice.

This is one reason – as a buyer advocate - I gain a significant advantage when vendors attempt to sell their own property.  Negotiating directly with a vendor enables me to unearth far more information than a well-seasoned estate agent would ever permit.

When I negotiate on behalf of buyers however, the sales agent is granted no such advantage.  

For example, the question I want to know is what amount of money will buy the property “today?”  

If the agent starts to grow attentive when I ask if his vendor will accept a certain amount – say, for example around $440,000, $450,000, $460,000  - it gives me a better assessment of the vendor’s likely reserve. And it does that without compromising or disclosing my client’s position.  

The idea for you is to wrest control into your hands.  There are numerous ways to do this. Negotiation is about more than price alone. Negotiating settlement dates, conditions on the contract, the deposit amount and so forth, are all useful tools to employ. However getting someone to negotiate on your behalf is the most powerful.  

It’s the ‘Golden Rule’.

As the saying goes – “a man who is his own lawyer has a fool as a client.”

Don’t be that fool. 

Catherine Cashmore

 

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Catherine worked tirelessly in finding me a great property at a good price. She did things that I wouldn't have done (hours and hours of legwork) and more importantly, couldn't have done (organising the purchase before anyone else had even put in an offer). When I was ready to give up, Catherine kept working. I'm certain that I never would have been able to buy the same property within 10k of what we eventually settled at.... David
The expertise you bring are excellent and helped us understand the process and what to do and what not to do. You discussed at the beginning that by using you it will save us money and in our instance and the current environment of Melbourne’s market I believe you saved us $100,000 or enabled us to get into a suburb which going to auction would have gone way over our limit. You worked tirelessly to help us purchase a home.... Karen
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Why use Cashmore & Co?

Our advocates and researchers are international experts on market and real estate cycles. 

With decades of experience working in the Australian real estate market Catherine Cashmore and her associates have lectured widely on the real estate cycle and the economics of investment.

Cashmore & Co use their expertise to assist investors, home buyers and developers.  They simplify the buying process saving buyers thousands in negotiation, as well as preventing costly mistakes.

Cashmore & Co's services and expertise will not only assist you to increase your wealth, but also educate you to become a better investor.

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About Catherine

Catherine Cashmore

Director

Herald Sun Pic .jpg

Catherine Cashmore has been working in the Australian real estate market for over 14 years. As a buyer advocate, she has assisted hundreds of Australian home buyers and investors to secure quality real estate for the best possible price. Originally from the UK, and having lived in the US, Catherine is a seasoned traveller who has extensive experience across a range of international real estate markets for those interested in property investment overseas.. 

As President of Australia's oldest economics organisation, Prosper Australia, Catherine is a regular and highly respected media commentator and often called upon to give guest lectures to university students (including RMIT and Sydney University) on how tax policy affects real estate, the design of cities and the economy.

She is editor of Port Philip Publishing’s 'Cycles, Trends, & Forecasts' – a publication that teaches real estate investors about the land cycle and its effects on the economy. She is author of ‘Speculative Vacancies’, the only study in the world that analyses long term vacant housing based on water usage data (Melbourne focused). As such Catherine has an in depth knowledge of the Australian real estate market, few can rival.

You can contact Catherine directly on 0458 143 089 or at cc@cashmoreco.com.au

 

 

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