Buying from estate agents.
The only way to get the very best no brainer deals is to be the investor an estate agent rings first. So when someone comes into their office and wants to sell their property quickly you are their first call. It is important that the person you are dealing with knows how to create a deal.
How can you be the estate agents first call?
Let’s start from the beginning. The best days to call on an estate agent are Tuesday, Wednesday and Thursday’s. This is because any good agent will be booked for viewings on Saturdays and Sundays and the only person in the office will be the weekend person and as you need to build up a relationship with the hottest agent in the office then weekends are out. Mark Penn who works for me now used to be the area manager of a 5 branch Estate Agency told me the following.
“Mondays are typically made up of meetings with their manager going through figures from the week before and Fridays are where they are setting themselves up with viewings for the weekend”.
When you arrive at the estate agents office if there is a good agent in there they will be jumping over desks to be the first to speak to you.
Mike who works in our office was the top salesperson for a large chain of agents for 14 months running and he says that he used to be the first person at the door anytime anyone walked into their office.
Now your objective is not to walk up to them and say “ I am a cash buyer, I can buy quickly here is my card see you later” It is to build a rapport with them the old adage people buy from people is the same when it comes to selling.
So as I said the key here is to develop a rapport and we do this by chatting to the agent for around 30 minutes mainly about the market in general but also about them. I would not go into details about your buying criteria yet. So midweek as it is the agents least busy time is when the agent will have more time for a chat. Then I will ask the agent to show me the best 3 buy to let properties they have on their books.
Now it would be very easy to rubbish the 3 choices but don’t ask to view them which will give you another hour with them and more time rapport building.
Now for the whole key to dealing with agents.
You are not so much looking for a property that fits your buying criteria as they are very rare. You need the agent to find a vendor who is willing to meet your criteria ! So use the three viewings to explain your criteria.
After you have viewed the properties is when you start talking about your buying criteria and how you can make the 3 properties fit your buying criteria.
You then need to explain that you can borrow 75% of the ACTUAL VALUE of the property.
Value of property = £100k
Amount you can borrow = £75k
Your offer is what you can borrow which in this case is 75k
less 4k buying cost
lest refurbishment costs of say 6k
In this case your offer would need to be 65k for the deal to meet your buying criteria
Assuming this also fits with your rental requirement of £200 per month cash flow.
If the property is on the market for 100k an offer of 65k does not normally appeal to an estate agent but this is where you need to be using the best agent in the office.
You don’t want the agent ringing the vendor and apologising for the call and explaining that they have just had a very poor offer as the vendor will nearly always say no.
Let me give an example of a deal we recently did.
The agent knowing our buying criteria and knew we would pay 90k for a property that does not need a refurb and that would value at 125k.
So he called me to confirm that he had just found a property for me that had been on the market for 125k that the vendors wanted to sell quickly as they had found a property they wanted to move into as soon as possible and that they were prepared to drop to 115k for a quick sale.
HE FOUND A VENDOR WHO MET OUR CRITERIA BECAUSE HE HAD A NEED
He had then contacted the developer from who they were buying their property from to say that they had had an offer from a very good reliable cash buyer at 30k less than the asking price. He then explained that they could only afford to drop 10k and would the developer be prepared to drop 20k from their price.
The developer agreed so the agent rang the vendors and told them that he had a brilliant offer for them from a very reliable cash buyer and could he come round to see them.
So rather than apologise to them that he had received an offer of 30k below their original asking price he phoned to tell them that he had received a brilliant offer and asked if he could make an appointment to discuss it with them face to face.
He then went to see them told them about how great it was to have an offer in such a poor market and how good it was to have an offer from such a reliable cash buyer. He then went on to tell them that he had managed to get a 20k discount from the property that they were buying because they had an offer from a great buyer at 20k below the asking price. They accepted the offer
That was when he phoned me, I viewed the property within 1 hour and agreed to purchase at 90k
It will take a while to establish this sort of rapport with an agent. I found from every 10 agents I visited I built this sort of relationship with one of them. It has been easier for me to develop this rapport with newly employed agent working in the large chains
rather than the office manager. The office manager normally already has a network of people he can call.
It is also not as easy to work with independent agents as they tend to buy these deals themselves or the owner will pass it on to a friend.
So to sum up YOU NEED TO EDUCATE THE AGENT TO WORK FOR YOU AS YOU WILL BUY EVERY PROPERTY THAT HE CAN FIND WHERE THE VENDOR WILL SELL TO YOUR CRITERIA
We offer a service where one of the ex estate agents who works for me will go out with you and visit agents in your area explaining your buying criteria and explaining the finance methods used.
Agents have big egos so you will need all your people skills. This business of buying cheap property is not about property it’s about dealing with people.